QUEEN’S WHARF BUILD COST INCREASES
The Star Entertainment Group is sticking with an August start date for the staged opening of Queen’s Wharf despite rising costs and a drop in gambling revenue from its two existing casinos in Queensland.
Star is a 50 per cent partner in the Destination Brisbane Consortium building Queen’s Wharf on a 12.8 hectare riverside site in the CBD.
In a market update on Thursday, Star recommitted to a staged opening from August after earlier delays and with the consortium having to push back the opening of hotels and repurposed heritage buildings.
But everything comes at a cost: settling a dispute with builder Multiplex is now expected to cost the consortium between $60 million and $170 million, while another $220 million is needed to bring the project to completion.
Based on the most recent cost estimate of $3.6 billion – from an initial $2 billion – that will likely see Queen’s Wharf become a $4 billion project. Consortium partners are looking to refinance loans and find enough money to finish tower two (of the five towers approved for construction).
Yet damaging inquiries into the Star business and ongoing regulatory requirements have already started to eat away at the revenue the company makes from gamblers in Queensland.
Star reported a 10 per cent drop in revenue for Treasury casino in Brisbane – which still raked in $177.6 million in six months – due to steps taken to deal with problem gamblers, such as exclusions and time restrictions.
There was also “increased competition from larger pubs and clubs that underwent large-scale renovation projects, introduced loyalty programs and greater promotional activity”.
It remains to be seen how Queen’s Wharf will impact on Brisbane’s existing operators, but the state government was warned its casino patrons would largely be locals, rather than the international tourists Star claimed.
The Star Gold Coast casino experienced a 13.6 per cent drop in revenue over the period, which was attributed also to subdued domestic tourism.
Star faces a follow-up regulatory inquiry in NSW and fines from AUSTRAC, and has yet to publicly release the remediation plan that it will use to restore its reputation.
The Queensland government has accepted the remediation plan, along with $100 million in fines, but has until the end of May to restore Star’s full casino licenses.
Star is still punting on Queen’s Wharf Brisbane becoming a winner for the company and told shareholders it has already received $20 million in forward bookings for events.
It is also lodging its own civil claim against Probuild seeking about $27 million in damages.
The casino at the core of Queen’s Wharf has approval for 2500 poker machines – 1000 more than The Star in Sydney, and 768 more than Treasury Brisbane – but will open with 1705 (354 more than currently in Treasury Brisbane). Star’s financial results showed each poker machine in the Brisbane casino was still making $372 per day on average.
The new Neville Bonner Bridge will connect South Bank to Queen’s Wharf, where there will also be a sky deck, leisure deck and multiple restaurants and bars.
Source: Gambling revenue down as Queen’s Wharf build cost nudges $4 billion (msn.com)
