Supplier News
Australia – Echo signals Queensland expansion as results hold group back
By Phil - 22 August 2013
Australian operator Echo Entertainment wants to improve its gaming offer in Queensland to better compete for VIP high rollers from Asia.
Having seen its Queensland casinos hold its revenues back in fiscal 2013, Echo has already started talks with Queensland’s government about relocating its Brisbane licence and has proposed a redevelopment of its Jupiters casino.
Chief Executive Officer John Redmond said the properties in Brisbane, the Gold Coast and Townsville, weren’t big enough to attract overseas players.
“We don’t have a compelling enough offering to attract people,” he said. “You need to build or develop something at a scale that allows you to compete with the rest of the world.”
Revenue from Echo’s Queensland casinos dropped by 3.3 per cent in the year ended June due to weak consumer interest.
VIP play slipped by 19 per cent to A$1.88bn, illustrating Mr. Redmond’s viewpoint that they weren’t capable of taking on the all-powerful Integrated Resort Casino models of Singapore.
“The Queensland properties will not reach their potential until further significant investment is made,” he added. “While recent trading has been challenging in Queensland, we remain committed, positive and engaged on the underlying potential of these assets and share the Newman Government’s vision for tourism and the opportunity that segment provides for the medium term growth profile of our assets. We have a wonderful opportunity to be at the forefront of that tourism push and we continue to work collaboratively with the Government to help develop those plans as a holistic approach for South East Queensland.”
The comments came as Echo posted an impressive increase in revenues of 17.5 per cent at The Star in Sydney where due to its improved product offering.
Chairman John O’Neill said: “FY2013 was a challenging year for Echo but one in which a relatively new company achieved a great deal to position itself for future earnings growth. The expansion project at The Star that was started in 2007 was completed on budget in January 2013, with the Event Centre as the last piece in the transformation of The Star into a world class integrated resort complex befitting of its location on Sydney Harbour. The quality result in our VIP business shows that these investments are starting to deliver.”
That will be challenged though by any decision to let james Packer’s Crown develop a six star casino hotel at Barangaroo, which won a government vote ahead of further expansion of The Star.
Mr. O’Neill said: “The outcome of the Unsolicited Proposal put to the NSW Government by Echo to further develop The Star was disappointing, however the benefits of being the incumbent sole casino operator for at least another six years should not be under-estimated and we have a sharp focus on optimising that position to make sure we are a strong and effective competitor beyond 2020.
“We continue to have productive discussions with the Queensland Government around a potential relocation of the Treasury Brisbane casino and further investment in Jupiters Gold Coast, which Echo believes will be positive investments for both Queensland and Echo’s shareholders.
Mr. Redmond, added: “The focus for FY14 is to drive improved top line momentum across all of Echo’s properties. With the cost optimisation program now largely complete and new group loyalty program launched, Echo has the right platform from which to drive consistent and continued improvement in the operational performance of the assets, and a stronger return on investment at The Star. The Queensland properties experienced soft revenue trends in FY13. The modernisation of the regulatory environment for electronic gaming machines should help provide some revenue momentum in FY14 despite the poor general macro-economic conditions in our core markets.”
