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A Star is reborn

Newsdesk by Newsdesk
Thu 6 Apr 2017 at 10:56
Print Friendly, PDF & Email

By Muhammad Cohen | Editor at large

Muhammad Cohen also blogs for Forbes on gaming throughout Asia and wrote Hong Kong On Air, a novel set during the 1997 handover about TV news, love, betrayal, high finance and cheap lingerie.


Star Entertainment Group’s rebranding of Jupiters Gold Coast amid an AU$850 million upgrade is the leading edge of its expansion in Queensland and beyond as Queen’s Wharf Brisbane moves ahead and market leader Crown stumbles.

Ater a makeover amid sweeping changes across Australian gaming, Jupiters Gold Coast is now The Star Gold Coast. Number two in Australia’s estimated AU$5 billion market, The Star Entertainment Group and its China-facing partners Chow Tai Fook Enterprises and Far East Consortium are betting billions on Queensland, Australia’s top domestic tourist destination, aiming to attract more international visitors via its Gold Coast and Queen’s Wharf Brisbane projects. Star and partners are also pouring money into the Group’s flagship The Star in Sydney ahead of the arrival of market leader Crown, still reeling from the arrests of 15 employees in mainland China that continues to make waves across the industry. As it puts the finishing touches on a six-star tower on the Gold Coast, Star insists it can come out a winner without huge numbers of VIPs from mainland China.

“There’s a significant increase in supply of international tourists coming into Southeast Queensland. That’s the primary driver for developing these types of resorts,” Star Managing Director for Queensland Geoff Hogg says. Queensland attracted a record 2.6 million international visitors last year, up 10%. China led the way with 484,000 arrivals, up 21%.

“It’s your middle class travelers, booking through travel agents, using all the direct flights that come here,” Hogg explains. “We’re also seeing growth from a gaming perspective in that premium mass market and we rely very little in our development plans on the top, top end of that market.”

Conversely, GamePlan Consultants CEO Sudhir Kale, a Queensland resident, adds, “Star’s partnerships with prominent groups from Hong Kong will go a long way in attracting international tourists … but I still believe the actual number of international visitors to Queensland casinos would be a fraction of what we have been led to believe. The current reality is that every casino in Australia currently makes bulk of its revenues from locals, not tourists.”

When Conrad Jupiters opened in late 1985 it was the first casino in Queensland, the state occupying Australia’s northeastern quadrant. Along with Burswood Island Casino (now Crown Perth) which began around the same time, Jupiters was one of the few casinos outside Macau to offer a rolling chip program for VIPs, its cachet boosted by the presence of David Hilton, the grandson of Conrad Hilton and son of his successor Barron Hilton (and, yes, uncle of Paris Hilton). But when Tabcorp acquired the property in 2003, it curbed VIP play and, according to an industry source, Jupiters, “was run like a local club.”

An artist’s impression of the rejuevanted Jupiter’s on the Gold Coast

GREAT OUTDOORS

Star is completing a AU$345 million Gold Coast upgrade that began in 2015 to restore the property’s luster ahead of next April’s Commonwealth Games, an event that Star enthusiastically supports and Mr Hogg says, “will propel the Gold Coast onto the world stage,” giving Star a chance to, “showcase what’s great about the Gold Coast.”

All 596 guest rooms have been refurbished. The new six star hotel tower with 54 luxury suites measuring from 68 to 300 square meters – plus expanded gaming facilities – is due to top out this month and open late this year. Integrating the resort with the environment is a key objective of the effort, with more spaces open to the subtropical climate’s 300-plus days of blue skies and new food and beverage outlets that capitalize on local products.

“What we have here is that coastal feel, still with the sophistication of a modern integrated resort that embraces the Gold Coast surroundings,” Mr Hogg, who joined Star in 2008 after a dozen years with SkyCity in New Zealand, says. “As a group we’ve put significant investment into ensuring we provide a premium product which will in turn become a major driver in attracting vital economic benefits for the Gold Coast and Queensland tourism more generally.”

On Star’s first half earnings call in February, Managing Director and CEO Matt Bekier said the company has begun to direct more premium customers to the Gold Coast following guest room upgrades to get them familiar with the property and set the stage for return visits to the new tower.

As the tower nears completion, Star has embarked on further “transformation,” potentially adding thousands of keys to the property. Star and its Queen’s Wharf partners have obtained government approval to build a 200 meter, 4.5 star tower with 700 hotel rooms and apartments, at a cost of around AU$500 million, bringing spending on the upgrade to AU$850 million. “We simply need more rooms,” Mr Hogg says, and up to four more similar hotelapartment towers are part of a master plan for Star’s 6.7 hectare Broadbeach resort site. Star Gold Coast also has a 2,000 seat theatre and operates the government-owned Gold Coast Convention Center, linked to the resort by elevated walkway.

At The Star in Sydney, which accounts for more than 60% of company EBITDA, the partners have begun a AU$1 billion investment program that includes upgrading guest rooms and building a 400 key Ritz-Carlton that will push the property’s guest room count over 1,000. That’s happening against the backdrop of Crown Sydney’s expected opening at Barangaroo in 2021.

