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Australia – VIPs hit Crown for $100m

By - 16 October 2014

Crown Resorts’ owner James Packer has revealed that his Melbourne and Perth casinos have taken a hiding from VIP customers who have won more than $100 million in less than four months.

Mr. Packer revealed to shareholders at Crown’s AGM that the high-rollers were currently enjoying a sustained period of luck at his tables. He described trading in the first 15 weeks of the year as ‘mixed at best.’

“Our VIP businesses are almost $100m below the theoretical result less than four months into the financial year due to an adverse win rate or put simply, bad luck. The punters are killing us. Despite what some people will tell you, our business is not a licence to print money, we operate in an extremely volatile industry, one that is affected by a variety of factors such as the roll of the dice or luck of the cards. Last year, we recorded strong profits, but trading so far this year has been mixed at best. We face soft consumer sentiment in Perth and Melbourne and our most recent VIP win rates at both resorts have unfortunately been poor. Our VIP businesses are almost $100m below the theoretical result less than four months into the financial year due to an adverse win rate or put simply, bad luck. Recent trading in Macau has been difficult, negatively impacted by regulatory changes around smoking and the government crackdown on corruption in China, a crackdown that we give our 100 per cent support to and believe will secure the long term future of the industry there.”

Mr Packer defended Crown’s latest foray into Las Vegas.

“I have made a lot of mistakes in my life but one thing I try not to do is make the same mistake twice,” Mr Packer explained. “We’ve got an absolute world-class management team in Las Vegas this time. Crown has acquired a 34.6 acre site on Las Vegas Boulevard, which was formerly occupied by the New Frontier casino. The development plans for the site, which will be unique, and the capital structure of the ownership entity are not yet finalised. However, it is expected that Crown will have majority ownership and Crown’s total equity investment will be approximately US$400m to US$500m with a total project budget of approximately US$1.6bn to US$1.9bn. Crown believes there are extensive opportunities to expand our customer base in a city that is still regarded as the home of gaming and which is benefiting from strong flows of domestic and Asian tourism.

“It shouldn’t matter whether you are visiting Crown in Perth, Melbourne or Macau, the experience should be similar – memorable and truly world class,” he added. “We want our guests to escape the hustle and bustle of their everyday lives and feel like they are coming to somewhere exquisite, somewhere special, where they can just relax and have fun. These memorable experiences are why we are successful in attracting so many international visitors to come back and visit our resorts time and time again.”
Chief Executive of Crown, Rowen Craigie, said that ‘local trading continues to be impacted by the general softness in consumer sentiment.’

“Overall, the results for Crown’s wholly-owned Australian casinos, Crown Melbourne and Crown Perth, were satisfactory,” explained. “We experienced improved trading in the second half in Australia, however we continued to see weak consumer sentiment that adversely impacted trading at both Crown Melbourne and Crown Perth and which reflects the fact that their local economies are continuing to experience structural and cyclical challenges. Market conditions across Macau did weaken during the fourth quarter. While revenue from the main gaming floor and non-gaming operations rose 2 per cent in the period, turnover from Crown’s domestic high-roller punters was flat compared to the previous corresponding period. The results from our Macau joint venture, Melco Crown Entertainment, were solid and were driven primarily by mass market table games business at City of Dreams.”

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