Kangwon Land¡¯s Smooth Sailing

Pres. Choi works for balanced growth for casino and non-casino sectors for overall increase in profit

The ultimate value of an enterprise is to continue to exist and develop,¡± said President Choi Young of Kangwon Land, adding that the casino alone cannot promise it will still be in business in the next five years. Therefore, now is the time to make investments and prepare for business, continued the CEO in a recent interview with local media.
Choi said he hopes everyone would look at Kangwon Land as an integrated resort, not just a casino, especially if they are concerned about the limit on growth as a casino and also if they have misgivings about a large investment being ploughed into the resort.
An integrated resort always needs reinvestment, he said, as a resort with memberships can¡¯t make much profit because the members who don¡¯t spend much money usually visit the facility during the peak season. What he meant was that it would be hard to raise an enormous amount of money for reinvestment, not bothering with members. In that sense, it is hard to find resorts in the country running in the black, except Everland, he said.
If reinvestment is made in resort facilities with earnings from the casino operation, the number of tourists will increase and income from tourists can be used as part of reinvestment funds as in a ¡°mutual survival¡± theory, Choi said. He would like to attract diverse customers who come to the resort to enjoy games for leisure, rather than small gamblers who spend all their time at tables.
Choi seemed very confident about accessibility, the weakest link in his management strategy. He thinks the harmony of snow skiing, the golf course at the resort, one of the five public golf courses in the country, and the only casino open to the general public in Korea can attract a large number of visitors to Kangwon Land. He said he plans to attract visitors not only from the Seoul area and its vicinity, but also from other regions, which have not been able to take advantage of Kangwon Land¡¯s integrated resort facilities so far.
The number of visitors to Kangwon Land totaled 3.46 million as of Sept. 27 or 76.36 percent of the total figure for last year, although it is not winter yet, the most attractive season for people to visit. Non-casino income has been contributing a lot to the resort¡¯s overall revenue growth for the past five years.
The growth model that Choi has been after has been the balanced growth of all sectors of Kangwon Land by expanding revenue from the non-casino sectors to boost the overall revenue of the resort.
The casino sector has also been catching up with the change in management policies. It changed its make-up inside the casino to make it more suitable for ¡°small¡± gamblers and the cash management system has also been reestablished to preclude the recurring of any mishaps.
The casino has 130 tables that operate in three shifts. Cash for all of those tables at the end of the day is usually some 400,000 won short, or about 1,000 won per table per shift, as a result of errors in the system. Choi said many casinos overseas don¡¯t even carry out a daily accounting of cash, but even a $1 dollar mistake is rare.
Kangwon Land has been thought of as a winter resort in the minds of the people. But the resort plans to add an aquarium and a water park to turn itself into a year-round resort. The design will be announced officially at the start of next year.
The CEO hopes that when the resort is open year-round it will attract 7 million visitors annually in 2013 from the estimated 5 million for the whole of this year. The resort also plans to expand its lodging facilities to 12,000 from 6,000 with 1.35 trillion won invested already. Choi takes special care for the traditional Korean foods served at the resort, the cold noodles in particular. He is proud that its taste is one of the best country.
He expects third quarter results will be among the best in recent years, thanks to the longer-than-usual Chuseok holiday that brought more holiday crowds to the resort than usual. According to an analyst at a securities firm, Kangwon Land is estimated to record total sales of 394.5 billion won, up 13.9 percent YoY, and operating profit up 16.8 percent YoY at 163.2 billion won.
He said paying dividends to shareholders is very important, but increasing the value of an enterprise is as important. He feels that if the current effort to reinvest and rationalize management were to continue and boost profitability, the market value would be recognized in the end. nw

President Choi Young of Kangwon Land, the operator of the largest resort complex including a casino in Korea.


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