Star Entertainment Suffers Chinese VIP Fallout in 2017

Star Entertainment has felt the fallout from the arrests last October of its Crown Resorts staff in China, and subsequent 20% collapse of its Chinese high roller segment. Consequently, the Australian casino operators’ normalised 2017 net profit fell by 11 per cent to A$264.2 million (US$208.8m) for fiscal year 2017 ending June 20th, and commenting on the situation, Matt Bekier, CEO of The Star Entertainment Group, stated:
“The North Asian disruption is lingering. We dropped a long way in November and December and it’s going to take a little while to climb out of that hole.
Nevertheless, Star still enjoyed an overall solid net profit for the fiscal year, mostly due to an above average ‘win rate’, which ultimately resulted in a 23 percent increase in its annual dividend. According to Matt Bekier, CEO of The Star Entertainment Group, this was just due to “the luck of the draw,” though, with the win rate comparing favorably to that noted 18 months earlier.
As a result of the drastic fall in numbers of its lucrative Chinese VIP players, Crown Resorts has now instigated an overhaul of its international marketing model by focusing its efforts on other less risky South Asian markets, as well as promoting its product primarily to the premium mass market.
On the positive side, the company has subsequently noted an improvement in its domestic market in line with the continuing upgrade it is carrying out to its properties’ gaming and non-gaming facilities. Furthermore, the development of its premium mass market segment should have the effect of creating a lower risk base for the company by limiting the win rate volatility usually associated with international VIP gamblers.
“Our strategy of diversifying international revenues and providing a more compelling high-end tourism proposition for VIP and premium mass customers is showing signs of good growth,” explained Bekier.