Star City Casino $1bn Facelift will Boost Revenues

Thursday 8 September, 2011 15:59

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ECHO Entertainment is planning a $1 billion facelift to its flagship casino, Star City Casino in Sydney. It is expected that the facelift will boost revenues for the company in the second half of next year.

The company operates Star City Casino in Sydney, as well as Jupiters Casino on the Gold Coast. The company predicted a yearly net profit of $226 million, while revenue for the year ended June 30, 2011 was $1.65 billion. A final dividend was not announced by ECHO.

Changes to ECHO's theoretical win rate, from 1.35 percent to 1.54 percent also boosted results and Deutsche analysts said this could add up to 15 percent to their earnings.

ECHO plans to spend $960 million on the facelift with 80 percent going to non-gaming facilities. The company has stated that they plan to see the benefits of the scheme in the second half of next year.

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Larry Mullin, CEO of ECHO Entertainment said, "The hardest part was getting here. We are here now with almost $1 billion worth of fun coming through the market."

A Promising Future

Mullin gave a positive view of the future of the group's main (non-VIP) gaming business. He announced that trading for the first six weeks of 2012 were solid and that revenue was up 8.2 percent on a normalised basis.

He said, "From what we are seeing, everything is quite robust." "On the Gold Coast specifically, where we've had dire reports about the state of the local economy, we've seen pretty good business in the first part of the new financial year" he continued.

During the year, the group moved more aggressively into an area that was previously dominated by the James Packer-backed Crown. This saw VIP revenues up 34 percent over the year.

Mr Mullin expressed his confidence that ECHO could walk away with 50 percent of the VIP market in Australia, following the re-launch of their flagship casino. This would see it grow from around 30 percent where it currently sees itself, despite the threat from Singapore casinos. Mullin said that he was anticipating the ability to translate their spending into a boost in revenue.

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