Supplier News

Australia- Concern over falling revenues and Echo investment

By Phil - 8 November 2013

Echo Entertainment has released its A$1.5bn blueprint for the renovation of its Queensland casinos, a move that immediately saw  its share price fall based on investor concerns over the scope of the investment and warnings of underperformance this year.

Having been piped at the post in Sydney where Crown Resorts won the first round of approvals to develop a VIP casino resort in Barangaroo, Echo chairman John O’Neil said the company has now focussed its attention on its Queensland properties.

“Our attention is now firmly on Queensland,” he said.

Echo has will renovate its Jupiters Hotel and Casino on the Gold Coast and build a new casino in Brisbane to replace its existing Treasury Casino. The Jupiters project will include a six-star hotel to attract international high rollers, while the heritage-listed Treasury building will be turned into a luxury hotel.

Chief executive John Redmond said the proposed redevelopment and new casino could come at a total cost of more than $1.5 billion.

“We see significant growth opportunities for the company in both Brisbane and the Gold Coast,” he said. “We are extremely excited about the opportunity before us in Brisbane, and see this as a once in a lifetime opportunity and a very substantial opportunity for the shareholders of Echo Entertainment Group. While the recent performance of the Jupiters Townsville has been positive the size and breadth of the appeal of the Townsville market means a more limited opportunity for the creation of a large scale integrated resort. To date no decision has been made and a transaction would only take place if appropriate value is generated.”

However with revenue for the four months to the end of October down by 3.5 per cent and earnings showing just ‘marginal growth,’ shares in Echo fell 6.7 per cent to A$2.38.