SkyCity CEO: Queenstown, Hamilton scoped for redevelopment, hotels

Graeme Stephens

SkyCity Entertainment Group is evaluating its Queenstown and Hamilton sites for redevelopments which could include new hotels.

The company said in its results yesterday that “future development options leveraging the existing portfolio are being considered, particularly in the case of the New Zealand properties”.

Chief executive Graeme Stephens told the Ticker that its two casinos in Queenstown were not making a material contribution to the group’s results and redevelopment was on the cards.

“We think we can do more with those two licenses with a new development, whether it is hotels or other components, in addition to the casinos,” said Stephens.

“It is certainly something that is being evaluated but I would not want to overstress it right now. We have been in touch with all the stakeholders down there and if we were going to do anything then having a hotel as part of it is something that would make absolute sense.”

Stephens said SkyCity was focused on the best utilisation of its two Queenstown licenses and the casinos in the future “probably won’t be what they are today”.

The company’s Hamilton site was also being evaluated for future options.

“Hamilton is also getting quite interesting. It is really growing quite nicely and its proximity to Auckland will ensure that the region grows in the future,” said Stephens.

“We only have the casino there and we don’t have a hotel. Intuitively, you would think we can do more there in a region that is growing and so we are currently evaluating it.”

Stephens said he was confident the New Zealand International Convention Centre would be open in time for the large conferences booked in 2020 despite a three-month delay brought on by ructions at contractor Fletcher Construction. The centre is now expected to open mid-2019.

“We built a reasonable [time] buffer right up front where we haven’t taken large conferences until early 2020,” said Stephens. “We have been taking bookings for late 2019, which we will be able to host within our existing facilities if we need to.”

SkyCity had been in touch with the 2019 conference organisers to highlight the potential risk of the new venue not being ready for them.

“At the moment though, it is less about timing and more about quality being maintained,” said Stephens. “We do not want to rush and end up with something inferior – we want the right product delivered on budget.”

SkyCity yesterday reported a net profit after tax for the year to June of $44.9m, down 69.2% on the previous period, off revenue of $1.02bn, which was down 7.2%.

The drop in performance has been largely attributed to a book write down of its Darwin casino by A$95m (NZ$102m).

Without the one-off Darwin impairment, normalised net profit after tax would have been up by 1.3% to $154.6m. Normalised earnings before interest, tax, depreciation and amortisation (EBITDA) was $321.5m, down 2.6% on the previous year, and normalised revenue was down 4.9% to $1.03bn.

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