Echo Entertainment Group Ltd is expected to pursue some of its Sydney redevelopment plans despite losing out to James Packer's Crown Ltd in a bid to secure a second casino for Sydney.
The decision by the New South Wales government to allow Mr packer's $1.5 billion Barangaroo hotel and casino proposal to proceed to the next approvals stage came as a result of a recommendation from an independent panel chaired by former Future Fund chairman David Murray.
Mr Murray said the bid offered an opportunity to introduce competition into Sydney's casino market.
Echo's exclusive hold on Sydney's casino market is now set to end in 2019 as a result of the decision, giving Echo six years to develop a strategy to attract and retain the high-roller clientele that will be targeted by Mr Packer's development.
As part of its casino pitch, Echo planned redevelopment of its The Star, including two luxury hotels that would bring the development's total room count to 1,150, as well as five $25,000 per night villas and some 20 new restaurants and bars (see Cliona O'Dowd's Collected Wisdom).
"We are disappointed that the NSW Government does not share our vision for the opportunity to further develop The Star into a globally recognised Integrated Resort that competes with the best in Macau, Singapore, Melbourne and other destinations," Echo chairman John O'Neill said.
"Echo looks forward to working constructively with the NSW Government, and exploring other initiatives, to deliver an enhanced integrated resort at The Star which will drive significant tourism and other economic benefits for NSW and, generate value for Echo’s shareholders"
One option that has been discussed includes a joint venture with Malaysian casino giant Genting, which is believed to have raised its 6.6 per cent stake in Echo recently.
“This isn't the end of the game and they must now look to do something with Genting,” one fund manager told The Australian.