Investment could reach 0 million
Star Entertainment Group of Australia has announced it will add a third hotel tower to its massive Gold Coast Casino site. According to the Asia Gaming Brief, the additional 200-meter (656-foot) tower will join a 17-story all-suite tower now in the works and an AU$345 million (US$245 million) upgrade of Star’s existing hotel.
If approved by the Queensland government, the new inventory will give the resort almost 1,400 rooms, suites, apartments and other guest accommodations, for a possible investment of up to $850 million, reported AGB.
“Our commitment to the Gold Coast is unambiguous,” said Star Entertainment Group CEO Matt Bekier. “We are already well advanced on transforming the property through the hotel refurbishment and new restaurants, and later this year when we rebrand to the Star Gold Coast, the new six-star all-suite tower will be rising out of the ground.”
Star’s partners in the project are Hong Kong investors Chow Tai Fook and Far East Consortium; each of the three will own a 33 percent share in the Gold Coast venture.
Queensland Premier Annastacia Palaszczuk has put her stamp of approval on the plan, saying, “I commit my government to work with Star and its partners on the tower plan. Over the last 12 months, we have attracted more than 40,000 additional seats on international flights directly into the Gold Coast. More flights mean more nights’ accommodation in hotels, more economic activity for small businesses and more jobs on the Gold Coast.”
Forbes says the former Echo Entertainment has been reborn as Star, and is “now burning brightly in the antipodean firmament.” For the 2015 fiscal year, revenues rose 19 percent to AU$2.26 billion (US$1.7 billion) and EBITDA was up 17.4 percent to AU$455 million. International VIP revenue increased 48.4 percent to AU$588 million.
However, reported GGRAsia, the company overall reported half-year net profits after taxes were down 37.9 percent year-on-year, in part due to winning high rollers in the six months leading to December 31. Bekier called the win rate for the period “freakish.”
“We’ve looked at the distribution of bets, we’ve looked at the players, we looked at who won, we understood the lifetime history of the players that won—and it’s just bad luck,” he said on a conference call with analysts last week.
In spite of that blip, Morgan Stanley analysts Mark Goodridge, Andrew McLeod and Elise Lansky agree Star will benefit from Chinese tourism. The brokerage has predicted a 15 percent compound annual growth rate for Chinese tourists to Australia to 2020, rising to 18 percent from 2020 to 2025. “Morgan Stanley sees Star capturing a good chunk of business from this growing Chinese market,” reported the business publication.
