According to analysts, the main effort of the largest casino operators in Australia to once again become attractive to wealthy Asian high-rollers is to remain on the agenda amid the overall economic decline in China. However, experts are now more optimistic about the chances of a recovery in the upcoming fiscal year.
At a time when China has recorded the slowest growth rate of its economy in almost thirty years, partly driven by its controversies with the US, Australian casino behemoths, including Crown Resorts and Star Entertainment have faced a sharp decline in their revenue generated by high-roller Chinese customers, which seriously hurt their profits.
Gambling industry analysts have been monitoring the situation in Macau, the largest gambling hub on a global scale known as one of the most desired destinations for punters from mainland China, as part of their efforts to determine the strength of the international high-roller gambling sector.
Despite the fact that share prices on the VIP market have been falling as a whole, analysts from Macquarie Wealth Management have reported a sharp change in mainland Chinese residents’ attitude, which has been seen into increasing high-rollers’ confidence. They have revealed that a VIP gambling market’s recovery has been included in the financial year 2020, regardless of the fact that they are still cautious on the high-rollers volumes in the second half of the current fiscal year. Still, analysts have revealed that they remain optimistic about the sector and project recovery of the VIP gambling market in the region.
Two Largest Australian Casino Operators Suffer High-Roller Turnover Losses
Apart from analysts’ observations and monitoring of the sector, executives at the two biggest casino operators in Australia revealed that they had noticed the decline in the money spent by Asian VIP gamblers (mainly by the ones who originate from China), who usually spend billions of dollars on an annual basis.
The largest casino operator in Australia, James Packer’s Crown Resorts revealed to its investors earlier in 2019 that turnover generated by high-rollers had decreased by 12.2% from the profits generated by the operator over the six months which ended on December 31st, 2018, reaching AU$19.9 billion. The massive decline in Asian high-roller volumes in Australia has had a negative impact on James Packer’s plans for the new VIP Barangaroo casino and hotel complex of Crown Resorts, which is set to be completed in 2021.
The other Australian behemoth, Star Entertainment, saw its casinos’ profits fall by 33% in the same period, reaching AU$20.7 billion, with high-roller turnover at its biggest casino falling by 49%. Regardless of the registered decline, analysts from Macquarie Wealth Management commented that The Star, which currently operates casinos in Sydney, the Gold Coast and Brisbane, still look attractive to customers. Experts have added that the domestic gambling business of the company still accounts for over 80% of its EBITDA (earnings before interest, taxes, depreciation and amortisation) and constitutes a higher-quality business than the VIP business, as it generates greater earnings at better margins.