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Australia – The Star looks to blow Crown out of the water

By - 24 June 2013

Echo Entertainment is looking to scupper Crown’s plans for a VIP, six star casino resort in the Barangaroo area of Sydney with the launch of its own plans for Australia’s first ‘Connected Integrated Resort.’

Group Chairman John O’Neill and CEO John Redmond said that Echo’s expansion plans for its existing The Star would require a total investment spend of more than $1.1bn with 93 per cent in non-gaming, tourism related infrastructure. Echo said it would pay $250m to the NSW Government for the extended licence.

Approval of the project would see the development of two new international hotels, a six star and a five star, with more than 500 new rooms: bringing the total number of rooms at The Star to 1,150.

Mr. O’Neill and Mr. Redmond unveiled details of Echo’s Detailed Proposal which was formally submitted to the NSW Government through its unsolicited proposal process on Friday afternoon.

“The proposal we are unveiling today is visionary, transformational and we believe would create the world’s best Integrated Resort right here in downtown Sydney,” Mr O’Neill said. “This is a pivotal moment. What we are proposing is a real game-changer for the city and the State that will help deliver the Premier’s ambition to make NSW number one again. If approved, our plans will complete Sydney’s new feature precinct, integrating Barangaroo, Darling Harbour and Pyrmont and contribute greatly towards the ambitious goals set by the NSW Government which aim to double overnight visitor expenditure to NSW by 2020. Our proposal complements the NSW Government’s vision for a revitalised Pyrmont and Darling Harbour precinct and will simplify transport options for millions of Sydneysider trips each year. Importantly, the people of Sydney and NSW will also benefit if our proposal is approved.”

It would boast more than 50 world-class restaurants and bars, including over 20 brand new experiences and contribute $130m to community infrastructure including the “City Link” pedestrian/cycle bridge and an upgraded light rail station to transform transport options for 10 million Sydneysider trips a year.

Echo envisages an increase of 330,000 international and interstate visitors per year, or a 1.2 per cent increase to current overall NSW international and interstate visitor arrivals, increasing the total number of estimated annual visits to The Star by international and interstate guests to over 2,000,000 by 2025. This would lead to an estimated  incremental tax contribution of around $1bn to the Government across the proposed extended exclusivity period.

Mr. Redmond said that Echo’s plans would further improve upon the benefits The Star already provides to NSW.

“Since 1995, The Star is estimated to have already contributed around $4 billion in taxes, licence fees and other charges to the NSW Government, and GST to the Commonwealth Government,” Mr Redmond said. “As part of our plans today, we are giving the NSW Government the option of exclusivity payments totalling $250m and a further tax contribution of $1bn for the duration of the extended exclusivity. We are already one of the largest single site employers in Sydney and once our expansion plans are completed, The Star will be providing jobs for more than 5,750 people.

“We are home to The Darling, which is the only new five star hotel built in Sydney since the 2000 Olympics. We will further add to this by building two brand new hotels which will mean The Star will be home to a total of 1,150 hotel rooms for tourists.The Star is already one of the leading tourist destinations in Sydney and NSW but our plans are expected to attract an additional 330,000 international and interstate visitors per year.

“I have been in this business all my life and there is not an Integrated Resort anywhere in the world with a better location than The Star, and the opportunity to build a complex of this scale and on such a site should be a huge magnet to overseas visitors wanting to visit Sydney.

“This project will make The Star a $3bn ‘downtown’ resort – in the heart of Australia’s global city – on the shores of the world’s greatest harbour. We are aiming higher for Sydney while our rival has to have a bet each way. We believe our plans will be compelling for both the NSW Government and the residents of Sydney,” Mr Redmond said.
Echo considers the optimal outcome for Sydney is the continued existing industry structure in NSW ,and across all Australian capitals, of full exclusivity, allowing for one licensed casino operator. However Echo also shares the NSW Government’s enthusiasm for the development of Barangaroo, and supports the inclusion of a six star hotel as a feature to help underpin the success of such an important state project.

Echo has provided an alternative option within its proposal to the NSW Government that does allow for earlier certainty of such a development at Barangaroo, through Crown Limited’s proposed six-star hotel. This accommodation would be on the proviso that the gaming facilities proposed as part of the current Crown plan are strictly table games, VIP-only, as Crown originally proposed and in line with the globally accepted meaning and current regulatory framework applying to Echo around VIP (that is international and interstate “rebate”) gaming.

With some fragmentation of the gaming market under this scenario, Echo would not make a cash payment for extending exclusivity arrangements, but would remain committed to its proposed development investment.

Mr. O’Neill said: “Echo is still able to commit to such an investment because the primary focus is enhancing Sydney as a destination for a greater numbers of Asian tourists, and that tourist market is forecast to grow rapidly. While Echo is confident that our proposed development plus licence exclusivity payment provides the most impactful solution, this alternative may be seen as a potential win-win scenario for the people of Sydney, with a combined infrastructure and tourism spend potentially in excess of $2bn.”

 

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