As president of MGM Mirage Global Gaming Development, Lloyd Nathan directed the company in its expansion plans in many jurisdictions. In April, he resigned from MGM to take over as CEO of Asian Coast Development Limited, a Canadian company that plans to build an MGM Grand in a resort area in Vietnam, a deal that Nathan structured. Because MGM is not contributing any capital to the Vietnam project, just branding and operational experience, Nathan will have a challenge in developing the resort and then expanding ACDL’s footprint in Asia. He spoke with Global Gaming Business in May.
GGB: You had a successful career as head of MGM Mirage’s international development unit. Why did you decide to leave and take the CEO position with Asian Coast?
Nathan: I have a relationship with MGM Mirage that dates back 20 years, which I deeply value and which I look forward to having for another 20. However, an opportunity to create a global gaming platform from the ground up does not come along very often and it was a challenge that proved irresistible.
Does the commitment from MGM Mirage still remain to brand the Ho Tram Strip as an MGM resort still in place?
Absolutely. My new position has only strengthened the ties between the working groups at ACDL and those at MGM Mirage and added to the great relationship we have enjoyed to date.
What makes the Ho Tram Strip so attractive to Asian Coast?
We are the only current large scale gaming destination authorized in Vietnam and have a 420-acre site with pristine beach front which forms part of a government-led tourist master plan.
From a gaming perspective, it is not lost on us that the 16 countries in close proximity to Vietnam comprise almost two-thirds of the world’s population, but only 5 percent of the world’s licensed gaming establishments. We also benefit from a growing economy and a large, young and well-educated population that will provide an excellent work force and a growing consumer base for the hotel and other non-gaming amenities at the Ho Tram Strip.
How involved is the government in installing the infrastructure necessary to make the Ho Tram Strip a success? What are some of the needs to be completed or at least under way before you open?
Both the national government and the provincial authorities in Ba Ria Vung Tau have been exceptionally supportive with their commitments to the Ho Tram Strip development. There have been various significant infrastructure improvements to date and these include: the new East-West highway that began construction in April 2005; works on the Ho Chi Minh City-LongThanh-Dau Giay expressway which will shorten the distance to the Ho Tram Strip from HCMC by about 45 minutes. The first phase of the project, Phu My bridge, has been completed at a cost of US$109 million; lane enhancements to Route 51 which links HCMC to Ba Ria Vung Tau which commenced in 2009 and are expected to be complete in 2014 at a total cost of approximately US$1.5 billion. This improvement is estimated to reduce the travel time from HCMC to Ho Tram by a further 20 minutes. Finally, the new Long Thanh International airport will also be just over an hour from the Ho Tram Strip.
Describe the Asian Coast project in the Ho Tram Strip.
The Ho Tram Strip master plan includes five integrated resorts and a championship golf course to be located on 168 hectares or 420 acres of land and more than two kilometers of pristine beach in southern Vietnam. The first resort to open will be the MGM Grand Ho Tram, which will be the first five star destination resort in Vietnam and an Asian flagship property for MGM Mirage. It is a prime beachfront location with diverse and appealing ancillary resort facilities including entertainment, restaurants, conference, spa and retail.
Is construction under way?
Yes. The site is cleared, piling work is completed, and the team is at work on the piling caps. Full construction will start later this year.
Are there any other commitments for projects on the Strip there?
We have received numerous expressions of interest and are confident we will be able to select partners best suited for this development, at least for the second resort, later this year.
The Vietnamese government currently prohibits its citizens from gambling. Would you like that policy to change? Is there any indication it will change?
It is important to emphasize that in addition to the large number of expats living in and around Ho Chi Minh City and Vung Tau, there are a significant number of Vietnamese citizens with foreign passports or foreign residency permits, who will also be able to enjoy the gaming experience at the Ho Tram Strip. These groups live in large numbers in the Ho Chi Minh City and Vung Tau areas and currently have high frequency visitation to a limited number of small slot parlors which do not offer live tables or the breadth of amenities that will be available at the Ho Tram Strip. Clearly, approval of local gaming would likely result in a home run for those holding limited licenses, although we have not modeled on this basis nor made any assumptions. That will be for the Vietnamese government to decide. I will say that this is a government well versed in the intricacies of gaming, as well as the competitive dynamics in the Asian region .
