Rivalry between Australia’s two casino giants – James Packer’s Crown and Sydney-based Star Entertainment – is seeing new episodes of “competitive corporate diplomacy,” according to recent media reports.
Last week, Star confirmed its plans to spend another USD500 million on its flagship integrated resort in Pyrmont, Sydney – a move that was assumed to ignite old tensions between the casino rivals. However, Packer, who is co-chairman of Crown Limited, stated that he would support the plans devised by Star, formally known as Echo.
Daily paper Sydney Morning Herald reported that the Packer camp is arguing that an improved Star Casino facility will entice gamblers and tourists to Sydney, and will attract a bigger share of the international market by having two world-class facilities in one town, creating a win-win situation for the rivals.
“What’s good for Sydney is good for Australia, and what’s good for Australia is good for Crown,” Packer told media.
Following this statement, experts cited by the Australian newspaper questioned whether “Packer could also be hoping his support for The Star’s development plans may also result in Star dropping objections it presented to authorities – based on local advice – that suggested Crown’s Bangaroo [a six-star casino and hotel resort that is pending approval for construction close to Sydney] planning process was flawed and open to court challenge.”
Packer and Matt Bekier, The Star Entertainment Group’s chief executive, agree on the importance of increasing the percentage of international patrons, including Chinese gamblers. Mr Bekier says that Australia represents only four percent of the global market, so there is no shortage of headroom. Both operators are also aware of how Chinese VIP players function, using Macau as a template.
The Star Entertainment Group’s product, marketing and earnings have vastly improved and in turn boosted its market share. They confirmed plans for a third hotel within its Sydney complex last week – one that will be more than two-thirds the height of its competitor.
“Australia has the highest per capita spending, on gaming of any nation today other than Hong Kong. So opening another casino is unlikely to expand the domestic market when Australians are already spending $1600 per capita per year. The opportunity for expansion is through Sydney becoming a more attractive destination for the international VIPs and the high end tourist, with greater capacity to accommodate them,” Bekier commented.
The Sydney Morning Herald claimed that these two companies will always compete for a slice of the local VIP and premium mass market business, but could put aside their differences for the sake of putting Sydney on the map as a destination for the middle-class Asian market.
The Star has also poached management talent from Crown, including the new head of the Star’s international VIP business, John Chong, who was recently lured from Crown’s Macau joint venture, Melco Crown.
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