Austalian Tabcorp will try to attract wealthy Asian tourists to its gambling tables, boosting its Star City redevelopment budget by $285 million.

A new 3000-seat entertainment venue, luxury hotel suites, intimate gaming rooms and private aircraft will be offered as the company aims to lift its lagging share of the multi-billion-dollar market for VIP visitors to casinos in Australia.

It is the third time the gaming and wagering group has increased its investment in Sydney’s Star City from its original forecast of $300m back in 2007, taking the overall project budget to $860m — or $960m including a $100m licence payment owed to the NSW government.

Tabcorp chief executive Elmer Funke Kupper said the company had underinvested in a rapidly growing market that showed no signs of slowing despite emerging competition for high-roller gamblers from new casinos in Macau and Singapore.

“The international VIP business in our part of the world is very large and continues to grow strongly. In Australia that market now turns over $50 billion per annum” Mr Funke Kupper said.

“We have 15-20 per cent of that market and we used to have 30 per cent.”

Tabcorp said the investment would help to realise the full potential of the Star City complex and it was expecting returns of 14-15 per cent.

The redevelopment, under way for about a year, includes a five-star hotel and day spa, restaurants and bars, retail outlets and a bigger casino.

Mr Funke Kupper said the project was on time and on budget, and denied that any of the additional spending was a result of cost blowouts.

Star City reported modest revenue growth last year, while overall casino earnings for the group fell 17 per cent.

Macquarie gaming analyst Andrew Levy warned that the additional capital expenditure would concern some investors.

“The majority . . . appears to be going toward attracting and servicing VIPs and providing amenities, as well as . . . additional gaming floor space,” Mr Levy said in a note to clients.

“The move will pit Star in direct competition with Crown for VIP players. While it’s a fast-growing segment, there is risk for both parties given Crown’s legacy business and Star’s significant commitment to these players.”

Tabcorp casino boss Larry Mullin, who joined the company a year ago from the US, where he ran casinos in Atlantic City, said there was more than enough business to go around.
The move follows a decision by rival Crown to spend more than $200m upgrading the VIP facilities and services at its Crown Entertainment Complex in Melbourne. The James Packer-backed outfit also intends to spend $350m over the next three years turning its Perth casino into a world-class resort.

Posted by Shayne Heffernan on Aug 8th, 2010and filed underBoating & Yachting, Connoisseur's Club, Fashion, Fine Dining, Jewelry, Real Estate, Travel.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site