Shares in casino group Echo Entertainment (EGP) took a bit of mild punishment yesterday as it revealed a slowdown in revenues from high rollers.
Echo’s annual meeting was told that revenues from high roller gamblers at its casinos in NSW and Queensland had slumped in the first four months of the financial year.
That was even though increased losses from local punters, especially at the Star casino in Sydney, picked up some of the shortfall.
Echo CEO Matt Bekier said in the four months ended October 31 domestic revenue, which includes food and beverage sales and gaming revenue, rose 8.7% compared to the same time last year.
But high rollers contributed less – international VIP rebate revenue (what high rollers leave behind after gaming), fell a massive 33.8%. Echo blamed much of the slump on an abnormally low win rate for the house. Smoothing out the volatility associated with high rollers, Echo said VIP revenue still fell 8.1%.
Bekier told investors at the annual meeting that it was "reassuring" that Echo’s Sydney property The Star, which is the main driver of its growth, was continuing to produce strong financial results despite property refurbishment work being undertaken.
At the AGM Bekier launched an ambitious pitch for the $4 billion operator to continue investing in its three casinos with an eye to "become Australia’s best integrated resort operator over the next ten years".
Echo shares fell 6% to $4.875.
EGP 1Y – High rollers beat the house at Echo
As part of those plans for Echo’s growth it yesterday asked shareholders to approve a name change to The Star Entertainment Group. It was approved.
“That name change will allow us a seamless transition to, over time, rebrand our properties as The Star, Sydney; The Star, Gold Coast; and The Star, Brisbane,” Mr Bekier explained to the meeting.
The strategy is similar to rival Crown Resorts, which has consistent branding across its two local casinos in Melbourne and Perth.
“The increasing wave of Asian tourism, particularly from China, has the potential to be our next mining boom," Mr Bekier said.
"To capture our fair share of this opportunity, we need more tourism infrastructure – especially in the high end accommodation category."
