AUSTRALIA

The country’s two main operators reported a slowdown in their 2019 statements due to weakness in the VIP market as a result of China’s economic slowdown. They now have to contend with the likelihood of a further downturn in tourism dollars and a drop in discretionary spending at home.

Consumer sentiment had already weakened significantly in Australia before Christmas with the Westpac index of consumer sentiment down 1.9 percent in December from the prior month and down 8.9 percent from the year earlier.

Domestic revenue is the backbone of Australia’s gaming industry and in the year to end-June had been the bright spot, helping to offset falling VIP spending.

“In our view, the fallout from the bushfires may further dampen sentiment towards gaming as domestic leisure travel, or general entertainment spending may be put on hold as people prioritise the rebuilding of those areas destroyed by the fires,” said Fitch Ratings analyst Kelly Amato. “However, we do not see this as likely to have a material impact on the earnings of the casinos, with these revenues having been relatively resilient historically and continuing to be supported by favourable licence conditions (one casino per major city currently).

“Likewise, there may be some decline in VIP revenues should foreign VIPs postpone plans to come to Australia owing to the bushfires, however VIP revenues are historically volatile and make up a small proportion of the domestic casinos’ earnings.”

Australia’s IRs are mostly located in large urban centers such as Sydney, Melbourne, Perth and Brisbane, which apart from the smoke have not been affected by the fires. However, the country is estimated to have some 196,301 gaming machines installed in bars and clubs across Australia, representing about 2.6 percent of the global total, according to the Gaming Technologies Association.

J.P. Morgan analyst Don Carducci adds that the main impact in terms of Australia’s gaming industry will be on these pubs and clubs in locally affected areas.

However, “The casinos will likely see tourism reduced in 2H20 results due to lower inbound visitation,” Carducci said. “I imagine forward bookings for airlines will see commentary in February mention softer trading for mid/late 2020 international volumes.”

The bush fires had ravaged an area of 10.7 million acres, bigger than Belgium, as of Jan. 8, devastating large swathes of Victoria, New South Wales and South Australia. At least 26 people have been killed and more than half a billion animals are thought to have perished, among them critically endangered species that may never recover.

In the year to end-September, before the wildfires took hold, Australia had welcomed more than 9.4 million tourists, an increase of 2.7 percent on the prior year. For 2020, Tourism Australia had projected total tourism spending of $44.6 billion, up 5 percent, creating an industry worth between $115 - $120 billion.

As of yet, the tourism authorities have not updated their forecasts for the coming year, although analysts estimate a loss of tourism earnings will be a drag on the economy.

In early January, Philippa Harrison, managing director of Tourism Australia encouraged visitors to not cancel their plans, pointing out extensive areas of the country remain unaffected.

“Whilst bushfires continue to impact parts of Australia, many areas are unaffected and most tourism businesses are still open,” she said in a statement on the organisation’s website.

Star Entertainment, which operates a casino in Sydney, The Star Gold Coast and is developing an IR in Brisbane, cancelled its New Year fireworks display on the Gold Coast as a result of the disaster, saying instead it would donate the funds to firefighting charities. It also donated profit from the sale of drinks at its Garden Kitchen and Bar.

“Given the periods of emergency that have existed, and the destruction of property that has taken place, we felt there was a more thoughtful and telling contribution we could make than continuing with our annual fireworks display to welcome in the new year,” Star Gold Coast COO Jess Mellor said.

The company has also announced it will grant paid leave to workers volunteering to sign up for emergency services.The gaming and entertainment group has a new company policy allowing four weeks paid leave for workers called into action during natural disasters, which can be increased on request. So far, the group has donated $150,000 to relief efforts. For its part, Crown Resorts and the Packer family foundation have donated $5 million to firefighting and other charities dedicated to helping those affected by the bushfires.

Paul Arbuckle tendered his resignation as CEO in December, just days after an Annual General Meeting at which Chairman Stuart McGregor, as well as industry veteran David Green and Yugo Kinohsita of Aruze were removed from the board by shareholders. Arbuckle was only six months into the job.

In accordance with his employment contract, Arbuckle has provided six months’ notice, with his final day expected to be June 4, 2020.

The Australian Stock Exchange suspended trading of Donaco International after the AGM due to the firm no longer possessing the minimum two directors residing in Australia.

Crown Resorts’ Sydney VIP venue is set to open three months ahead of schedule – in Christmas 2020, local media reported company founder James Packer as saying.

Packer made the comments whilst touring the construction site of the multi-billion Barangaroo development on Wednesday. Construction is now around 75 percent complete, with 55 floors in place.

Crown last year settled a legal dispute with Infrastructure New South Wales (ISNW) over construction plans that would have blocked the resort’s view of Sydney Harbour.

The resort will be VIP-only and will not feature any slot machines.