Donaco International earns a strong growth at Lao Cai International Hotel

According to an announcement of Donaco, the company’s operating revenue increased 100 per cent compared to the previous corresponding period. This was driven by a 44 per cent increase in VIP turnover at the Lao Cai International Hotel.

Donaco is a Australia company, its flagship business is the Lao Cai International Hotel, a successful boutique hotel and casino located in Lao Cai, Vietnam, on the border with Yunnan province, China. The hotel caters primarily to Chinese citizens from Yunnan. Vietnamese citizens are not permitted to enter casinos within Vietnam.

“We are very pleased that despite the capacity constraints at the existing property, our Vietnamese casino operations continue to show robust growth, particularly in VIP turnover. This is a testament to the hard work of our staff, and the ongoing success of our junket marketing program,” said Donaco managing director and chief executive officer Joey Lim.

Actually, total visitation to the casino declined slightly at 3.2 per cent, primarily as a result of bad weather which reduced the number of walk-in customers. In September 2013, heavy rains caused a temporary closure of the border crossing from China, and in December 2013, exceptionally cold weather caused snow to fall in the highlands surrounding Lao Cai.

But Donaco in the announcement explained the growth was driven by an influx of higher spending VIP customers, reflecting the success of the company’s ongoing junket market program.

Due to the decline in walk-in customers, mass market turnover declined by 15 per cent. This was more than outweighed by the growth in VIP turnover, with total table game turnover increasing by 33 per cent overall.

Slot machine turnover showed very strong growth of 122 per cent, primarily due to the introduction of 12 new machines in February 2013. These have proven to be far more popular with customers than the 24 older machines, which are also still operating.

The 10-year-old Lao Cai International Hotel is a 3-star hotel, comprising 34 rooms and 8 gaming tables. It also has an approval from the government to operate up to 300 electronic gaming machines, including 150 slot machines and 150 video gaming machines. But, in fact, only 36 slot machines are under operation at this time.

Early this year, Donaco International purchased additional 20 per cent of stake from state-owned Sapa Petroleum Tourism Joint Stock Company, increasing its proportion of stake to 95 per cent, from 75 per cent, at the hotel and casino project. The remaining 5 per cent continue to be held by the state-owned company.

Right now, the joint venture is currently building a much larger five star hotel in Lao Cai. In November 2013, the Vietnamese authorities gave an indicative grant of a maximum of 50 gaming tables at the new Lao Cai Hotel, with a minimum of 26 tables. While the final number is still be to resolved, management currently plans to open the new hotel with 40 tables.

“The level of demand for gaming entertainment at the Lao Cai International Hotel gives us great confidence in the success of our new 428 room, five star property, which is now nearing completion,” said Lim.

“The board and management team have maintained our focus on ensuring that this project is completed on time, and under budget. In preparation for the soft opening in May, our marketing team has begun to reach out across China, and is sourcing patrons from outside Yunnan province for the first time,” he added.