SKYCITY’s Graeme Stephens: Tourism operators wanted for ex-convention space

Graeme Stephens

SKYCITY is on the hunt for tourism and entertainment operators to help fill its Auckland precinct once the New Zealand International Convention Centre (NZICC) opens.

The entertainment group’s chief executive, Graeme Stephens, who spoke on Friday to the Ticker after the release of SKYCITY’s interim results, said he was seeking partners to fill the current convention space, which would be vacated once the NZICC came online in mid-2019.

“It’s an exciting project to figure out who goes in there and we are trying to focus on family, kids, tourism and entertainment,” said Stephens.

The All Blacks Experience, a partnership with Ngāi Tahu Tourism announced in December, is to take about 2000 sq m of the available floorspace leaving around 3000 sq m to be filled.

“We are in discussions with a number of other potential partners who could take the other few thousand [sq m] to try and create more of a family entertainment tourism destination in space that is already built,” said Stephens.

The new family-focused attractions would help round out SKYCITY’s offering across its Auckland precinct, which would comprise new conference space and hotel accommodation, the casino, restaurants, bars, retail and the Sky Tower.

“It is a bit of a missing part of what you’d expect in a normal integrated property. We don’t have enough of it and the All Blacks Experience is a really significant partnership that we are really pleased to have. Hopefully, we can get a couple of others [signed up] before 2019.”

SKYCITY was also edging closer to formulating redevelopment plans for its regional properties at Hamilton and Queenstown.

“Waikato is a region that’s doing pretty well. We have land in Hamilton that is on a precinct that is being redeveloped but we don’t have many of the things you would expect there, like a hotel,” said Stephens.

“Are we maximising what we have got? There has got to be more that we can do down there but we don’t have enough concrete thoughts to be put out to the market yet.”

The company’s two Queenstown sites are also under close scrutiny with an upcoming lease renewal pushing planning forward.

“We have two very small properties there and we have a sense that we should be able to do more with them but it’s less clear as to what,” said Stephens.

“Queenstown does not have a high local population whereas the other cities we operate in do so it’s a little easier to rightsize a product for people who live there than to try and figure out a product for people who don’t – like tourists.”

Overall, Stephens said he was pleased with the groups’ interim results for the six months to December.

SKYCITY lifted its net profit by 11.6% to $93.5m for the period citing growth at its NZ properties and a recovery in its international business for the result. The company reported EBITDA up 6.8% to $180.6m off revenue of $554.7m, up 4%.

“We have had contributions from every one of the properties – you can’t single out any one of them – although international business made a strong recovery.”

The international business division, what SKYCITY calls its VIP high-roller operation, recovered after a challenging FY17. Turnover grew 9.4% to $4.8bn and normalised EBITDA was up 87.1% to $14m for the six months to December.

Chinese restrictions on transferring funds internationally for gambling, as well as the arrest of employees from magnate Kerry Packer’s Crown Resorts casino in Australia for allegedly organising gambling activities for Chinese nationals overseas, hit the whole Australasian industry hard.

“It went off a cliff across the board so there’s been a recovery there with the employees being released and a general sense that it’s returning to some normality,” said Stephens.

The appointment of Stewart Neish to lead the international business team had helped focus the division, he added.

Work attracting events to the NZICC was ongoing and not overly disrupted by the six-month delivery delay of the venue.

“To be safe, we are taking bookings [for the NZICC] from early 2020 so there’s a little bit of a buffer and we are keeping bookings for 2019 to a scale we can cope with in our existing facilities,” said Stephens.

SKYCITY has also signalled a probable legal stoush with contractor Fletcher Construction over the completion delay, which was initially thought to be three months but has slipped to six.

“As you get to the end of these big projects, typically that’s when you start to crystallize the contractual aspects,” said Stephens.

“Nothing is currently happening but we are flagging the liquidated damages that we are entitled to and, simultaneously, Fletchers, which would be likely to challenge our ability to claim them.”

He said raising the possibility of a court fight was done in the interests of transparency.

“What you don’t want to be doing is saying ‘it’s all fine, it’s all fine, it’s all fine’ and then it’s a high profile court process. Whereas every other contract [dispute] in NZ is settled quietly in court, this one, you can be sure, if it ever goes there, will get some publicity.”

However, Stephens added, the immediate focus for both SKYCITY and Fletchers was delivering the NZICC and the Hobson Street hotel by mid-2019 and to the appropriate quality.

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