17/02/2022 - 08:20

Vax rules add to Crown woes

17/02/2022 - 08:20

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Crown Resorts has reported a 23 per cent fall in activity at Burswood since the state government imposed proof of vaccination as a condition of entry.

Vax rules add to Crown woes
Photo: Attila Csaszar

Crown Resorts has reported a 23 per cent fall in activity at Burswood since the state government imposed proof of vaccination as a condition of entry.

The data from Crown adds to numerous anecdotal reports that hospitality businesses in WA have suffered a sharp fall in activity this year.

Crown reported today that its Perth facility had been the one relatively bright spot in a tough six-month trading period to December 2021.

The company suffered a loss after-tax of $196 million for the half-year compared to a loss in the prior corresponding period of $121 million.

The half-year results have come just days after Crown agreed to an $8.9 billion takeover offer from US-based private equity giant Blackstone.

The loss included $79 million of costs related to the closure of its casinos and other facilities in Melbourne, Sydney and Perth.

Crown Melbourne was closed for 96 days during the half year while Crown Sydney (where the company has still not gained approval to open its casino but owns a hotel) was closed for 102 days.

The company said Crown Perth, which was shut down for just a few days last July, delivered a solid result.

Total revenue was down only slightly at $402 million – this was just more than half the group total – while EBITDA was $109 million.

On an underlying basis, the company said earnings in Perth were down 20 per cent.

Occupancy at its three Perth hotels was 73 per cent.

Crown disclosed that the introduction of compulsory mask wearing on December 23 did not have an adverse effect – its earnings in Perth actually rose immediately after.

However, the announcement on January 4 of a mandatory vaccination requirement triggered a sharp fall in earnings.

“Operating performance at Perth to begin the calendar year is well down on performance during the first half of F22, with increased uncertainty from COVID-19 and the recent imposition of new restrictions including compulsory mask wearing and proof of vaccination significantly impacting patronage to the property,” the company said.

For the first six weeks of 2022, average weekly revenue at Crown Perth was down 23 per cent compared to average weekly revenue during the prior half year.

On the same basis, Sydney was down 20 per cent.

Revenue in Melbourne was down 16 per cent on the prior six-week period.

The company said it faced an uncertain outlook.

“The timing and impact surrounding the opening of the Western Australian border is expected to create further uncertainty on business performance in the second half,” it said.

The company said its corporate costs during the half year were inflated by about $50 million, reflecting the impact of regulatory processes, including royal commissions in WA and Victoria.

The WA royal commission is due to hand its report to the state government early next month.

It added that spending on financial crime, risk and responsible gaming was up about $30 million compared to 2019, before it was subject to a regulatory crackdown.

Chief executive Steve McCann expressed some optimism for the future.

"While we do not underestimate current headwinds facing Crown, there is growing confidence we have turned the corner," he said.

"All three of our domestic resorts are back open."

Mr McCann said Crown was "working well with the regulators" to deliver a responsible world-class gaming operation.

 

 

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