Crown Resorts has posted its first set of financial results since the arrest of 18 staff members in China sent its VIP marketing strategy there into disarray.
Its VIP business was expected to be down, naturally, but a 45.3 revenue percent plunge on the previous half-year emphasizes just how much the Chinese high-roller segment has dried up for the casino giant. The poor showing from Chinese whales in the the first half-year dragged overall profits down by 9.1 percent.
Crown’s Executive Chairman John Alexander was remaining upbeat, however. “We already operate in other South-East Asian markets,” he said. “Mainland China only represents half of the VIP customers base and we are just paused, in one sense, and once we have clarity about how to move forward, we will.
“We’re in a different situation now … because of what happened in China and we’re waiting to see how that plays out before we resume traditional marketing in the region. We’re in a holding pattern.”
Curiously, Alexander said that “14” of its staff remained in custody in Shanghai, having been arrested in October on suspicion of gambling crimes. The original quota was 18, with just one employee, an administrator, known to have been released. Alexander did not elaborate on the anomaly.
The sudden evaporation of a vital revenue stream has not only caused Crown to cut its investment exposure to China through the sale of $1.5 billion worth of shares of its Melco-Crown operations in Macau, but it also prompted talk on Thursday of an “efficiency drive” which will likely lead to job losses domestically.
That extends to the board too, which has seen heads roll since the Chinese detentions. First to go was Rob Rankin, who was replaced by Alexander as chairman, although he remains on the board. On Thursday it was announced that Alexander, a James Packer stalwart, would also be replacing Rowen Craigie as CEO next week. Packer has also rejoined the board.
Crown Sydney “Not Affected”
On Thursday, Alexander insisted that neither the efficiency drive nor the uncertainty surrounding marketing to Chinese VIP’s would effect the six-star Crown Sydney, currently under construction in Barangaroo and scheduled to open in 2021.
This, despite the fact that it was conceived for precisely the kind of VIP gambler that is in such short supply in Australia at the moment.
“It would be wrong to see Barangaroo as solely as a VIP property … we believe it will be very attractive to the local market, the local VIP market, which is quite strong and growing,” Mr Alexander said.
He declined to mention whether the plan to have no pokies whatsoever and a front desk staffed with employees fluent in Mandarin will remain intact.