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Asian VIPs Help Star Entertainment Increase Net Profits by 15%
- August 29, 2016 By Oliver Young -
One of the largest casino entertainment groups in Australia, the Star Entertainment Group, reported an increase in 15% of their annual profits – a change they stated was due to an increase in high-rollers from Asia. The reported net profits of the entertainment group rose by 14.9% to June 30, and amounted to A$ 194.4 million, while the full revenue was increased by 6% to $2.27 billion. The entertainment group reported that the growth was accumulative, with each experiencing a better financial performance in 2016.
VIPs Boost Profits
The biggest growth was seen at its “International VIP” unit, which set a new record for Star Entertainment after jumping up 7% and amounting to A$49.5 billion in 2016 alone, the normalized revenue amounting to $670 million. This year was also the first year that their The Star Casino in Sydney made more VIP revenue than their biggest rival The Crown Resort in Melbourne, or $320.5 million, to be more precise.
Their “International VIP” plans are tourist packages aimed at high-rollers from China and Asia, which gives a clear picture about the background of this sudden increase in VIP turnover, considering the crackdown on gambling activities in Macau – the former haven for Chinese gamblers. Star Entertainment’s CEO, Matt Bekier, confirmed this trend and stated that the casino group noticed a change of profile in their high-roller customer base around the time of the Chinese New Year.
An official statement from the company attributed the profit increase to a combination of their marketing and sales techniques, product, as well as their “loyalty programs” and more powerful “macroeconomic conditions”
What the Future Holds
Considering the migration of Chinese VIP players towards Australian venues and the fact that, currently, Chinese tourists make up for 22% of visitors to the country, the focus of Star Entertainment Group towards the Asian market isn’t at all surprising. Bekier confirmed that the casino group sees further growth opportunities by securing a growing share in the Chinese tourist market, and that even though the company didn’t have any formalized arrangements with venture partners from Asia, they are also building a sales force that will focus on other countries from the continent as well.
For the time being, the entertainment corporation is set on building a new resort that will be nearer to the Asian continent. The new facility will be located in Brisbane and closer than the already existing Sydney casino, but also the new Crown property being built in the same area. The constructions will add an expense of A$120 million to the already large A$425 million sum intended for the reconstruction of current venues in Gold Coast and Sydney.
The reason behind the new construction plans is probably due to the field statistics regarding Chinese high-spending customers that were gathered this year. Out of all Chinese tourists visiting the country, the CEO stated that about one quarter will end up in their venues, yet only 3% of their entire revenue comes from tourist customers. Part of the fault, as he sees it, is in the lack of room capacity at their properties, which is why they are focusing on reconstructing old and building new venues.