Australian operator Star Entertainment has reported that its VIP gaming revenue was ‘impacted by the Crown Resorts detentions’ in China as they dropped by 22 per cent in the second half of the year.
Rival operator Crown Resorts had 18 of its employees arrested for allegedly promoting gambling junkets in China.
Despite the VIP downturn, The Star still posted strong revenue for the half year to December due to what Managing Director and Chief Executive Officer, Matt Bekier described as ‘freakishly good’ win rates against the VIP gamblers that did turn up.
The company stated: “International VIP Rebate business front money was up 4.4 per cent with turnover of $20.8bn down 11.9 per cent. Turnover was impacted by the high win rate of 1.62 per cent in the half which resulted in a lower turn of 12.2 times as well as the uncertainty created following the detention of Crown Resorts employees in China in October 2016. [VIP] turnover in November and December 2016 was down 27 per cent.”
Mr. Bekier said the company would proceed with caution when it came to marketing to Chinese high rollers.
“We obviously want to be cautious because we don’t have all the facts on the table now,” he said. “At this point we are not taking any risks. We are executing against our strategy of diversifying our international revenues, including the south-east Asia VIP and Asian premium mass market. We continue to assess the north Asian VIP business as the China situation develops.”
Overall the group’s revenue increased 11 per cent to $1.23bn for the half with profit up more than 135 per cent to $141.8m, due to a near doubling in The Star’s win rate against its VIP gamblers from 0.88 per cent to 1.62 per cent.
Mr. Bekier said: “The improving momentum of our Sydney property into early 2H FY2017 is pleasing, as customers respond to the upgraded offerings with the completion of major capital works. The investment in gaming and non-gaming offerings advances our long term strategy to deliver a differentiated value proposition based on our brand, renewed loyalty program, guest satisfaction and staff engagement.”
Chairman John O’Neill AO added: “1H FY2017 has been another period of good progress for the group in executing its strategy to be Australia’s leading integrated resort company. Normalised results reflect the underlying performance of the business as they remove the inherent volatility of the International VIP Rebate business. Major capital works were completed, resulting in significant improvements to gaming and non-gaming offerings at our Sydney and Gold Coast properties.”