Genting Hong Kong is walking away from its casino joint venture on South Korea’s Jeju Island.
It was only last November that Genting HK announced it had entered into a 50/50 partnership with Hong Kong property developer Landing International Development Ltd. The Grand Express Korea Co Ltd joint venture involved a renovated casino inside the Hyatt Regency Jeju Hotel, which had its grand opening in January.
On Wednesday, Genting announced it was selling its 50% stake in the JV to Landing Intl for KRW 130b (US $111m), the same price Genting had originally laid out when it embarked on its brief Jeju fling. The parties expect the deal to conclude by Dec. 31, 2015.
Genting justified its JV exit based on its recent $550m acquisition of Crystal Cruises, the latest addition to the company’s burgeoning casino cruise operations. Genting says it needs to “focus on and put more resources to expand its cruise and cruise related businesses.” The extra cash will also allow Genting the flexibility to pursue other investments and opportunities as they arise.
The transaction won’t have any impact on Landing Intl’s other casino joint venture on Jeju with Genting Singapore. The multi-billion-dollar Resorts World Jeju had its ceremonial groundbreaking in February and its first phase is expected to open sometime in 2017.
Jeju is a popular tourist spot, particularly with Chinese visitors. But the recent outbreak of Middle East Respiratory Syndrome (MERS) in South Korea has led many tourists to revise their travel plans. Inbound tourist numbers in the month of June were off 41% and Paradise Co Ltd, the country’s top casino operator, said its sales in June had fallen nearly two-thirds from the previous month.
South Korea has reported no new MERS cases in the past three weeks and hopes are high that the tourism business will quickly rebound as the travel alert is lifted and confidence spreads. In the meantime, local travel agencies are cutting prices on package tours by as much as one-third in a bid to lure skittish bargain hunters.