Financial services firm Morgan Stanley claims that VIP business at Australia’s two biggest casinos – Crown Melbourne and The Star in Sydney – has experienced a recovery during the first three months of FY18 after the arrests of 19 Crown Resorts employees in China last year negatively impacted VIP volumes Australia-wide.
In a note published by The Australian on Thursday, Morgan Stanley said it expected Crown’s VIP business to grow by around 9.4% in 2018 over 2017 levels with local junket operators reporting a quicker than expected recovery in recent months.
“Specifically, junket operators spoke to a material improvement across both Crown’s Melbourne and The Star’s Sydney properties in recent months versus the VIP volume lows seen in 2017,” The Australian reported Morgan Stanley equity analyst Monique Rooney as stating.
“Since the Crown detentions in October 2016, Australia’s share of the VIP market has halved from 6% to 3% as at 30 June 2017,” she said.
“With the casinos to cycle the significant declines from the second quarter of 2018 onwards, combined with the recent positive commentary of a pick-up in volumes, we expect 2017 will mark the bottom for Australian VIP.
“With the market focusing on the weak domestic environment and not factoring much in the way of a recovery for VIP in 2018, we believe any rebound in growth would be taken positively.”
As previously reported by Inside Asian Gaming, Crown Resorts saw its VIP volume tumble 48.9% for the 2017 financial year to AU$33.3 billion, while Star Entertainment Group suffered an 18.6% decline in normalized international VIP revenue to AU$554.7 million.
But with the 16 Crown Resorts employees that were subsequently jailed for gambling offences in China released in July, Ms Rooney said it was likely that VIP players were now turning their interest back to Australia once again.
Morgan Stanley has subsequently upgraded its VIP expectations for both Crown and Star, revising its Crown predictions from a 6% decline to a 9.4% increase.
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