Thu, Feb 21, 9:55am by Staff Writer
Softer economic conditions in China and a crackdown on suspicious consumption in the world’s biggest economy have pushed down spending by VIP gamblers at Crown’s Melbourne and Perth casinos.
The Chinese economy is experiencing its slowest growth in nearly three decades and the popular casino is feeling the pinch.
Crown’s executive chairman John Alexander spoke to the matter on Wednesday to the Sydney Morning Herald stating that: “Chinese people, like Australian people, are suddenly feeling a bit poorer than they were a couple of years ago. It all goes to spending patterns.”
Gambling operators around the globe have been feeling the pinch, with lucrative high roller programs more uncertain than ever.
Chinese punters typically play baccarat and can turn over hundreds of thousands of dollars a hand and millions of dollars an hour.
This softening economic growth coupled with the Chinese government’s crackdown on shady consumption, as well as trade tensions with the United States go some way to explaining the reduction in wealth Chinese gamblers visiting Australia.
Crown told its investors on Wednesday that turnover from its VIP program had shrunk 12.2 per cent to $19.9 billion, driving down company profits over the final six months of 2018.
At Crown’s flagship casino in Melbourne, turnover was down 11.2 per cent to $17.3 billion.
The company’s after-tax profit had risen less than 1 per cent to $194.1 million, short of forecasts by Macquarie Research ($203 million) and JPMorgan ($221 million).
Crown’s share price took a hit on the back of the news, with a 5 per cent dip on Wednesday to $11.55.
— CasinoOrg (@Casino_Org) February 20, 2019
Macquarie’s senior gaming analyst David Fabris said: “overall, the result missed on softer-than-expected VIP within the Australian casinos.”
Foreign high-roller volume across all Australian casinos crashed in 2016-17 after the Chinese government embarked on an anti-gambling crackdown that arrested 19 Crown staff for illegal marketing activities on the Chinese mainland.
Crown’s chief financial officer, Ken Barton, remained circumspect stating that the softening was, “afflicting casinos across the Asia-Pacific region, including in Macau and Singapore. It is indicative of what we are seeing across the VIP market more broadly.”
Construction continues on Crown Resorts’ newest casino in Sydney’s Barangaroo despite a turbulent 2018 for the sector.
Gaming industry analyst from JP Morgan Donald Carducci said: “Barangaroo is becoming a larger part of the conversation as analysts are now starting to considering how to factor it into their numbers and its impact on both Sydney and Star in 2019.”
There is a consensus that Crown will have approximately 125 VIP gaming tables in its new casinos and if each can generates $2 million, this will create $250 million in revenue per year.
The question is whether this revenue will be from market growth or taken from its nearby competitor the Star Sydney.
Crown has had good recent success in its VIP gambling programs in Melbourne with revenue rising 73 per cent to $591 million last year.
Star Entertainment chief executive Matt Bekier has remained bullish about his casino’s prospects despite an impending rival.
“If you look at the typical VIP guest who goes to Macau for example, they play in 2.6 casinos over three days. I think the exact same thing is going to happen in Sydney,” Mr Bekier said.
The traditional super high rolling Chinese gambler has been one that the Star has steered away from relying on solely in recent times.
It has instead shifted its focus on drawing patrons from South-East Asian markets to its hotels and casinos.
The Star has successfully leveraged itself towards high-spending Chinese tourists through attractive partnerships with Hong Kong-based Chow Tai Fook and Far East Consortium, which has a loyalty program of 6 million people.
SkyCity Entertainment Group is poised to tap into the lucrative online gaming space, with plans to launch a platform mid-year that will…
The proprietors of three suburban hotels in Lake Macquarie and Newcastle have applied to the state’s licensing authority to extend the hotels’…
The Hard Rock Hotel is expanding, according to Yahoo Finance. The Seminole Hard Rock Hotel and Casino in Florida is working on…