Australian casinos could see an upturn in VIP revenue over the next three years according to investment analysts at Morgan Stanley.
Despite both Crown Resorts and Star Entertainment reporting losses from their high roller divisions this year, analysts believe a change is on the horizon.
Following the publication of financial reviews from Australia’s leading casino companies, Morgan Stanley’s experts expect growth of between 9 and 14 percent in 2017.
Improvements in China Set to Help Aussie Casinos
Citing improving market conditions in China as the main driver, the recent report notes that Australia is a strong position to capitalise on the changes. As well as China’s housing market showing signs of improvement, junket operations are starting to see more VIPs taking up their hospitality packages and returning to the tables.
Another factor raising expectations is the increased rate of acceptance for Chinese visa applications. With more residents able to travel, Australia should see an upswing in the number of VIPs making the relatively short flight to cities such as Melbourne and Sydney.
The prediction by Morgan Stanley will come as welcome news for the leading gaming brands in Australia, not least Crown. Following the arrest and imprisonment of 19 Crown employees working in China, James Packer moved to reduce his company’s focus on external operations.
Along with the arrests in China, falling revenue has forced Packer to close ranks and divert company funds to Crown Casino Melbourne and its new project in Barangaroo, Sydney.
Packer’s Crown Perfectly Placed for VIP Market
The Barangaroo project, known as Crown Sydney, will attempt to corner the VIP market when it’s completed in 2021. Although executives for the casino brand have stressed that it won’t be a “VIP-restricted gaming facility,” table stakes are set start at $30, which is more than the average casual player is used to spending.
Beyond the gaming floor, Crown Sydney will boast a six-star hotel, luxury retail outlets, signature restaurants and more. Although it has been dogged by planning issues, objections and financial troubles, Morgan Stanley’s predictions should give the company a renewed zest for the project.
Indeed, with projections suggesting the VIP market could improve by as much as 20 percent by 2020, it seems Packer’s decision to concentrate on the Aussie market may just payoff in the long-run.