“Currently, Parties Are Actively Analyzing to What Extent Gambling Business Operators and Hotels where They Want to Reside Can Suit Each Other”

14.07.2020

The Vice President of the Ukrainian Gaming Industry Association (UGIA) Alex Evchenko made a post on his Facebook page, sharing his observations concerning the possibilities for making an additional income for hoteliers shortly before legalization of the gambling business.

To provide more details about this intriguing issue, Alex gave an interview for Ukrainian Gaming Week. How interested are Ukrainian hoteliers in the opening of gambling rooms on their territory? How to choose a partner for the opening of a casino? Read about all of it in the interview.

Interviewer: Ukrainian Gaming Week (UGW)

Respondent: Alex Evchenko (А. Е.)

UGW: Do many hoteliers show their interest in the launch of gambling facilities at their premises?

А. Е.: The hoteliers that own premises that match the parameters specified in the draft law 2285-d are considering the possibility of placing a casino or a gambling room on their territory. Currently, parties are actively analyzing to what extent gambling business operators and hotels where they want to reside can suit each other. The problem is that gambling operators are not ready to sign contracts now, as the date of the adoption of the law is not clear yet.

UGW: Are most of them looking for a partner among operators or count on their own resources?

А. Е.: Most of hotel operators understand that gambling is not their cup of tea. For this reason, they primarily want to engage businesses that specialize in gambling as renters: be it a casino for five-star hotels or a slot machine room for three-, four-star hotels, – and to set higher rental cost. Thanks to the current situation when not so many good-quality premises are available, the rental rate for such premises before the adoption of the draft law and in the process of preliminary market research is too high.

UGW: In your opinion, which approach is more efficient?

А. Е.: I believe that everyone should do his own business: hoteliers – to host guests, and gambling operators – to organize games. Especially that they are good at their business. In my opinion, the most reasonable approach is the joint effort of two right formats. Furthermore, it is essential to understand the format of the future slot machine room, for example. As there are many options, in fact. We usually perceive everything the same way, but there are several formats.

UGW: What should hoteliers primarily pay attention to when looking for a partner among operators?

А. Е.: As I have already mentioned, one should primarily define the rules of “living together”. The reason is that the agreement is signed for a long time and an important thing here is to avoid the situation when the target audience of a casino or a slot machine room compromises the integrity of the hotel’s target audience. One of the ways out is to separate the flows of guests.

Besides, it is vital for the hotelier to discuss the rules of interaction with the slot machine room or casino in advance. What should be the general corporate principles, rules of food loading? When is it okay to do it? When and what kind of noise can the casino make? Or should the premises be soundproof not to bother hotel guests? There are many nuances.

UGW: How do you think, what is more far-sighted – to start business with a local operator or to engage a foreign partner with relevant experience?

А. Е.: I would say that one can start working with local operators much quicker. Because foreign operators will be studying and entering our market, attentively checking what opportunities the law provides. They will hire lawyers to define how to sign the contract correctly. I think it takes less time and is more efficient to start working with people “on the beat”.

UGW: For now, only owners of Hilton Kyiv have officially announced their intention to open a casino after legalization. Are other announcements expected before the adoption of the law? Or will hoteliers prefer to wait?

А. Е.: I know that some hotels are working on the change of the intended end-use of certain rooms to turn them into casinos and slot machine parlors. For example, they are rearranging ballrooms that were previously used for conferences. I know that many hoteliers are working hard on this issue, but I think that they will not reveal any information until the adoption of the law and signing of contracts. The reason is that it is a competitive advantage for them.

UGW: Is it worth thinking about selling a hotel business that brings little profit? Or is it more reasonable to wait for the legalization and breathe a new life into it with the gambling room?

А. Е.: As I wrote in my post, it is possible to sell a hotel now, but there are many nuances. It is not that simple to do that. It is clear that if you have been working with the hotel for some time and it does not bring you sufficient profit, and you have the possibility to place a slot machine room there and a potential investor shows interest in the purchase of such a premise, it possibly makes sense to sell it. But you should take into account many factors such as market growth and further opportunities that will open up together with this growth.

UGW: What would you advise to hoteliers in current conditions? And to operators?

А. Е.: An important piece of advice to hoteliers is not to hurry. Naturally, when the market opens, there will not be many operators at the start; they will be coming later, including foreign companies that will be entering the Ukrainian market. One should not jump in at the deep end, as in fact such “marriage with a gambling operator” is not a simple question and it is necessary to foresee all the nuances of the future life together.

As to operators, I would recommend them to take a more serious attitude to the hotel business. Why? I hear many following commentaries from the people that want to organize such rooms: we are not interested in hotels, even if they go into the red, we will be making the main profit from the gambling component.

However, a correctly arranged facility will allow potential players to get more services and comfort from the hotel component. It will give a possibility to increase their stay at such facilities. Premises with the best thought out details and extra services for guests will win competition. Correspondingly, such hotel and casino complexes will be making bigger profits and make their customers stay for longer.

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