Star demands exclusivity on Gold Coast casinos
The Star Entertainment Group and its partners have pledged to pour $2 billion into a dramatic revamp of its Gold Coast holdings as it seeks to head off the threat of a rival casino operator entering the market via the Queensland government’s long-running integrated resort process.
The gaming giant is demanding exclusivity in the city and laid out extensive tourism driven plans for a new precinct as it also awaits a crucial planning decision on the planned Ritz-Carlton tower above its Sydney property.
The company told investors that in the financial year to October 21, domestic revenue was up 1.5% on last year, with growth in both Sydney and Queensland, and investors drove up its shares by 5.4% to $4.70.
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The Star’s international VIP Rebate business normalised revenue was up on last year and the low actual win rate experienced in this half was negatively impacting statutory results.
The company is putting in place annualised cost reductions of about $45 million this financial year and normalised earnings for the first-half are expected to be between $300 million and $310 million.
Calling for certainty
The Star chairman John O’Neill publicly laid out a stark call for to the Queensland government to give certainty for the company to spark a major three-part development on the Gold Coast.
The Star is offering to lock in to the $2 billion-plus Star Gold Coast masterplan, provide a $100 million worth of upgrades and expansions to the Gold Coast Convention and Exhibition Centre, and to revamp the Sheraton Grand Mirage.
The Star says is growth strategy is supported by its alliance with its Hong Kong-based joint venture partners, Chow Tai Fook and Far East Consortium, who backed its $3.6 billion Queen’s Wharf Brisbane precinct.
“The Star Gold Coast has the potential to be a global tourism and entertainment destination that will rival Queen’s Wharf for scale and be an absolute beacon to drive increased visitation and substantial economic benefits to the region,” O’Neill says.
The casino owner’s pitch is that it would have about $9bn worth of tourism assets in southeast Queensland if it got exclusivity.
Speculation hits share price
O’Neill notes the Palaszczuk government continues to “speculate” about a second casino on the Gold Coast after seven years of “distraction” that have weighed on its share price.
He reiterates The Star’s position that the Gold Coast market is too small for two casinos, warning that bringing a new player in could force it to defend its market share rather than focusing on tourism.
O’Neill says The Star is seeking to break the deadlock by “reaching out” to the Queensland government by striking a contractual arrangement to deliver the five-tower masterplan for The Star Gold Coast.
The first tower — including a Dorsett hotel — is underway and The Star is undertaking apartment pre-sales for a second tower that will also house another renowned hotel.
The Star revealed a fifth tower would be another five-star hotel and sport a “Sky Park” tourism playground and a bevy of retail outlets, infinity pools, gyms, and a world-class day spa, alongside an outdoor function centre.
The casino company is also proposing to upgrade and run the state-owned conference centre, supported by a portion of gaming tax revenues from its Gold Coast operations.
The Sheraton Grand Mirage beachfront resort would be upgraded and The Star would seek to develop a resort on a site adjoining the famed hotel. But all these commitments were contingent on it winning exclusivity arrangements.
The company is awaiting a decision from NSW’s independent Planning Commission about its controversial 237m-tall tower proposal at The Star Sydney. An initial knock back drew the ire of Premier Gladys Berejiklian and a review of the area’s planning by the Greater Sydney Commission.
There was a less than 3% protest vote against The Star’s remuneration report.
This article originally appeared on www.theaustralian.com.au/property.
