Chen Si, COO of INSPIRE Entertainment Resort, redefines luxury

The latest newcomer to South Korea, Mohegan’s INSPIRE Entertainment Resort aims to redefine how luxury entertainment is done. Chen Si, COO of the property, explains what differentiates it from the rest and how to capture the clientele amongst a competitive regional environment.

With $2 billion just in the first phase, the group is planning to open its non-gaming offerings in October, with the casino hopefully coming online a few months later.

INSPIRE rendering

We are looking at a very big project taking place nearby Incheon International Airport. It’s already pegged at $2 billion just for this phase. You’re planning to open the non-gaming offerings this year, within October, how is that coming along?

It’s going well, construction on schedule. Our financing was done end of ’21. And we’re on budget.

And we did announce last month Mohegan, our owner, our parent company, injecting another additional $155 million into the project. But that’s not really over budget. We’re just adding more scope to the budget. We’re building some more amenities. So yes, we’re tracking okay

When is the casino coming online?

Yeah, I think it’s depending on the timing of the licensing. After opening in Korea, you have to get a five-star hotel rating before you can get the license. So, as soon as we open the resort, we’re going to get the five-star rating as soon as possible, then getting the licenses. I think, for a reasonable estimate, we’ll be waiting three months.

So within about 10 months from now, we’ll be able to see the casino open. Do you think you’ll have any issues in getting that five-star rating?

I certainly hope not. If we do our job right, it should be okay.

There are some very interesting individual elements that distinguish INSPIRE from its competitors. What do you think are some of the better elements of the property that make it shine?

If we’re talking about, for example, the Korean operators that that are in Korea right now – I think our hardware in terms of footprint, the size itself, and the programming of the building, are very different.

And we’re really taking advantage of Mohegan’s technical know-how of running entertainment elements, especially for the arena that we’re building – a 15,000 capacity, state-of-the-art, purpose built arena for music, taking advantage of Korea’s Kpop culture, and Mohegan’s expertise in running live entertainment in Connecticut for the last 15 years.

I think that’s certainly a huge advantage of ours. Other programs in the building that make us stand out are: an all-year-round indoor waterpark, and the largest hotel MICE facility in Korea that, given our geographic location, would allow us to really attract that regional MICE business.

Mohegan is a US-based company, this is the first project within Asia. It’s pretty ambitious. Is there any cap on the potential investment?

There isn’t. The $2 billion for phase one is obviously already spent. So, as we look forward to the next phases. We are committed to working with the government, our regulators, and finding potential partners to build it out. So, it really depends on the specific ideas that we bring to the table, and the condition of the financing market. But so we don’t have a number yet. We’re committed to do the work and find the right partner and the right ideas.

Who are the casino customers that INSPIRE is targeting?

I think Japan is extremely a focus for everybody in Korea, including us, and Greater China as well, and the rest of Southeast Asia. But I would say Japan and Greater China will probably be the two focus markets.

Can you give us a percentage breakdown in terms of what you’re looking at?

Right now, Japan, from other competitors’ benchmarking, Japan is probably 30 percent. And the other segment we didn’t mention is the local dual-passport holders, or foreigners living in Korea. And that’s actually a significant market right now, probably 30 percent to 40 percent of the market, the rest being China.

But obviously, with China opening up, I think their share will obviously go up. I think maybe it will be a-third, a-third, a-third at some point. But then, depending on the outbound traffic from China this year, it would be a little bit up and down. I think Japan and domestic are more fixed.

Is INSPIRE hoping to be allowed to have locals game at the property?

It doesn’t exist in any of our financial modeling. It’s not part of the value proposition when we go get financed or are talking to our partners. It is an option value for sure. And we didn’t start this, this discussion started with many other operators looking at this market, including Las Vegas Sands. It’s really not on the table at this point, even domestically.

People talk about it, but it’s not on any legislative agenda, like it is in Japan or Thailand. But down the road, are there opportunities? I think longer term: Yes. But I think that longer term really is probably 10 years, right after Japan, after Thailand. I don’t think anything will happen in the short term.

What about the changes within Macau? You mentioned that the downturn of Macau could actually be an upturn for INSPIRE?

Well, I love Macau. So first of all, I wish Macau my best. But I do think the changes in terms of access to Macau, and obviously the business structure from a VIP dominant market into mass and premium mass certainly will have an implication on the rest of Asia, or the rest of Asia gaming. I think specifically on VIP, given the structural change, a lot of those operators who used to operate in Macau are going to look to expand overseas, specifically the Philippines but also Vietnam and Korea.

Because both markets provide very attractive economics from a tax rate perspective. On the mass side, I think it’s really a matter of whether the visa policies, or the permitting policies of access into Macau, would stay the same or improve or get worse for mainland Chinese tourists, mass tourists. And, if that gets worse, I think it will benefit or push more outbound travel from mainland China for gaming. So, that would certainly benefit not just us, but Vietnam, Philippines, etc. and Singapore, obviously.

Can you define the percentage you’re expecting to be VIP, premium or premium direct, versus mass?

We’re still a few months away. So we’re not quite there yet in defining the numbers, because we certainly don’t have anything to look at right now. I would expect VIP to be less than 30 percent of our revenue.

What’s your gaming floor makeup right now?

The gaming is about 150 tables and 700 slots and ETGs. So we will have a phased approach, but certainly that’s the capacity we’ll get to shortly after we open.

The table number is roughly similar to some of the other casinos in operation regionally. How about the EGM number? 

We’re bigger. Yeah, we’re a lot bigger than everybody else. So we do see that as a growth opportunity. It’s traditionally not as strong ETG or EGM market, because you don’t really have a strong local base of customers. But again, based on our proximity to Incheon Airport with that transient passenger, do we have the opportunity to use interesting EGMs to attract some of that short-term visitation, mass play? I think that’s certainly something we want to try.