Last Friday, Crown Resorts Ltd. announced its plans to expand its business and to develop a new luxurious hotel and apartment complex located in a close proximity to the company’s Melbourne casino venue. The Australia-based gaming operator is going to collaborate with Schiavello Group on the AU$50-million (US$41.1-million) project.
However, Credit Suisse, a popular provider of various financial services, stated in a special note that the current decrease in gaming revenue from VIP players and the possibility for this to turn into a prolonged trend might hamper Crown’s plans for expansion.
According to a filing that Crown submitted to the Australian Securities Exchange, the popular gaming operator will “acquire and manage” the hotel once it is completed. It was also pointed out that no gaming operations will be performed in the new venue.
Crown’s chairman James Packer stated in the filing that their new luxurious hotel in Melbourne will probably attract a great number of high-net-worth tourists and will reinforce the city’s position as a popular destination for “international conferences, sporting and cultural events.”
Credit Suisse, however, expressed its doubts over Crown’s ability to find funds for the construction of new venues in Macau, Australia, and Las Vegas. According to the investment bank, the recent reports about a drop in Macau’s revenues from VIP players may affect Australia’s VIP segment, as well.
Some time ago, it was announced that Crown was also planning to build two more casinos – one in Sydney and one in Las Vegas. And according to Credit Suisse’s note to the Australian gaming operator, both projects are expected to be extremely dependent on VIP players.
In October, Mr. Packer released a statement about the situation in Macau. He said that the changes in local legislation concerning smoking and the corruption scandal in mainland China had influenced the industry in a negative manner.
Yet, according to the Australian company’s chairman, Melco Crown has generated solid revenue.
As mentioned above, Crown intends to expand its business in Las Vegas. In August, the company acquired a site and shared its plans to invest US$1.9 billion in a casino resort.
The gaming operator is currently building a new hotel in Perth, located in a close proximity to its casino there. It also plans to construct a AU$1.5-billion casino at the Barangaroo development in Sydney.
As for Melco Crown, it owns shares in City of Dreams Manila. The integrated casino had a soft launch on Sunday.
According to Credit Suisse’s note, profits from Australia-based casino and Melco Crown will allow Crown to invest as much as AU$2.7 billion. The money is supposed to be used for the financing of the company’s Sydney, Melbourne, and Perth projects, but this might turn out to be quite a difficult task.
