Casinos could keep Australia's market red hot

(Australia's Gold Coast)

Hotel operators, some from Greater China, are looking toward Australia to expand their offerings with integrated resort properties that include gambling as a prime attraction. 

They may be much further from Chinese gamblers than Macau, but resort operators in Australia are wagering that an enhanced gaming sector will only add to the country’s already significant appeal for Mainland China tourists.

Economy Down, But Travel Strong
A slowing Chinese economy may be hurting the mainland’s manufacturing sector, but it doesn’t appear to be damaging the prospects for growing tourist numbers in Australia. Last year was a big one for Chinese tourists in Australia, with more than 1 million Chinese visiting the country. That figure represents a surge of 22 percent over 2014’s total. And that’s only Chinese visitors - Australia is also a popular destination for other Asian markets as well.

Dr. Deborah Edwards, an associate professor at the University of Technology Sydney and expert on Australia’s tourism sector, said there was plenty of room for growth

“I don’t think we’ve hit any sort of maximum capacity, indeed, hotel stocks in Australia are somewhat low and we have a new international convention center, the ICC is coming online at the end of this year,” Edwards told Hotel Management. “That will be hosting some very large conventions, and we’re going to need a fair bit of hotel stock to meet the growing demand for both business and leisure travel.”

Approximately AU$15 billion ($11.42 billion) in investment is earmarked to build new integrated casino resorts and expand existing ones across Australia, with the hope of attracting more Asian gamblers, of which Chinese are the largest market. At present, a total of 12 casinos are expected to be constructed or expanded.

New Projects
Among these projects is the massive Aquis Great Barrier Reef Resort planned near the northern city of Cairns in Queensland. The resort project, which will be developed by Hong Kong tycoon Tony Fung, will feature eight hotels with a total of 7,500 rooms, as well as a golf course and attractions such as an artificial lake, an aquarium and a rainforest. The price tag: AU$8 billion ($6.1 billion). Construction could start as early as 2017.

Aquis said last month that it plans to initially develop the hotel resort portion of the project before applying to operate a casino on the site, in effect putting the casino portion of the development on hold.

Even without the casino element, the Aquis project highlights the general expectation that Chinese arrivals will remain robust for the foreseeable future. Aquis is also planning on investing AU$330 million in its Canberra casino, which features two hotel properties.

Each of Australia’s states has at least one casino, with locations in important tourism destinations that are well-known in China, including Sydney, Melbourne, Gold Coast and Brisbane. But unlike Macau, Australia has plenty of other activities for visitors.

 “We have a lot to support other activities,” Dr Edwards said. “Issues can arise when casinos discourage people leaving the casinos and don’t encourage them to undertake other activities that are in the area. At the moment, I don’t think we’re at that sort of risk.

Macau has built itself up like a Las Vegas, and that’s exactly the problem, she added.

“It’s just one casino after another and there’s nothing else to support that — for any destination to be attractive, it needs a variety of accommodation, activities and attractions to make it sustainable.”