Inside Asian Gaming

inside asian gaming August 2015 22 Cover Story recreation space. The deck extends to the taller residential and hotel towers flanking it, with two more residential towers sited to the east. Echo says the 2,000 apartments to be constructed and sold are a key to making the redevelopment financially viable. The district will have more than 50 food and beverage options from fine dining to street stalls. When the IR is completed, Echo will relocate gaming from Treasury to a new Steelman Partners-designed casino, with Treasury repurposed into a shopping mall, with an underground retail arcade connecting it to the IR complex. A Ritz Carlton in the heritage Lands Administration Building will replace Treasury’s current hotel. In all, the IR will have 1,100 hotel rooms under five brands including Darling, Chow Tai Fook’s Rosewood, Far East’s Dorset and a six-star Echo VIP property. The new casino will have a maximum of 2,500 gaming machines along with hundreds of tables. Gaming tax will be 10% for VIP play, 20% for mass tables and 30% for machines. The IR component is expected to cost A$2-2.5 billion, half paid by Echo and a quarter by each partner. Echo says it can fund the project “through existing and new debt facilities and free cash flow,” and analysts following the company agree. Chow Tai Fook and Far East Consortium will finance the residential component on a 50-50 basis. In addition to its share of profits, Echo will receive management fees for operating the casino based on revenue and earnings, while CTF and FEC will get referral fees for any direct VIP business steered to the IR. Complete financial details of the project have not been disclosed, as the government and Destination Brisbane finalize agreements. SUBTROPICAL PARADISE The revitalized Queen’s Wharf will feature “12 football fields” (Australian or otherwise unspecified in project documents) of public space along the north bank of the Brisbane River. “The Destination Brisbane consortium’s plans for public space set them apart,” Queensland State Development Minister Anthony Lynham said. “Their plan for Queen’s Wharf provides space for thousands of people to eat, shop, or simply enjoy Brisbane’s subtropical lifestyle.” Australia Loves Chinese Tourists China has become Australia’s second largest source of visitors and leads the pack in visitor spending with plenty more growth on the horizon. Last year, Australia’s arrivals from mainland China increased 18% to 839,000, accounting for 12% of total international visitors. Chinese visitor spending rose 19% to A$5.7 billion (US$4.2 billion), accounting for 18% of total visitor spend of A$31.1 billion. Over the past nine years, Chinese visitor arrivals and spending have posted compound annual growth rates of 12.9% and 18.9% respectively, more than tripling the overall market CAGR in each category. Tourism officials estimate Chinese visitor expenditures will grow to A$13 billion in 2020. Australia ranks first among Chinese travelers in aspiration and intention to visit, according to a market study by Tourism Australia, the government’s tourism promotion and research arm. In Hurun’s 2014 survey of Chinese luxury travelers, Australia moved from seventh place to first as the preferred destination of high net worth individuals. “Australia is an attractive destination for Chinese, for school, immigration, property investment, living, and gaming,” Tony Tong, founder of junket sector advisory firm Pacific Financial Services in Hong Kong, says. “Increasing numbers of mainland Chinese will go to Australia to live and for leisure travel and gaming, providing a more important and high-scale alternative to Macau, especially in light of the ongoing anti-corruption campaign in China.” Morgan Stanley estimates Australia and New Zealand’s share of the China-dominated Asia VIP market will rise from 4% last year to 6.8% in 2017. However, Queensland, Australia’s most popular domestic tourist destination, missed out on the boom last year. For the 12 months to 30th September, the most recent available breakdown, Chinese arrivals in Queensland stood at 310,000 and their spending at A$590.8 billion, essentially flat from the year-ago period. Perhaps more troubling, Chinese accounted for 14.6% of Queensland visitors but just 14.4% of visitor spending, indicating that high-value tourists went elsewhere. Queensland’s overall international arrivals, 2.1 million, and their spending, $4.1 billion, grew in the low single digits, well below national averages. Queen’s Wharf in Brisbane and other IR projects aim to help turn the tide for Queensland. In Hurun’s 2014 survey of Chinese luxury travelers, Australia moved from seventh place to first as the preferred destination of high net worth individuals.