Inside Asian Gaming

inside asian gaming September 2014 46 to 2035, a lowering of gaming taxes on VIP revenue, permission to introduce cashless gaming and TITO systems, and increases in the permitted numbers of gaming tables and slots. Last year, SKYCITY secured an extension of the license at its flagship Auckland property—from 2021 to 2048—together with permission to add 230 more slot machines and more gaming tables as part of an agreement with the New Zealand government to build a convention center in the country’s most populous city. Though construction of the Auckland convention center has yet to commence, Mr Morrison last month announced a major expansion of the project, with plans to add a 300-room five-star hotel, upgraded pedestrian access and additional car parks, which together have raised the budget from an original NZ$402 million to more than $500 million. SKYCITY plans to lodge an application for the project in the fourth quarter, with groundbreaking foreseen in the middle of 2015. In an effort to draw more high rollers, Mr Morrison also is adding new VIP gaming rooms and accommodations. He is well acquainted with the preferences of those high rollers from his previous role as CFO at Macau casino giant Galaxy Entertainment Group. He joined SKYCITY as managing director in 2008. He was at one time chief operator officer for James Packer’s Crown Limited (now Crown Resorts) and is a former CEO of the Federal Group, the venerable Tasmania hospitality giant that is the island’s largest machine gaming operator. Before embarking on his casino career in 1993, he was a corporate finance partner with Ernst & Young in Melbourne, specializing in the gaming industry. The Australian Competition and Consumer Commission last month gave the green light to the purchase of the Reef Hotel Casino in Cairns by Hong Kong billionaire Tony Fung’s Aquis Reef Holdings. The anti-trust regulator had previously expressed concern over the deal—announced in February—given Aquis is separately seeking approval to build a A$8.15 billion resort nearby at the Great Barrier Reef, but concluded that there would be limited crossover between the two operations because the latter would focus on attracting overseas VIP customers while the existing casino caters mainly to local residents and domestic tourists making relatively low-stakes bets. Mr Fung envisions Reef as a staging ground for Aquis to learn the market and generate cash flow as it seeks financing for the Barrier Reef super-resort, which would represent the largest tourism investment ever in Australia. If it goes forward as planned, 340 hectares of tropical farmland in Yorkeys Knob, a sleepy beachfront hamlet 13 kilometers north of Cairns, will be transformed with eight hotels containing 7,500 hotel rooms—nearly twice the rooms now available in Queensland’s entire tropical north—two theaters, convention space, luxury residences, retail shopping, a cultural center, an aquarium, a golf course and a sports stadium, plus a casino with 750 table games and 1,500 gaming machines, the whole to be completed in two stages over 10 years around an artificial lake and reef lagoon. The $4.3 billion first phase, scheduled to open in 2018, would include 4,000 hotel rooms. The Queensland government, intent on attracting wealthy Chinese gamblers to the state, has promised Aquis a casino license pending environmental, planning and other approvals. Queensland attracted 297,000 Chinese visitors last year, including 259,000 holiday-makers, usually bigger spenders, and garnered Tony Fung Founder and Chairman Aquis Reef Holdings $604 million of Australia’s $3.55 billion in Chinese visitor expenditures. A Queensland tourism report projects that total expenditure by overnight visitors in the state will grow from $21.5 billion in 2012 to $30 billion in 2020. Nationally, Chinese visitors are expected to account for one-third of expenditure growth. For Queensland that math indicates $2.85 billion in additional Chinese visitor spending. Tony Fung has 15 years of Queensland investment experience under his belt and holdings that include shopping malls and residential and commercial property in Australia, China and the United States. The 62-year-old scion of one of Hong Kong’s best- known real estate and financial services families is a savvy dealmaker credited with building the Hong Kong Convention and Exhibition Centre. To him, Aquis holds obvious appeal to Chinese travelers seeking a punt overseas. “I think it will be an easy sell for us,” he says. “You see, if you go to Macau your colleagues think you are a gambler. If you go to Singapore they think you are a gambler. But if you say you are going to Cairns and the Great Barrier Reef, then you are still a family man.”