Crown Limited AGM: Rev Up 6%, Hit By Singapore

Written by:
Greg Tingle
Published on:

G'day punters, casino and gambling millionaires and billionaires, poker nuts, politicians, super whales, journalists, ... one and all. Today we have the run down from Crown Limited's annual general meeting that took place in Perth, West Australia. Media Man and Gambling911 report from beautiful Perth...

What a huge 24 hours its been for our friends at Crown Casino.  Earlier today the Crown Limited AGM was held, Crown Casino remaining the Aussie crown in the jewel, and tonight Crown Casino hosts the Sports Performer Awards. Drinks have been flowing all around, and the pokies have been happily singing along. Cleopatra and Queen Of The Nile never sounded so good, and Shane Warne's positive impact and buzz has been bouncing off the walls and is on the tip of everyone tongue.

Crown powers that be tell us revenue from its Australian casino and hotel operations since the commencement of the financial year are up on the same period in 2009, so that's the good news. We'll give you the bad new later.

The combined gaming revenue from Crown Casino in Melbourne and and Burswood Entertainment Complex in Perth between July 1 and November 24 was up roughly 6%, chief executive Rowen Craigie told the gathering.

Craigie was speaking at the group's annual general meeting in Perth, Western Australia, earlier.

Non-gaming revenue in the same period was up by roughly 5% on the same period last year, not including the impact of the newly opened Crown Metropol hotel, pretty much next door to Crown Casino.

Including the Metropol, non-gaming revenue was up a modest 13% on the previous corresponding period, Craigie advised.

The Singapore Effect...

Ok, so overall Crown Limited is still one of the strongest gaming and gambling companies on the planet.

Crown has spent more than $1 billion over the past 4 years, and is to spend another $800 million to update and expand its facilities over the next few years.

Competitors, Tabcorp, is in the midst of its own redevelopment of Star City which, with the cost of the extra licence payment to the New South Wales government to make way for the work, represents about $1 billion of capital expenditures. That redevelopment is understood to be a key factor in the proposed de-merger of Tabcorp’s casino and other gambling interests. Getting ready for Packer in a few years maybe?

A key factor for both firms investing so much in their casinos was a goal to protect and expand their VIP customer bases, while they face stiff competition from the new casinos in Macau and, more recently, the 2 new "complexes"...Crown refers to them as "integrated resorts" Singapore. Star has wrestled to attract a reasonable share of VIP revenues, but maybe the tide will soon turn.

Crown had been pretty cool, no fussed about the 2 new Singapore resorts, based on its experience of the opening of the Macau casino resorts. Despite compound annual growth of 34.7% in Macau’s gaming revenues since the last quarter of 2005, Crown and Burswood have been pretty much unaffected, but who really knows what is around the corner.

It had initially appeared that the explosion of gambling capacity in Macau...there has been more than $17 billion spent on building the Macau complexes – was actually benefiting Crown by significantly expanding the pool of VIPs in the region. Crown was optimistic the opening of the Singapore resorts earlier this year would have a similar impact, but the jury is out for the moment.

It could well be too early for that sort of effect to show up...the Singapore casinos, which opened in January and April, would still be fresh an in their honeymoon period, like a new bride.

Packer and Craigie are understood to be concerned that those complexes are hurting Crown’s VIP visits and volumes.

Packer made noise of the government support the Macau and Singapore complexes receive, both the supporting infrastructure and promotional activities, because of their perceived capacity to help stimulate tourism. Tourism growth in Singapore is up 22% this year and Singapore has set a target of increasing tourism numbers from a modest 9 million visitors to 17 million by 2015, Crown says. Some segments of the Australian news media were keen to dismiss the tourism aspect of land based casinos, but now most newsrooms have come to their senses, despite the still odd media "beat up" on casinos, gambling and all that.

Crown is calling on the federal and state governments, the tourism industry and Asian-focused tourism operators to work more closely to lift Australia’s stagnating tourist numbers.

Despite Crown’s claimed status as the largest non-airline tourism operator, it is unlikely at this stage of the game it will get any direct government assistance in the current political climate, particularly given the anti-gambling stance taken by at least two of the independents in Canberra.

The strong Aussie dollar, the depressed state of the local industry and the increased regional competition for high net worth tourists, however, means there out to be an increased focus and spending on tourism generally.

Regaining its share of the international VIP market is critical to Crown Limited. So is increasing its 16% share of VIP revenues is crucial to Tabcorp’s casino strategy and massive investment. Crown estimates more than 35% of its revenue...more than $850 million a year...comes from international visitors. Don't even get us started on "funny money"... you know, the allegations of money laundering and "cleaning" of money via Crown (and pub) pokies.

Bad News...

Ok, the bad news.  He said turnover from VIP high roller punters aka "whales" at the Melbourne and Burswood casinos in the first 21 weeks of the financial year was down 10% on the same period last year, which is enough to raise some concern, especially when one joins the dots and analyses the likely cause, and its not just the global financial crisis, or crunch, if your prefer.

"We are continuing to see an impact from the opening of the two new integrated resorts in Singapore and are yet to capitalise on the opportunity to capture the new business that Singapore potentially offers," Craigie said reading off his notes.

Good News...

The Metropol Hotel, which opened last April, was achieving better than expected occupancy rates and room rates were "firming'', he disclosed.

Melco Crown Entertainment, Crown holding a 33.5% stake, has disclosed a "broad-based improvement" in the performance of its champion resort City of Dreams, Macau, the meeting was made aware.

In some much needed good news, Melco reported improved revenue and earnings in the 3 months to September 30 compared with the same period last year, Craigie said.

Crown Limited shares finished off down 3 cents at $8.21.

Readers... er, punters, how did you like our report? Tell us in the forum. 

If you have a bet, please bet with your head, not over it, and for God's sake, have fun.

*Greg Tingle is a special contributor for Gambling911

*Media Man is primarily a media, publicity and internet portal development company. They cover a dozen industry sectors including gaming and offer political commentary and analysis.

*The writer owns shares in Crown Limited

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