Inside Asian Gaming

inside asian gaming September 2014 34 a 35% increase in fiscal year 2014 profit to A$646 million, but top-line performance was soft—normalized revenue was down 0.7% at Crown Melbourne, down 3% at Crown Perth—and citing the 2% growth in main-floor gaming revenue at Crown Melbourne as indicative of the challenges, he said frankly, “That’s not where we want to be.” It was strength in Melbourne’s vaunted high-end business, combined with the company’s 34% stake in Macau’s Melco Crown Entertainment, that carried the company for the year, with MCE the “main contributor,” Mr Craigie said. Crown’s MCE stake earned it a $291.2 million equity-accounted share of profit, up 91% on last year, while VIP turnover rebounded at home, up a combined 36.5% in the second half, following a drop of 25.8% in the first half. “The higher-end [customer] is travelling a bit better than the lower end,” Mr Craigie said when the results were announced last month. “The challenge remains to get the players to Australia, and to do that they’re overflying effectively Macau, Singapore. They’re turning down Vegas to get to Australia. “But the first challenge,” he added, “is how do you get them to fly to the most distant market where they’re all playing the same game, which is high-stakes baccarat.” The completion last year of a 15-month refurbishment of Crown Melbourne should help, as will a $645 remodeling and expansion of Crown Perth, which will continue into 2016 with the addition of 500 more hotel rooms. The company also has upgraded its existing fleet of Gulfstream jets with three super-luxury Bombardier Global Express XRS aircraft at a cost of US$100 million. It helps, too, if you’ve been around for every twist and turn in the industry’s fortunes in Australia for the last quarter-century, and Mr Craigie has. He joined the Packer family’s casino business, then known as Crown Melbourne Limited, in 1993 as general manager of machine games, coming off a three-year stint as group general manager for gaming for the state of Victoria’s TAB. In 2001, he joined Crown Melbourne’s board of directors and the following year was named chief executive of Crown Melbourne and Crown Perth’s predecessor, Burswood Limited. He also served on the board of ConsolidatedMediaHoldings, the television and newspaper company on which the Packer fortune was built. Since the present-day Crown’s formation in 2007, he has been the only CEO the company has had. As James Packer’s right-hand man he’s recently been logging some air miles as well, flying back and forth to Sri Lanka to try to nail down a US$350 million resort casino in Colombo and wooing state and local leaders in Queensland on behalf of Crown’s pitch for a A$1 billion destination resort in the capital of Brisbane. He’ll be spending a lot of time in New South Wales as well to bring the company’s A$1.3 billion luxury Crown Sydney to fruition on Darling Harbour. The allure of all these projects is Crown’s reputation as Australia’s leader in the international VIP segment, a business Mr Craigie has been instrumental in building and maintaining; and on that score it’s a sure bet that Mr Packer’s pursuit of a multibillion-dollar resort in Las Vegas, where the company recently purchased a majority stake in 34 prime Strip acres, will be shaped to a significant degree by his experience and advice. Big changes are coming to South Korea’s foreigner-only casino landscape. Rather than fight them, market leader Paradise Group under Phil-lip Chun has embraced them. As the Korean government loosens regulations to encourage casino development as a tool for economic growth through tourism, Paradise has gotten out in front. It’s teamed with Japanese gaming machine manufacturer Sega Sammy Holdings to build Korea’s first integrated resort in a special economic development district in Incheon, 40 kilometers from Seoul, adjacent to the nation’s main international gateway airport. Groundbreaking on the US$1.7 billion Paradise City is set for next month, with an early 2017 opening projected. Paradise holds 55% of the joint venture, which owns the existing Paradise Casino Incheon, the property that is providing the gaming license. In July, Paradise sold $280 million in additional shares on the Korea market to help finance the project. The resort’s $1 billion first phase will include hotels, a convention center, shopping and entertainment, in addition to a casino with Phil-lip Chun Chairman and CEO Paradise Group 120 live table games, 400 slot machines and 300 electronic gaming tables. It will have plenty of company too. A partnership led by Caesars Entertainment has been approved to build a second IR in Incheon, expected to open in 2018. Dream Island, a $2 billion tourism project in Incheon backed by the Ministry of Oceans and Fisheries along with overseas Korean investors, may also apply for a casino license.