Star looks to profit from Macau slump
- 8th February 2016
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operator The Star Entertainment Group is cashing in
on the VIP slump in Macau, as more high-rollers desert
the world's largest gaming hub to gamble in Australia.
Hawkins, the former Crown Resorts executive who heads
The Star's Sydney casino, said it was reaping the
rewards as word of mouth spreads about the company's
high-end casino offerings particularly at its Sydney
think with the trend of 20 consecutive months of decline
in Macau you've seen some of the longer-haul destinations
like Australia have benefited from some of that slowdown
in Macau," Mr Hawkins said.
seen some strong growth over the past couple of years
coming into our Sydney property. I think word of mouth
does grow and I think that's driving interest at that
level in conjunction with some of the slowdown in
Macau as well."
casino revenue has been slammed following an anti-corruption
drive by the Chinese government aimed at stamping
out illicit money laundering and the flight of capital
from the mainland.
fell by 21.4 per cent in January from a year earlier,
marking a 20th straight month of declines. That prolonged
fall has piled pressure on some of the gambling industry's
biggest names including James Packer's Crown Resorts
which has a stake in the Melco Crown joint
venture to engineer a turnaround in the former
estimates Australia's share of the Asian VIP market
more than doubled to 6.8 per cent by the end of the
2015 financial year from just 3.3 per cent in 2010.
that growth, both The Star and Crown have found it
tough going in the last year to repeat the sort of
explosive VIP growth of 2014-15.
Star's VIP business almost doubled in 2014-15 after
an $870 million upgrade to its Sydney flagship casino
finally began to attract more high rollers.
on a winning streak
The Star's international VIP rebate revenue, which
is what high rollers lose, slumped a massive 33.8
per cent in the four months ended October 31, although
the casino operator blamed much of the slump on an
abnormally low win rate for the house. Smoothing out
the volatility associated with high rollers, VIP revenue
fell 8.1 per cent.
expects a 2 per cent decline in VIP revenue in the
2016 financial year to $306 million split between
a 8 per cent decline in the first half and 4 per cent
growth in the second half.
tips a strong 9 per cent surge in domestic revenue
will lift the company's overall revenue by 4 per cent
to $1.2 billion when it releases its half year interim
results on February 16.
Star recently poached a new head of VIP, John Chong,
from its arch rival Crown. The executive will be based
in Macau to help drive business over to Australia.
Hawkins said he is pleased with the overall trend
which is helping it to close the gap on Crown's Melbourne
capital commitment over the last three years
we've developed both hotel, gaming and restaurant
environments have dramatically improved our
offering and we're getting that feedback from our
customers as well that the gap has closed to some
extent in terms of Sydney versus Melbourne,"
said Mr Hawkins.
a continual focus for us and an ongoing journey. But
I think we are on a dramatic improvement path."
Sydney Morning Herald)