Australia – Gold Coast not big enough for second resort casinoBy Phil - 23 November 2018
Analytical group Macquarie Research does not believe that Australia’s Gold Coast is big enough for another casino.
Caesars Entertainment and Hard Rock have recently been linked with a resort casino on the Gold Coast whilst existing operator Star Entertainment has recently gained approval from the Queensland Government for a $2bn master plan to transform The Star Gold Coast into the biggest hotel in Australia with an overhaul that would see it offer more hotel rooms than the world-renowned Marina Bay Sands in Singapore offers, and be on a scale similar to the largest integrated resorts in Las Vegas. Five new hotel towers would bring 3,000 new hotel rooms.
Macquarie’s David Fabris and Andy Chuk believe that other locations in Australia would be more attractive than the Gold Coast, highlighting that at AU$616m so far in 2018, Gold Coast gaming revenues don’t offer enough growth for another operator. The Star Gold Coast currently generates 45 per cent of the region’s gaming revenues.
Macquarie said: “We see challenges generating an appropriate return on a development larger than A$400m, which compares to media speculation of around A$2bn. The Gold Coast is not the most attractive market for a new integrated resort and casino, in our view, relative to other regions within Australia. Given the market structure, a new competitor would be arguably challenged to expand the domestic market with an investment case most likely based on taking significant domestic market share from the incumbents.
“With a decision up to the Queensland Government, they will need to assess the net community benefits and determine whether it deters The Star Gold Coast from completing its recently approved A$2bn master plan,” it added. “The net community benefits and determine whether [a second integrated resort] deters The Star Gold Coast from completing its recently approved A$2bn masterplan.”
A spokesperson at Star Entertainment hinted that any extra competition could derail their own investment.
“Our position is also well known. We are excited by the approval of our A$2bn-plus expanded masterplan for The Star Gold Coast. We have been consistent saying each stage of the masterplan will be dependent on the market and competitor landscape at the time. We are informed by government there is no process under way.”