Located amid the misty mountains and lush greenery of Lao Cai is the site of Donaco International’s Aristo property, its latest and upgraded site boasting more than 400 rooms in the border town between Vietnam and China.
The towering five-star Aristo Hotel and Casino, a joint venture between Donaco and the Vietnamese government which owns 5 percent, has 428 hotel rooms and 40 gaming tables – a bold step up from the 34 rooms and eight gaming tables it had at its previous site a few minutes away at Lai Cai International. The new site also has 58 electronic gaming positions, with 34 linked jackpot slot machines and 24 electronic roulette seats. The casino’s license allows up to 300 EGMs.
Aristo is the only casino for about 200 km and is positioning itself to take advantage of a mini boom taking place in the city.
Sources with knowledge of the city say it has undergone significant development in the last year. A highway built by the Vietnam Expressway Corporation and funded by the Asian Development Bank now cuts the journey time from Hanoi Airport to Aristo from about 8 hours to just over three.
All along the highway in the city are shiny new cafes and retail outlets as well as construction sites where developers are building residential and office space to capitalize on the increase in trade between Yunnan and Lao Cai provinces. According to sources, the city now has about 10 banks compared with about 6 last year.
Another significant emergence is the relocation of some government departments to the city to take advantage of cheap and abundant land. The increase in officials residing and working in the area it is hoped will lead to an increase in the demand for meeting and convention space at the hotel, while diversifying the company’s customer base from predominantly Chinese.
Since launching mid-last year, the company has reported healthy financial results, with Edison Investment Research describing the hotel’s performance as “all the more creditable since the hotel was still in soft opening mode and faced the temporary negatives of China/Vietnam tensions, the World Cup and the Yunnan earthquake.”
The hotel and casino is propped up by residents from Yunnan province who are permitted to visit Lao Cai using a border pass as opposed to a visa.
“Patrons are typically sourced through junket operators. Primarily VIPs who check in with a minimum of [$98,000 plus],” Donaco said in its May presentation.
“Aristo VIP players would be premium mass market players (at best) in Macau.”
“For VIPs, the minimum bet size is RMB4000 ($650); premium is RMB 600 to 2000; and main hall patrons, RMB50 to 400.”
In Donaco’s half year results presentation published in February, the company said normalized results for its Vietnamese casino operations show a 55 percent increase in operating revenue and 52 percent increase in EBITDA, driven by the soft opening of the Aristo.
There was a 13 percent increase in table game turnover with revenue of $9.04 million, a 74 percent increase in slot machine turnover and 822 percent increase in non-gaming revenue to 3.33 million.
In May, the company said its win rate, however, continues to be volatile with VIP gross win rate of 1.3 percent in March and 2.11 percent in April, below the theoretical win rate of 2.85 percent.
The company added that the hotel’s occupancy is consistently at 70 percent, which Aristo’s management expects to improve with the overall development of the province and increasing investment and tourist numbers.
Aristo is close to Sapa, a renowned tourist destination 50km away that is seeing an increase in tourist arrivals. In 2013, Sun Group began construction of the Fansipan-Sapa cable car system in Sapa. Once completed this year, the cable car system will go from Sapa town to the peak of the Fansipan Mountain – the highest in Indochina – seven kilometers away.
In the first four months of this year, total tourist arrivals to the province of Lao Cai reached nearly 665,000, a year-on-year rise of 21.7 percent, reported the Lao Cai News. April was a bumper month for the province as the 2015 Sapa Culture and Tourism week coincided with the National Reunification holiday and May Day. Sapa welcomed 138,000 visitors in April, while Lao Cai city and Bac Ha received 80,000 and 17,100, respectively.
Along with tourism, the province has become popular among mining companies. Private investors have pledged around $4 billion in committed capital investment since 2008.
In September last year, Vietnam inaugurated its largest factory to produce steel from iron ore in Lao Cai province. The Lao Cai Cast Iron and Steel Plant, a venture between Vietnam Steel Corporation, Lao Cai Mineral Joint Stock Company and China's Kunming Iron and Steel Group Co. Ltd, was put into operation after three years of construction and has an initial capacity to produce 500,000 tons of steel per year, according to the Vietnamese government.