Australia: Star presents multibillion-dollar projects to stop 2nd Gold Coast casino

Star Entertainment Group has unveiled a multibillion-dollar 'master plan' to develop assets on the Gold Coast in a bid to convince the Queensland government to abandon plans for a second casino in the city.

The development pitch comes as the casino giant awaits a decision from an independent panel on a proposed 237-metre tower at its casino complex in Sydney's Pyrmont which has been opposed by the NSW (New South Wales) planning department, as reported by The Sydney Morning Herald.

The three-pronged proposal, outlined at the group's annual general meeting in Brisbane on Thursday, involves a $100 million revamp of the Gold Coast Convention and Exhibition Centre which is built on state-owned land but would be operated by Star. Star could be able to enter an exclusive arrangement with the Queensland government, which earlier this year called for registrations of interest in developing a global tourism hub and a second casino on the Gold Coast.

Star Chairman John O'Neill told the meeting the group was also contractually committed to completing its $2 billion Broadbeach Island master plan, which includes five additional towers on top of the existing The Star Grand and The Darling. The first tower – the Dorsett Hotel – is already under construction, while the second tower is in the pre-sales stage, though the remaining towers aren’t currently guaranteed. It’s been revealed that early plans for Tower 5 could include a five-star hotel and potentially a Sky Park tourism playground incorporating adventure, entertainment and luxury dining attractions, according to myGC.

Star also plans a major revamp of its Sheraton Grand Mirage resort which is on the Gold Coast's Southport Spit. When completed, The Star along with these developments would boast more than nine billion dollars worth of tourism assets in south-east Queensland, and put The Star Gold Coast in a position to contest the world’s biggest and best integrated resorts.

"The Star’s position has always been – we support investment in tourism assets on the Gold Coast – but the Gold Coast market is too small for two casinos," O'Neill said. "We are not alone in this assessment of the market. The introduction of another local casino competitor would force us to defend our local market share at the expense of driving incremental growth in interstate and international tourism."

O'Neill said the debate over a second casino on the Gold Coast had been a been a distraction for seven years and "yielded nothing but considerable cost – tens of millions of dollars – to governments and is impacting our business, weighing on our share price".

The casino group's share price jumped 4.5 per cent to $4.66 after the presentation, and closed up 5.46 percent to $4.70 on Thursday. In a trading update for the September quarter released on Thursday, Star reported group revenue was up 1.5 per cent but noted "front money" – funds a gambler deposits with a casino before going to the tables to play – was flat.

According to the update, the "low actual win rate" in the first half of the 2020 year to date had negatively hit its results and Star planned to cut costs by $45 million by the end of the first half. First-half earnings before interest, tax, depreciation and amortisation (EBITDA) is expected to be between $300 million and $310 million.

In Sydney, The Star is also hoping for a positive outcome from the NSW government's Independent Planning Commission over its proposal for a new hotel tower at its Pyrmont site, to be operated by the Ritz-Carlton. After three years of going through the development application process, the initial plan was rejected on height issues.

Star Entertainment chief executive Matt Bekier said it had been a "mixed year" for the business, impacted by domestic consumer sentiment and global economic softening. "The international VIP business produced mixed results. While we delivered 10 per cent growth in unique visitation on the 2018 year, normalised revenue was down 30.7 percent on the previous corresponding period due to substantially lower spend per customer," Bekier said.

He said the statutory international VIP rebate business revenue declined at a lower rate of 17.6 percent due to a higher comparable win rate. In Melbourne, casino rival Crown Resorts noted a 46 percent fall in turnover in the VIP program at its local resorts in the first few months of the financial year at its annual general meeting Thursday. Crown shares were trading 1 percent higher in mid-afternoon trade despite the sharp drop amid large protest votes against the re-election of several board members.