Australia’s Star Entertainment Group says it will review its international business model to focus on premium mass over VIP in the wake of the Bergin Report into the suitability of its rival in the Australian casino space, Crown Resorts.
The update formed part of Star’s 1H21 financial results announcement on Thursday morning, which saw the company suffer a 33% decline in net profit after tax to AU$51 million. The results included a 97% fall in turnover in its international VIP business to AU$654 million, with revenue from the segment of just AU$9 million.
While the focus of the NSW gaming regulator is currently on getting Crown back to suitability after this week deeming it unsuitable to hold a state casino license, Star will also be paying close attention given that one of the recommendations contained within the Bergin Report was a total ban on junket activity in NSW.
Star said Thursday that it plans to engage with the regulator in relation to the recommendations of the Bergin Report, but also revealed plans to overhaul its international VIP business.
“The Star is reviewing the business model, reducing the fixed cost base and will increase the focus on International Premium Mass customers when the borders re-open,” the company said.
There will also be an ongoing focus on Star’s domestic business in NSW, where it operates The Star Sydney, and Queensland where it runs The Star Gold Coast and is developing the AU$3.6 billion Queen’s Wharf Brisbane.
“The Group continued executing its growth strategy despite the extraordinary challenges and significant impacts of COVID-19,” said Chairman John O’Neill.
“The fundamental earnings prospects for The Star’s domestic business remain unchanged. They are underpinned by valuable long-term licenses in compelling locations and the continued transformation of our properties into globally competitive entertainment destinations.
Star’s group-wide gross revenues fell 36% in the six months to 31 December 2020 to AU$750 million, although EBITDA was down only 4% to AU$233 million.
The Star Sydney, which has suffered harsher lockdowns and COVID-19 restrictions than its northern counterparts, was hardest hit with normalized revenue down 51% to AU$390 million and EBITDA by 44% to AU$107 million. The Star Gold Coast also saw normalized revenue down 44% to AU$172 million, however Brisbane produced a record performance on the strength of its domestic market with normalized revenue only slightly down to AU$180 million but EBITDA up 29% to AU$68 million.
Star said its slots revenue in Queensland had proved particularly strong with revenues up 7% on the Gold Coast and 8% in Brisbane year-on-year.
