Australian Casinos Optimistic About Foreign High-Rollers Coming Back
VIP gamblers or high-rollers are said to contribute the majority of all revenues that a casino makes. Casinos across the world have paid special attention to Asian high rollers as they are known to spend millions at the casino tables.
The Australian casino industry has depended heavily on foreign high rollers for a number of years but the trouble for Australia’s top casinos is that the Asian high-rollers are no longer flocking to casinos down under.
This is mostly because of trade concerns as China’s economy slows down. However, with the potential of economic recovery, Australian casino operators are optimistic about the return of these wealthy gamblers.
A Dent in Profits
Australian casinos like the Crown Resorts have been reporting a sharp drop in super-rich Chinese tourists who spend huge sums of money. As a result, Crown Resorts is also witnessing a dip in their revenues. It’s not just Australian casinos that are reporting a drop but also Macau’s casinos which is a prime destination of many Chinese VIP gamblers.
However, analysts from Macquarie Wealth Management think that the market is set to reverse its fortunes as China’s economy recovers. This will hopefully lead to increased VIP confidence which will drive up VIP attendance and spending at the casinos.
In a statement, the Macquarie analysts said
We now include a VIP recovery in financial year 2020. While we remain cautious on second-half 2019 VIP volumes, with our view that Macau VIP bottoms in the June 2019 quarter, we are optimistic and now forecast a recovery.
Despite the confidence from gaming analysts, the numbers show that a lot of the high-rollers of yesteryear are showing a lot of restraint. Crown Resorts has revealed data to its investors that its VIP program dropped by 12.2 percent bringing in revenues of $19.9 billion which looks good but in reality is a lot lower than it was six months ago.
Star Entertainment the biggest rival to Crown Resorts is also showing a drop in its VIP gambling numbers. Data shows a 33 percent drop in the last six months, with its Sydney casino seeing a 49 percent drop in VIP attendance.
Star Entertainment’s investors don’t have to worry though. The company is still pretty strong despite the hit to its profits as Start has casinos in Sydney, Brisbane, and the Gold Coast. Star Entertainment is less reliant on foreign VIP revenue as it focuses on the domestic market which brings in about 80 percent of its earnings.
Crown Resorts on the other hand is very dependent on foreign high rollers. The casino operator is currently developing its Barangaroo casino in Sydney’s harbourside. With an opening scheduled for 2021, it might be in trouble if the predicted return of high-rollers doesn’t come true.