Australia’s casino rivals Echo Entertainment Group and Crown Resorts are raising the stakes in the competition for China’s lucrative VIP gambling trade.
Sydney-based Echo is considering buying a golf course for a resort south of Brisbane, while billionaire James Packer’s Crown recently spent A$100 million upgrading its fleet of private jets.
“For people to fly to Sydney from Macau, they’re flying over some pretty attractive casinos along the way and they wouldn’t make the trip if there wasn’t something unique here,” Echo CEO Matt Bekier said in a recent interview after his company posted a 25 percent jump in annual profit. “At least a third to a half of them have connections here.”
Revenue at Echo’s international VIP rebate business has more than tripled, and the A$389 million in second-half VIP revenue at the company’s Sydney flagship, The Star, was 30 percent of the site’s A$1.28 billion gross revenue during the period, according to a company presentation.
Crown Resorts, Australia’s largest casino company, posted a 53 percent jump in second-half VIP revenue.
“The challenge remains to get the players to Australia,” Chief Executive Rowen Craigie said on an investor call. “They’re overflying, effectively, Macau, Singapore; they’re turning down Vegas to get to Australia,” Craigie said. “The first challenge is, how do you get them to fly to the most distant market where they’re all playing the same game, which is high-stakes baccarat?”
Melbourne-based Crown spent $100 million in the latest fiscal year buying three Bombardier Inc. jets to replace its fleet of Gulfstream private aircraft for ferrying Asian VIP customers, the company said in a recent presentation. The Bombardiers feature 15 seats, nine sleeping berths and are powered by Rolls-Royce engines that allow them to fly 6,000 nautical miles without refueling.
The company also is building a new high-roller casino on Darling Harbour in Sydney not far from The Star, due to open in 2019.
Echo’s VIP gamblers, who wagered an estimated A$29.1 billion in the year to June, frequently have family or business links that make Australia a more attractive destination, Bekier said.
“If I look at the customers that come to Sydney, they very often have other reasons” for visiting the city, he said.
People claiming Chinese ancestry made up 4.3 percent of the population in Australia’s 2011 census, and Chinese buyers have overtaken Americans to become the biggest overseas investors in Australia’s property market, according to federal government data.
The state of Queensland is among the local governments looking to cash in. In the capital of Brisbane, where the state is offering a new casino license, incumbent Echo is working with Hong Kong’s Chow Tai Fook Enterprises, owner of the world’s largest listed jeweler, and property developer Far East Consortium International on plans to build a new casino resort.
It’s also spending as much as A$280 million in the coming year on upgrades, including adding Japanese and Italian restaurants to its Jupiters resort in Gold Coast south of Brisbane and expanding gambling rooms at Sydney’s Star.