Star Entertainment Soaks Up $94.6 Million Loss For 2020 Financial Year
Star Entertainment reported a $94.6 million loss for the 2020 financial year after COVID-19 ravaged its revenue. The company was on course to report a record year until the deadly virus forced extended closures and kept VIPs away from its casinos.
The $94.6 million loss for the 2020 financial year is a 147.8% reduction on last year’s figures. Star Entertainment made a $198.0 million profit during the 2019 financial year, up 33.7% of 2018.
Only two key financial indicators read better than the 2019 financial year report. Gaming Taxes and Levies fell 30.6% to $377.3 million. Operating Expenditure also fell to $827.7 million, which is a 22.0% reduction.
These improved figures are due to a lack of customers passing through Star Entertainment’s doors. Gaming Taxes and Levies fell because fewer gamblers visited Star’s properties. Likewise, operating expenses plummeted because most of Star’s staff temporarily lost their jobs among other running costs.
A lack of customers results in a lack of revenue. Casinos need bums on seats and the owners of those bums to gamble with their cash. Travel restrictions and enforced closures resulted in a 24.1% drop in Domestic Gaming Revenue to $1,243.9 million.
Money generated from international VIPs dropped like a stone. They accounted for $285.3 million in revenue, a fall of some 51.3%. Overall Gross Revenue for the entire group slumped 31.1% to $1,487.0 million. Foreign VIPs turned over $5 billion less than the previous financial year, showing the impact of the COVID-19 virus.
The Bizarre Normalised Financial Year Data
Australian casinos report two sets of figures each financial year. One is what actually happened to the casino. The other pretends that the well-heeled VIPs didn’t effect its finances. These “normalised” figures show total revenue of $1,972.9 million, which is still down 21.1% on last year.
Star makes a lot of its money from its vast hotels in addition to gambling. Not everyone who visits the company’s properties does so with gambling in mind. The biggest Australian casinos are much like their Las Vegas counterparts. They have shopping malls, restaurants, bars, and more; they’re entertainment complexes.
The Star Sydney was only 76% full, on average, for the 2020 financial year. This is compared to being at 95% occupancy in 2019. The reduction of hotel customers wasn’t as severe for Star Queensland, however. Occupancy stood at 79% for 2020 compared to 81% the previous year.
All those unused rooms ultimately impacted on revenue from the hotel, bars, and restaurants. Combined revenue of $288 million is vastly different from the $372 million generated in 2019.
A Testing Year For Star’s Executives
John O’Neill, Star’s Chairman, stated the company delivered record earning from July 2019 to February 2020. Everything came crashing down when the COVID-19 pandemic hit the world with full force. Star closed its properties in March before reopening on a partial basis in June 2020. They reopened fully in July, but new restrictions came into play soon after a rise in COVID-19 cases.
Australians are used to seeing Crown Resorts in the headlines for the wrong reasons. Star is often seen as the squeaky clean alternative. This no longer applies after several own goals over the past few months.
It has found itself embroiled in a New South Wales probe into junket partners. It is quite ironic that these junkets are the same ones that landed Crown in hot water.
New South Wales Liquor & Gaming issued Star with a $64,500 fine after allowing underage gambling. An unnamed 12-year-old girl entered Star’s Sydney casino and played 21 bets on pokies. The regulatory body was enraged by Star’s apparent lack of ability to spot such a young person.
“Not only did The Star fail to manage the risk, once the child was on the gaming floor, but there were also several opportunities where staff should have noticed a very young person playing the poker machines – well before they did which was when the family was leaving.”
This isn’t the first time Star has fallen foul of underage gambling laws.
A 16-year-old girl entered the casino through a VIP checkpoint without a request for ID. She managed to purchase alcohol at the casino bar before being discovered trying to enter a night club.
A 17-year-old boy was caught in a separate incident. He was ejected, but not before playing 42 rounds of roulette and 22 hands of poker.