Casino companies around the world have been struggling for over a year now to stay afloat while still dealing with the COVID-19 pandemic. From closures and limited services to masking and social distancing, the process has been involved. For Star Entertainment, a casino group based in Australia, times have been tough. The company recently confirmed it is back to full-year profit, but not before having to sell a few assets to get back on track.
COVID-19 affected the company’s bottom line, and it was forced to sell assets to stay afloat. Star has started the process of selling half of a casino in Sydney, Australia as well as selling additional property and a VIP jet.
There are also considerations being given to a sale and leaseback plan for its casinos in Queensland and the Gold Coast. This may take place at a later date.
Early trading for Star was impacted negatively by the shutdown of properties due to the pandemic. Operating restrictions were also a factor once the Queensland venue opened back up. The Star Sydney closed in June of this year and is still shut down.
Properties in Queensland shut down in June as well but only for a few days. After reopening, the casino was restricted to just one individual per 4m2, patrons were asked to remain seated while eating and drinking, and to wear masks at all times. The venues shut down again in late July and stayed closed for eight days.
John O’Neill AO, the Chairman of Star Entertainment commented on the situation by stating: “The Group continued executing its strategy well in the context of the extraordinary COVID-19 related challenges. The fundamental earnings prospects for The Star’s domestic business remain attractive. They are underpinned by valuable long-term licenses in compelling locations and the transformation of our properties into globally competitive entertainment destinations is nearing completion.”
The Chairman stated further that the company is committed to maintaining a balance sheet that focuses on recovery post COVID-19.
For the Sydney property, the earnings were impacted by operating restrictions from the pandemic. The normalized EBITDA dropped 26% and operating expenses were down 17%. For the Gold Coast casino, the normalized EBITDA had increased by 17% on pcp with $112 million in earnings.
The Brisbane totals were up 100% via normalized EBITDA coming in at $114 million. This was a more than 30% increase in revenues. According to Matt Bekier, the Managing Director and Chief Executive Officer for the company stated that Star has been able to execute its long-standing growth strategy over FY2021.
Actions were taken to mitigate the COVID-19 impact throughout properties, including safeguarding employees and staff members. Each property was able to adapt quickly to the changes put in place for operations to continue due to the pandemic.
The announcement comes shortly after Star withdrew its offer to buy Crown Resorts. The company was initially planning to spend $12 billion on the acquisition. However, the deal is now off the table. Star did say it would consider buying the Barangaroo casino of the company in Sydney if Ray Finkelstein, the Victorian commissioner, moves ahead with his plan to see the casino operated by Victorians.