Australian casino operator, the Star Entertainment Group is looking to boost its revenue from the international VIP gaming segment which has recently seen a stronger performance than its domestic segment.
Star Entertainment Group’s latest results show that international VIP segment rose by 7.2 percent in the first half of this year while growth in its domestic business stood at 6.8 percent. Overall revenue for the group was A$2.4 billion, up by 6 percent. Net profit reported by the group was at A$194.4 million, a growth of 15 percent over last year.
The group saw a win rate of 1.5 per cent this year in its international VIP business which according to chief executive Matt Bekier was above average but wasn’t enough to recover losses the company had suffered last year in the VIP segment due to a win rate of 0.88.
With a slowing down in the growth rate of Asia’s VIP market segment, Bekier has said that the trend of big whales or high rollers visiting casinos was declining. He stated that the company was seeing more visitors but they were playing smaller amounts.
Junket operators who act as middlemen have played an important role in the past in bringing in a regular clientele of high end VIP gamblers. However with the slowing down of the VIP sector, casinos are looking to cut out the middlemen. Star is working on building a sales presence in South-East Asia to establish direct contact and bring down costs. The company is also working on attracting more Chinese tourists to its casinos.
In a statement, Matt Bekier said
Only around 3 per cent of revenue comes from tourists. A surprisingly large number of Chinese tourists – around 25 per cent – find their way into our properties. But we can't get them to stay on our properties. Therefore we need more rooms to get them to stay. We're just a side trip. Therefore we need to work with the relevant tour operator on how to maximize that
With the intention of ramping up its hotel facilities, the Star Group is spending about $3 billion to create more room capacity in Brisbane, the Gold Coast and Sydney which will also help it counter competition from Crown’s upcoming Barangaroo casino. Bekier hopes that the upgraded facilities would bring in a higher number of international VIP customers to its casinos.
Bekier noted that poor consumer confidence during the second quarter of this year was influenced due to macro-economic factors such as the Brexit and Australia’s election campaign which had impacted the casinos’ performance. He said that the confidence has since returned and the casinos’ were seeing growth once again.