New Zealand-based casino operator SkyCity Entertainment Group showed no signs of catching Asia’s VIP slowdown as profit soared 30% in the first half of its fiscal year.
On Thursday, SkyCity announced a profit of NZD $71m (US $47.4m) in the six months ending Dec. 31, at the top end of its previously issued guidance, as revenue rose 14% to a record $566m. SkyCity operates four casinos in New Zealand and two more properties in Australia.
The prime contributor to SkyCity’s excess of success was its international business (IB), aka the company’s primarily Asian VIP clientele. So-called IB turnover was up over 51% year-on-year to a record $7.2b, while the IB win rate was 1.41%, slightly above the theoretical 1.35% and significantly above than the 1.04% recorded in the same period one year ago.
SkyCity’s flagship property in Auckland reported normalized revenue up 7.4% to $325m, while SkyCity Hamilton gained 9.9% to $27.7m. The combined Queenstown operations enjoyed record growth, rising 107.6% to $13.7m thanks to “significant” IB activity.
In Australia, SkyCity’s underperforming Adelaide property enjoyed an influx of high-rollers, leading to a 146% gain in IB turnover that helped boost revenue 18.7% to AU $103.6m (US $69.3m). In Darwin, revenue rose 2.6% to $75m as IB turnover rose nearly 70%, helping to offset flat local gaming activity.
SkyCity credited the overall IB surge to increased recognition of its boutique Horizon brand among Asian VIPs, a strong focus on direct relationships with its VIP customers, significant growth in revenue share programs as well as its recent decision to raise its maximum gaming table stake to $300k.
While Macau’s VIP market has dropped off the map since its heyday of a few years ago, SkyCity’s IB business has enjoyed 42% compound annual growth since 2010, while win rate has averaged 1.29%, roughly in line with the theoretical target.
SkyCity is having talks with Australian officials regarding the possibility of adding more direct flights from Asia to Darwin. SkyCity CEO Nigel Morrison said Darwin enjoyed good proximity to major southeast Asian centers but “the airlift is the challenge.”