Sky City Says Revenue From World Cup Was Less Than Expected
Sky City Entertainment Group Ltd. (SKC), New Zealand’s largest casino operator, said the Rugby World Cup boosted sales less than had been expected as regular customers stayed away during the early stages of the tournament.
Group normalized revenue rose NZ$26.5 million or 8.8 percent to NZ$325.8 million ($253 million) in the four months ended Oct. 31, the Auckland-based company said in a statement. About NZ$12 million of the increase was attributable to the rugby tournament held in New Zealand from Sept. 9 to Oct. 23.
Sky City invested NZ$50 million this year adding bars, restaurants and gaming rooms for tourists and high-net worth visitors to its Auckland site, which includes two hotels as well as its biggest casino. The World Cup was expected to attract 95,000 foreign fans over a six week period, many of whom visited Auckland, which hosted six playoff games including the final.
“The NZ$12 million is disappointing,” Chief Financial Officer James Burrell said in an interview today. “Probably where we were more disappointed was on the amount of local business in the first three weeks.”
Sky City shares rose 1.2 percent to NZ$3.47 at 4 p.m. in Wellington trading, after earlier falling as much as 1.8 percent.
The rugby-related revenue was primarily earned at hotels, bars and restaurants, while there was a “modest net gaming uplift over the tournament,” the company said. Burrell declined to say what revenue increase the company had expected.
Auckland gaming machine revenue rose 18 percent in the four months through October while table revenue fell 6.5 percent, the company said. Auckland hospitality revenue surged 30 percent.
Local customers stayed away in the first half of the tournament because they were concerned about traffic, or the complex being too busy, Burrell said.
“It did keep some of our core gaming customers away,” he said. “We saw the real pickup from the quarterfinals onwards. That for us was a great period. The bars were busy.”
Local customers may have been investing more in tickets and going to the games, “and there is only so much discretionary income that some of our customers have,” he said.
Also foreign visitors tended to leave Auckland in the period between games early in the tournament, while the regular company and convention business coming into the city was lacking, he said.
The company’s investment in new gaming space will encourage more international high-net-worth gamblers, Chief Executive Officer Nigel Morrison said in the statement.
“Whilst the impact of the Rugby World Cup was less than expected, we believe the continued momentum in our core business will deliver more value to shareholders,” he said.
Still, the timing of an economic recovery in New Zealand “remains somewhat uncertain” and discretionary spending is also weaker in Australia, where the company has casinos in Adelaide and Darwin, he said.
Sky City expects full year normalized net income will rise to at least NZ$140 million from NZ$130.9 million a year earlier.
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