On the northeast coast of North Korea, a new resort is opening on Tuesday, July 1. Wonsan-Kalma has hotels, shopping centers, restaurants, and a water park. It is said to be able to accommodate 20,000 a day, which may indicate as many as 5,000 hotel rooms. There are many unanswered questions, but speculation holds the resort is intended for international tourists. The relationship between the North Korea and Russia has become friendlier since the war in Ukraine began and many Russians have visited, though not enough to fill the new resort.
Analysts think Wonsan-Kalma was built to attract Chinese tourists. If so, it joins a growing list of countries with resorts built for the same primary purpose. It takes more than wishful thinking to compete in that market. It may even require knowledge of the future.
The fine art of predicting the future is an ancient practice, but rare today. Thousands of years ago, there were specialists to help kings, queens, priests, and generals make the right choice. The diviners, soothsayers, and seers read the stars, dreams, and palms, as well as the organs of various animals. If official seers existed today, politicians and investors would most certainly consult them before putting money or effort into new ventures. That would be especially helpful in Asia.
Governments and investors in Asia could use some clarity. For example, MGM is investing $10 billion in the Osaka Prefecture in Japan. From beginning to end, the process of building the resort will take 10years. Other prefectures in Japan are watching and a second round of proposals may be in the wings. Before jumping into the Integrated Resorts pool, the other jurisdictions and potential casino development companies want to see what happens with MGM and Osaka. Was that a good use of MGM’s capital and human resources? Was it a good idea for Osaka? Those questions will not get even a hint before 2030, and probably not a definitive answer before 2035.
A comparable question is developing in Thailand. At first blush, Thailand seems like a good location for an integrated resort; all that is missing is enabling legislation and the subsequent regulations. Thailand is like Japan — in the early stages of the process. In Japan, with the release of increasing restrictions and costs, most resort companies backed away. The other prefectures in Japan also became leerier.
Thailand is set to be the next Asian country to legalize casino gambling. Initial suggestions call for three to five licenses with a minimum investment of $2.7 billion. The primary target market is international tourism, which in Asia means Chinese tourists. Thailand already gets 38 million tourists a year. It would like more and of course more of their dollars. However, the situation is uncertain; first it has been proposed that Thai casino customers have at least $1 million in the bank. That is a red flag for conventional casino operators.
A millionaire-only policy might not be a deal breaker, but it would certainly limit the number of companies interested. While that is a significant issue, local politics are more important at the moment. Prime Minister Paetongtarn Shinawatra, whose government is pushing for the integrated resorts, is under fire. Her coalition is breaking apart. There are demonstrations against her and her party and calls for her resignation. She is not backing down, but the legislation, the Entertainment Complex Bill, has been relegated to the bottom of priorities. Underlying that, the popular support for legalized gambling is far from certain.
With the situation in Thailand murky and risky, fortunately for investors, there is no opportunity to invest and no risk, yet. The political situation will have to resolve itself first. A seer might be able to tell us if Thailand will become the next major casino-resort locale; no one else seems to have a definite answer. A seer might also be able to help Kim Jong Un and his new resort. Without any of the political infighting and compromising that characterized first Japan and now Thailand, North Korea took the plunge.
The Wonsan-Kalma Coastal Tourist Zone has been built and its doors are ready to open. There are no estimates of its cost, or indeed any details about the project. But it must have been expensive and risky. North Korea is no stranger to risky investments; it harbors an unfinished mega hotel. The Hotel of Doom is a 1,000-foot-tall 105-story pyramid. Construction on the Ryugyong Hotel began in 1987, then was halted in 1992. In 2008, the exterior was completed, though the inside remains unfinished.
Wonsan-Kalma has even grander plans, if not a grander architectural design. This is where the seer would be valuable for North Korea, Thailand, and Japan, Osaka, and MGM. Are these investments justified? I suspect it will be 2030 or later before we can begin to answer the question for any of those threads dangling in time.
