Echo pledges $1.5b on casinos as it takes on Packer - again
Echo Entertainment has pledged to spend more than $1.5 billion redeveloping its Brisbane and Gold Coast casinos if it wins its high-stakes battle in the sunshine state with James Packer's Crown Resorts.
"We could not have moved faster in committing a significant investment upgrade in Sydney, and our attention is now firmly on Queensland," Echo chairman John O'Neil told investors at the company's shareholder meeting on Friday. The meeting was held at its flagship casino, the Star, which has undergone an $860 million revamp.
Echo appears to have lost out to Mr Packer in Sydney, where Crown's plans to develop a $1.3 billion high-roller casino and luxury hotel in competition with the Star have progressed, although it has yet to receive final approval.
Echo and Crown are two of the strongest contenders to redevelop the government precinct in Brisbane's centre which goes to tender later this year.
If Echo loses the bid, it would throw serious doubt on the company's ability to compete with its current operation, Treasury Casino, which sits in the area proposed for development.
Echo chief executive John Redmond told investors the scale of the company's total investment would ultimately be determined by a number of factors that might affect its ability to make an appropriate return.
"We have a well-developed vision to provide the Queensland government with a solution for the whole of south east Queensland with investment that leverages the properties Echo already has in the state, converting them into world-class integrated resorts with the smallest possible increase in gaming in the state," Mr Redmond said.
He would not be drawn on details of Echo's proposal for Brisbane, or how much it was willing to spend, other than to say the Treasury hotel and casino - which has heritage restrictions that would frustrate its development into a casino resort - would be turned into a luxury hotel with no gaming facilities.
"We're not going to break down the expenditure between the two areas until we understand what's going to happen in Brisbane, because by doing so you start telegraphing how much we're willing to spend" Mr Redmond said.
More detail was offered on proposed investment at the Gold Coast Jupiters resort, featuring a six-star hotel tower with VIP gaming salons.
Echo said trading for the start of the current financial year had followed similar trends to last year with "soft domestic revenue growth" and "marginal" earnings growth.
"Discretionary consumer spending remains relatively subdued in our core domestic market segments and this continues to impact revenue growth," Mr Redmond said.
He said the company remained on track to extract $60 million in costs from the group this year as it attempted to "restore the company's operating expenditure base to levels that are more sustainable in the longer term and deliver appropriate operating margins."