Explain how you plan to phase the MGM Grand Ho Tram project, if you do indeed.
It will be built in two phases and this was a decision that was taken in conjunction with the Vietnamese authorities and with MGM Mirage. Obviously everyone is keen to have this first resort, which is to be the showpiece of the Vietnamese tourist industry, open as soon as possible. Our design, which consists of two hotel towers, will allow us to open the first hotel tower along with the vast majority of the resort amenities while the second hotel tower is being completed.
Why is the MGM brand so powerful?
The MGM Grand brand appeals to a wide variety of customers from Las Vegas to Macau and is well known globally. Quality, service and energy are key identifiers of the brand and importantly it is also expanding globally into non gaming jurisdictions such as Abu Dhabi, Dubai, Mumbai and mainland China. All of this is to the benefit of the Ho Tram Strip in having MGM Grand as the first resort.
What is the relationship? Is it just the brand or will MGM also manage the property?
MGM Mirage has been providing, and continues to provide, a broad range of pre-opening services from input on the design and construction to the pre-opening budget. In addition to providing these services and the MGM Grand brand, MGM Mirage will also be managing and operating the first resort.
What is the target market for the project?
Geographically, the Ho Tram Strip will appeal to a pan Asian group of customers including those from Japan, Korea, Malaysia, India, the Philippines, Indonesia, China and Thailand. As I mentioned earlier, the 16 countries in close proximity to Vietnam comprise almost two-thirds of the world’s population, but only five percent of the world’s licensed gaming establishments. Demographically, the Ho Tram Strip will appeal to a wide variety of customers, from families and other vacationers seeking an upscale experience, to business travelers wanting to mix work and play, to VIP customers looking for an alternative to Singapore and Macau.
Do you plan to enlist the VIP operators who bring junkets to Macau or will there be a different model for the high rollers?
We have already been approached by several junket operators excited by the opportunity but it is premature to be negotiating any agreements. Some are not comfortable with the regulatory system established by Singapore, others are not happy with the capped rates in Macau, most are seeking a five star alternative for their customers in a new and exciting environment. We anticipate being able to offer competitive junket commissions as well as five star service. With regards to the first resort, on top of the experience of the MGM Grand Macau, the MGM Mirage International Marketing division has being doing business in Asia for over thirty years and understands the market and how to attract the best junket operators .
How are the regulators approaching this development? We know they have visited other gaming destinations like Las Vegas. Are they supportive?
Vietnam’s government officials have visited several gaming destinations around the world, have met with the Nevada Gaming Commission, and are well versed in the intricacies of gaming. Their approach to date has shown a desire to create a properly regulated environment.
Other large-scale developments in the region are either operating-as in Singapore-or planned-as in Manila. What impact do you think they will have on the Vietnam development? How will you compete with them?
According to a 2008 report from Ernst & Young, the 16 countries in close proximity to Vietnam comprise almost two-thirds of the world’s population, but only five percent of the world’s licensed gaming establishments. And while I am not a believer in unlimited demand, I do believe supply has not yet met demand in Asia and I am also a firm believer in better supply. Ultimately the size of the market is such that Vietnam will thrive as a compelling alternative to Singapore , Manila or Macau. We are also seeking to provide for a far broader customer base in Vietnam. Importantly, we will be in a position to offer significantly more value for players and for junket operators than in other parts of Asia. We also will be providing a quality beachfront with activities for all of the family in a country that is steeped in culture with phenomenal sights, food and art.
Tell us about ACDL. Are there plans beyond the Ho Tram project? If so, what would you like to see the company become in a few years?
Asian Coast Development is an international development and gaming company specializing in integrated resort destinations and real estate. We are the only company in Vietnam to have secured an Investment Certificate enabling large-scale gaming, with our first project being the Ho Tram Strip, a group of five integrated resorts to be located on 168 hectares of land and more than two kilometers of pristine beach in southern Vietnam. I think we have an excellent business model and a unique opportunity to create a successful global gaming platform.