Casinos operator Crown Resorts says its Perth casino is feeling the pinch after the end of the mining boom and has called for more attention on tourism from the West Australian government to help lift performance.
The James Packer-controlled Crown also saw a welcome improvement in its international VIP gambling business at its Melbourne casino, but overall conditions have been challenging at the Melbourne and Perth properties.
Crown’s profit fell 33.2 per cent to $238.6 million for the six months to December 31, partly pulled back by a cut to earnings from the company’s exit from the Melco Resorts and Entertainment business in Macau.
But a year after Crown’s VIP gambling business took a big hit from the detention in late 2016 of Crown employees in China over alleged gambling offences, Crown executive chairman John Alexander described the 16 per cent improvement in VIP turnover to $22.6 billion, including a 37.5 per cent lift in Melbourne, as “a pleasing outcome”.
Excluding one-off items and variations in the win rate against high-rolling gamblers, Crown’s profit rose 0.6 per cent to $192.4 million.
“We’ve had a strong recovery in the Melbourne VIP business, partly offset by some weakness particularly on the main gaming floor in Perth, and that’s obviously a reflection of what we’ve seen in the economy over there (in Western Australia),” Crown chief financial officer Ken Barton said on Thursday.
Revenue from the main gaming floor at the Perth casino in the first half of fiscal 2018 fell 3.3 per cent, and turnover in the VIP high-roller business at Perth dropped 41 per cent to $3.2 billion.
Mr Alexander said the performance of the Perth casino resort would improve if the Western Australian government took more steps to boost tourism and if more direct flights from Europe and north Asia went directly to Perth.
The new football stadium in Perth should boost activity at the Perth casino as would the recently completed Crown Towers luxury hotel, which Mr Alexander described as the best hotel in the country.
“It’s going to be slow, hard yards, but we collectively believe that Perth has bottomed out,” Mr Alexander said.
Mr Barton said it was always challenging to attract VIP gamblers to the Perth property because of Perth’s remoteness and because the casino had a more laid-back, resort-like feel compared to the grand scale and glitz of casinos in Macau.
Mr Alexander said the lift in the VIP business at the Melbourne casino reflected a lift in junkets – organised visits by wealthy gamblers that guarantee revenue for the casinos in return for perks – coming out of China, even though Crown hasn’t had a marketing team in China since the detention of the Crown employees there.
Mr Barton said the VIP market globally was stronger than people expected although Crown is still significantly down on where its peak market share was in 2015.
Crown shares rose 55 cents, or 4.4 per cent, to $13.05 on Thursday.
VIP GAMBLERS RETURN FOR CROWN, BUT PERTH CASINO HURTING
* Net profit down 33.6pct to $238.6m
* Revenue up 1.4 per cent to $1.8 billion
* Interim dividend 30 cents, 60pct franked. Down from $1.13 previously