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Star Entertainment Group chairman warns against reliance on China

Sun, Jul 16, 1:11pm by Staff Writer

During an interview with The Weekend Australian, Star Entertainment Group chairman John O’Neill offered a stark appraisal of the Australian casino industry’s increased reliance on Chinese tourism.

Speaking in a luxury restaurant within The Star Sydney, and celebrating five years since being appointed as chairman of the casino constellation, O’Neill cautioned against becoming overly dependent on Chinese patronage:

“We have got, at all costs, to avoid complacency with China.

The Chinese market is incredibly important, but we shouldn’t be putting all our eggs in one basket.

There are other important markets in Southeast Asia, including Thailand, Singapore and Indonesia.”

The comments come less than three weeks after Star Entertainment Group’s chief rival Crown Resorts saw 16 of its employees sentenced to prison time by Chinese authorities. That case represented the culmination of an extended crackdown imposed by the Chinese mainland government, targeting foreign casino operators conducting business within the special administrative region of Macau.

In the government’s estimation, companies like Crown overstepped their boundaries in actively courting Chinese high-rollers – especially through enticements designed to divert their gambling activity to Australia altogether.

O’Neill was careful to avoid mentioning the Crown imbroglio directly, but he pointedly observed that Australian casino operators must remain cognizant of overseas sovereignty at all times:

“We operate in a highly regulated environment in all our various jurisdictions. Each market has its nuances which must be understood by operatives.

There cannot be any room for complacency. Early warning signals, or changes to the rules of engagement, must be monitored carefully and responded to proactively.”

Prior to the Macau row, major operators like Crown viewed Macau as a veritable gold mine, investing billions of dollars in integrated resort projects along with international entities like Las Vegas Sands Corporation and Hard Rock International.

But rather than divert his company’s assets toward the now contested Macau market, O’Neill outlined a vision for Star Entertainment predicated on domestic development:

“We (Star) are not expanding into China or any other overseas destinations.

We are a partnering with Chinese investment, bringing it into our properties in Sydney, Brisbane and the Gold Coast. There are endless benefits they bring to the table.”

At the heart of that vision is Star Entertainment’s planned $2.5 billion casino resort in the Queen’s Wharf district of Brisbane, a project which involves significant collaboration with a pair of Hong Kong-based partners in the Chow Tai Fook Group and the Far East Consortium. As O’Neill described, the Brisbane casino resort will represent a prime destination for Chinese tourists given the property’s dual investment:

“It’s a massive $2.5bn project which takes up 12 per cent of the Brisbane central business district – a hotel, entertainment, and apartments precinct with apartments and a footbridge across to South Bank.

It’s game changing and transformative, (and) it is a model for how to bring in Hong Kong and Chinese investment into Australia.”

Curiously, even as O’Neill warned against becoming reliant on Chinese patronage, he spelled out in stark terms the mathematics motivating the industry’s current balancing act:

“There are 100 million Chinese tourists who travel overseas a year now.

We have got about 1.2 million a year, or about 1 per cent of them. Australia should be picking up about 5 per cent of that. There is no reason why we can’t.

That’s why a lot of this tourism infrastructure, including hotel rooms, has to get built to accommodate them to a good standard.”

O’Neill became chairman of Star Entertainment (then known as Echo Entertainment) in July of 2012, following more than a decade at the helm of the Australian Rugby Union (1995-2003; 2007-2011).

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