SkyCity Entertainment Assesses Casino Activity in Australia

Australian Economy Affects Casino Growth

New Zealand’s thriving economy and stable political situation, along with a boost in the tourist industry, has helped to increase growth for SkyCity casinos.

As we head into the New Year, SkyCity Entertainment has assessed its casino activity in Australia and in New Zealand. SkyCity has noted that while the company's Auckland, New Zealand casino had shown excellent performance in the past year, the operator's Adelaide and Darwin casinos in Australia are going to struggle to reach the performance of the Auckland casino.

SkyCity Compares Australia and New Zealand Casinos

In New Zealand, SkyCity Entertainment operates casinos in both Auckland and in Queenstown. Both these locations are popular tourist destinations, and even when the New Zealand economy looked as if it may be in trouble in 2015, it did not adversely affect the casinos. In fact, during the third quarter, the number of tourists increased, keeping the casinos profitable, giving an unexpected boost to the third quarter casino income.

The company's two Australian casinos, in Adelaide and Darwin, are not finding the path as easy as those casinos in New Zealand. Darwin saw huge economic growth over the past 18 months, however, this growth was not from tourists, but rather from those who were working on the Ichthys liquefied natural gas project. Since the workforce is no longer located near Darwin in the Northern Territory, the casino and hotel numbers have declined.

Nigel Morrison, the Chief Executive of SkyCity Entertainment, commented on the challenges faced in Darwin, noting: "In Darwin some of the big gas projects are starting to wind down and some of the workers who were occupying the hospitality space are no longer there. There's more rooms available today than there was this time last year so that's flowing through. Revenue growth is challenging."

Morrison explained that the company tends to compare their casinos in Australia and New Zealand, especially the highly profitable Auckland casino. He explained: "New Zealand is going well but Auckland is going even better and it's definitely a lot harder in Adelaide and Darwin. I think there are some headwinds out there particularly with the decline of manufacturing in South Australia... but we think being able to tap into the tourist market is a big opportunity."

A Strong Economy Will Boost Casinos

Morrison said that having a strong economy will boost casino revenue. He explained that in New Zealand, the country has been stable politically with "a prime minister who is very popular and a tax system which works for everybody." In Australia, however, with Malcolm Turnbull as prime minister, he is the fifth Australian prime minister in a period of a little more than five years, which makes it "a bit more challenging in Australia."