BEACHIN’

In January, the three-way partnership closed its AU$140 million purchase of Sheraton Mirage Gold Coast, the area’s only true beachfront hotel. “Say we’ve got a guest that is coming here looking for an urban experience in Brisbane or a Gold Coast experience, some of them will want to be right on the beachfront and therefore they can stay at the Sheraton Gold Coast as part of our offering,” Mr Hogg says. “We saw it as something that compliments our IRs.”

Tony Fung’s Aquis group, which abandoned its pursuit of a casino license for an $AU8 billion resort in Northeast Queensland but owns Casino Canberra in Australia’s capital city, had its deal to buy the 250 room Sheraton for AU$160 million unravel in 2015. Star has no plans for gaming at the hotel, but is likely to expand within the property’s four hectare boundaries. As with other partnership projects, Star contributes 50%, Chow Tai Fook and Far East Consortium each contribute 25% and they share ownership on that basis.

The projected game changer for Star and Queensland is Queen’s Wharf Brisbane, a facelift for the state capital’s central business district that includes Star’s Treasury Casino.

“Brisbane today is a small facility that primarily operates for the local market,” says Mr Hogg. “With the broader attractions, hotels, restaurants and bars, Queen’s Wharf is about broadening that product.”

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Star and partners, known as Destination Brisbane Consortium, won the bidding for the site against Crown and its mainland China partner in July 2015. The victory helped Star get its mojo back after losing its Sydney exclusive, a string of scandals involving leadership and three different chief executives in 14 months.

The government turned over the riverfront site to Destination Brisbane on 1 January and demolition work has begun with building interiors.

“From late April, they’ll start chipping away at the facades. That’s when it will become real to people working around the precinct,” Mr Hogg says, with demolition to be completed this year. “Then we start in early 2018 digging a pretty big hole and spend most of the year doing that. By the start of 2019, we’ll be ready to build.” The IR is expected to open in 2022.

An artist’s impression of the revamped Treasury in Brisbane with Ritz-Carlton on the left

UNLOCKING THE TREASURY

Star’s current Treasury Casino, with around 80 gaming tables and 1,632 machines in a heritage building, will be replaced and the building repurposed for high end retail, among 11 historic spaces being revitalized. The separate Treasury Hotel with 127 rooms in its own heritage building, along with the current 28 rooms above the casino, will become a Ritz-Carlton.

Overall, there are five new-to-Brisbane hotel brands in the project including Chow Tai Fook’s top end Rosewood brand, Far East Consortium’s Dorsett and two from Star’s stable that includes Darling and Astral, lifting the room count to 1,100. The branded hotels are the first built in Brisbane in 20 years and are key to boosting convention business, officials say. In deference to Brisbane’s convention center, part of the South Bank arts and culture complex across the Brisbane River will be linked to the IR by a new pedestrian bridge.

Other IR features include a casino with perhaps 200 gaming tables and up to 2,500 machines, four distinct retail areas, 2,000 apartments – financed by Chow Tai Fook and Far East – eight hectares of public space for recreation and accommodating up to 60,000 for performances and 50 new F&B outlets across the spectrum.

SINGAPORE SWING

The key attraction of the Queen’s Wharf development will be a semicircular Arc topped with a Sky Deck 102 meters above the Brisbane River, part of what Queensland government projects Chief Executive David Edwards admits is “unashamedly” modeled after Singapore’s Marina Bay Sands.

“If you’re in Marina Bay Sands, you’d hardly know there was a casino there,” he says. “It’s certainly not a Vegas experience. But it’s been a catalyst for new hotels, new high end retail, food and beverage, public realm and public space and, really, that’s what we’re after.”

“Recreating the same type of success as Singapore in Queensland would be a very hard task, in particular since the demographic makeup and behavior of the prime clientele – and their respective propensity for gaming – are vastly different,” Ovion Partners Managing Director Peter Klugsberger says. “I could see that these resorts will be successful in the mass market tourism and real estate sectors but I can’t see massive step-changes in gaming revenues. Increases in Asian tourism in Queensland will primarily be mass market and entry level premium, but attracting sufficient VIPs from other countries than China will be sheer impossible.”

Based on what Star says about that very top end of the market and Queensland officials’ vision of the project, what Mr Klugsberger describes may well suffice. The state government’s overriding objectives are to, “increase international tourism numbers, [and] importantly, increase the time they spend in Queensland and increase expenditure,” Mr Edwards says. “The tourist that [now] comes to Brisbane will typically be on their way somewhere else, like the Great Barrier Reef or Gold Coast. They don’t stay here very long, so we get under-expenditure compared with New South Wales.”

Last year’s statistics indicate Queensland’s visitor arrival and expenditure growth rates lag Australia’s overall figures and spending is lower than in other states.

The government and Star are united in selling Brisbane as an international destination. Compared with Sydney and Melbourne, Brisbane is a shorter flight from Asia by two or three hours, and its airport has no curfew. An airport upgrade to be completed by 2020 will give it capacity comparable to Singapore and Hong Kong, Mr Hogg observes, and the government says it added 500,000 passenger seats to airlift last year.

To entertain tourists, Star is forming alliances with tourist service providers from theme parks to wildlife encounters.

“We’re really packaging our Southeast Queensland experience,” Mr Hogg says. “Come stay in Queensland seven to 10 days. We’ll show you Brisbane, we’ll show you the Gold Coast. We’ll show you tropical fruits, seafood and all the great culinary experiences of an integrated resort. You also get to enjoy the climate 12 months a year.”

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