Aug. 19 (Bloomberg) -- Australians once rioted against Chinese migrants attracted by a 19th-century gold rush. Sydney’s sole casino now depends on the city’s Asian ties for high-rollers who provide almost a third of its sales.
Echo Entertainment Group Ltd. is considering buying a golf course for a resort south of Brisbane, Chief Executive Officer Matt Bekier said in a phone interview, to entice Chinese gamblers who’ve driven a fourfold jump in Macau’s casino revenue over the last six years. Billionaire James Packer’s Crown Resorts Ltd. has spent $100 million upgrading its fleet of private jets for the same reason.
“For people to fly to Sydney from Macau, they’re flying over some pretty attractive casinos along the way and they wouldn’t make the trip if there wasn’t something unique here,” Bekier said in the interview last week after the company posted a 25 percent jump in annual profit. “At least a third to a half of them have connections here.”
Australian companies are looking to tap rising Chinese consumer spending as Beijing winds down an investment boom that spurred a surge in commodity exports following the 2008 financial crisis. China’s shift toward consumption offers new opportunities for Australia to benefit from its biggest trading partner, Trade Minister Andrew Robb said in March.
Revenue at Echo’s international VIP rebate business, which lures overseas gamblers prepared to bet large sums with the promise of free hotel rooms, food, drink and transport, more than tripled in the four years through June to A$397 million ($370 million), the company said Aug. 13.
High-stakes bettors accounted for about two-thirds of $45 billion casino revenue last year in Macau, the world’s largest gambling hub and the only Chinese city where casino gaming is legal.
The A$389 million in VIP sales at Echo’s Star casino on the shores of Sydney Harbour was 30 percent of the site’s A$1.28 billion gross revenue, according to a company presentation.
Crown, Australia’s largest casino company, rose the most in almost a year in Sydney trading on Aug. 14 after the company posted a 53 percent jump in second-half VIP revenue. The stock climbed 1.8 percent to A$15.98 today, the highest level since Aug. 1, while Echo gained 0.6 percent to A$3.20.
“The challenge remains to get the players to Australia,” chief executive Rowen Craigie said on an investor call.
Crown spent $100 million last fiscal year buying three Bombardier Inc. jets to replace its fleet of Gulfstream private aircraft for ferrying Asian VIP customers, the Melbourne-based company said in a presentation last week. It’s also building a new high-roller casino on the shores of Sydney Harbour close to Echo’s Star, due to open in 2019.
“They’re overflying, effectively, Macau, Singapore; they’re turning down Vegas to get to Australia,” Craigie said on the conference call. “The first challenge is -- how do you get them to fly to the most distant market where they’re all playing the same game, which is high-stakes baccarat?”
Echo’s VIP gamblers, who wagered an estimated A$29.1 billion in the year to June, frequently have family or business links that make Australia a more attractive destination, Bekier said. The company’s VIP revenue represents only the proportion of bets won by the house, which was 1.45 percent last year.
“If I look at the customers that come to Sydney, they very often have other reasons” for visiting the city, he said.
People claiming Chinese ancestry made up 4.3 percent of the population in Australia’s 2011 census, more than double the proportion with Indian or Greek roots.
The 103,100 Chinese tourists who arrived during the lunar New Year month of February was more than double the 42,600 who came during the whole of 1995.
Chinese buyers overtook Americans to become the biggest overseas investors in Australia’s property market in the 12 months ended June 2013, according to federal government data.
In Queensland state’s capital Brisbane, Echo is working with Hong Kong’s Chow Tai Fook Enterprises Ltd., owner of the world’s largest listed jeweler, and property developer Far East Consortium International Ltd. on plans to build a new casino resort.
It’s also spending as much as A$280 million in the coming year on upgrades, including adding Japanese and Italian restaurants to its Jupiters resort in the Gold Coast south of Brisbane, and expanding gambling rooms at Sydney’s Star.
Chinese high-rollers who’ve been to the Gold Coast site are attracted by the proximity to the sea and the city’s golf greens, and Echo would consider owning its own golf course to attract them, Bekier said.
“What we’re trying to do is have another proposition that’s equally unique,” he said. “A six-star resort at the beach.”
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