The Star Entertainment Sees Increase in VIPs but Drop in Profits
Despite a record number of high rollers, the casino operator, The Star Entertainment Group had a 44% drop in full-year profits to AU$148 million. The profit was impacted by the expenses related to the building and opening of the Gold Coast hotel in Queensland.
High Rollers Roll into Star Entertainment
The Star Entertainment operates casinos in Sydney, Queensland, and Brisbane. The group saw a 54.3 per cent increase in international high rollers. They brought a 36.6 per cent increase in funding which equalled AU$4.7 billion.
However, the casino saw an “abnormally low” house-win rate if 1.16 per cent which is down from 1.59 per cent last year. The Star Entertainment Group’s CEO Matt Bekier reportedly said the win rate swings around a lot, which means that there’s still a possibility it will change. “In the fullness of time, it always normalises around that win rate of 1.35 per cent,” he told AAP.
Profit Margins in the Green
Excluding abnormal house-win rate and other one-off expenses, the group’s normalised earnings actually increased to AU$588 million and normalised revenue increased to AU$2.69 billion.
The rise in high rollers, who are mainly Chinese tourists, is encouraging for The Star Entertainment. The casino experienced a drop in high rollers in 2017 after the imprisonment of a group of Crown Casino employees in China. “Even though we were not involved, we share a lot of customers with (Crown) and a lot of customers said ‘Well we aren’t going to go to Australia for a while,’” Beiker explained.
The Star also recorded a 4.1 per cent increase in domestic revenue, a 5.5 per cent increase in pokie machine revenue, a 6.3 per cent increase in table revenue in Queensland, and a 15.2 per cent increase in non-gambling revenue.
It declared an increase in dividends of 13 cents per share, from last year’s 8.5 cents per share.
Expanding Hotels to Meet Influx
The Star Entertainment Group is expanding its properties in Australia to meet the increase in tourism. Bekier, on Australia’s CNBC called for more hotels to be built to meet the decades long growth in casino tourists, especially those from Asia. “For us to capture a good share of that we need a lot more hotel capacity,” he said. He announced on CNBC that Star Entertainment is building a complex in Brisbane called Queens Wharf. It will have five hotels which will include the luxury Ritz Carlton brand. This is expected to open in December 2022.
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