Crown's Asia Pullback Risks Choking the Flow of Overseas Visitors to CasinosBy and
Crown appears to have closed eight offices across Asia
Overseas visitors drum up more than third of domestic revenue
Crown Resorts Ltd.’s apparent dismantling of its Asian office network threatens to choke the flow of overseas visitors to the company’s Australian casinos and a planned $1.5 billion flagship resort in Sydney.
Crown’s offices in eight Asian countries from Macau to Indonesia which helped attract gamblers in the region to its resorts in Australia appear to have closed. Staff who were detained in China in October are due to appear next week in a Shanghai court on charges related to promoting gambling, and billionaire James Packer’s company now lists Hong Kong as its sole international outpost.
Crown has already suspended marketing in China and the company has sold out of a Macau venture to focus on Australia. But with consumer spending at home under pressure and contributions to Crown from overseas visitors in focus, the apparent closure of its Asian premises has confounded some industry observers.
“It doesn’t make sense,” said Ben Lee, Macau-based managing partner at Asian gaming consultancy IGamiX. “They’ve shut their Southeast Asian offices, which were never at risk, and they’ve kept only one office open, which happens to be China-facing.”
Crown shares have lost 2.3 percent since its workers were detained on the mainland in October, trailing a 5 percent gain on Australia’s benchmark index through Thursday.
Asked to respond to how the closure of offshore offices would impede Crown’s ability to attract high rollers to Australia, the company had no specific comment. Crown said in a statement on Thursday its Sydney resort “will be a game changer for Sydney and Australian tourism.” The development will feature a hotel and luxury residential apartments when it’s completed in 2021.
“Crown Sydney’s business case remains robust with a continued strong hotel market in Sydney and the city remaining a popular destination for international travelers, including gaming customers,” Crown said. “The resort will be one of Crown’s most valuable assets.”
The company said in October that about a quarter of revenue last fiscal year came from international VIP gaming programs. High rollers from mainland China accounted for about 12 percent of total revenue and a smaller proportion of profit, it said.
About half of Crown’s high-stakes customer base is sprinkled between Singapore, Malaysia, Indonesia, Hong Kong and parts of North Asia, Crown’s new chief executive officer, John Alexander, said in February.
The importance to Crown of Asia’s big hitters calls into question the sustainability of the A$2 billion ($1.5 billion) Sydney casino focused on high-roller gamblers with Crown closing most regional marketing hubs.
“I’m not sure where they’re going to get players given that their Melbourne properties and their Perth properties are suffering a big downturn from Asia,” said Roy Wheatley, CEO of Global Consulting & Development, a gaming advisory business with offices in Australia, Singapore and Japan.
Turnover from Crown’s VIP program plummeted 45 percent in the six months ended Dec. 31 in the aftermath of the crackdown in China. Even so, Crown’s six-star waterfront resort at Barangaroo in Sydney is targeting high-stakes gamblers because it’s not licensed to operate slot machines.
CEO Alexander said in February the company was confident the project would be profitable, partly because it would also appeal to local gamblers.
Visits by Bloomberg News over the past two months to addresses of Crown offices formerly listed on the company’s website in Macau, Taiwan, Malaysia, Vietnam, Indonesia, Singapore and Thailand indicate they’re closed. In India, where Crown previously listed just a phone number and no address, the man who answered said he no longer works for Crown as its head of marketing in the country.
Previously listed phone numbers for those offices won’t connect or are answered by individuals who said they no longer represent Crown. References to all but one of Crown’s representative offices outside Australia have been removed from the company’s website, leaving just Hong Kong.
To be sure, Crown may not need physical presences across Asia. Crown could use local junket operators to contact VIPs and bring them to Melbourne and Perth, said Sudhir Kale, who has worked on projects for Crown and other large casinos as head of GamePlan Consultants in Queensland.
“You don’t really need an office in every country,” said Kale. “Hong Kong can be the Asian hub for Crown to continue exploring businesses in the region.”
Crown’s regional cutbacks come before the 19 individuals appear next week in a Shanghai court. Crown said June 13 its detained workers have been charged with offenses related to the promotion of gambling.