BUILDING INTEGRATED RESORTS TO CAPTURE AUSTRALIA S TOURISM OPPORTUNITY

Transcription

1 BUILDING INTEGRATED RESORTS TO CAPTURE AUSTRALIA S TOURISM OPPORTUNITY PRESENTED TO MORGANS QUEENSLAND CONFERENCE OCTOBER 015 1

2 BUILDING INTEGRATED RESORTS TO CAPTURE AUSTRALIA S TOURISM OPPORTUNITY KEY POINTS 1 Overview of Echo Entertainment Group 3 Inbound Asian tourism is expanding quickly due to economic, demographic and behavioural changes Australia especially Sydney and South-East Queensland is well placed to capture a large share of this upside, but needs more capacity and capability 4 Echo is transforming and expanding its properties to capture this opportunity 5 Earnings momentum and balance sheet position Echo well

3 1 ECHO ENTERTAINMENT GROUP ECHO ENTERTAINMENT GROUP TODAY Treasury Casino & Hotel Brisbane Established in 1995 Perpetual licence linked to the lease of the Treasury site that expires in 070 Announced as preferred proponent for new Queen s Wharf integrated resort, new casino licence to replace current licence once Queen s Wharf is operational Jupiters Hotel & Casino Gold Coast Established in 1985 Perpetual licence Currently undergoing a $345m expansion and refurbishment of the existing property seeing significant expansion of the non-gaming facilities including a new six-star hotel, as well as enhanced gaming facilities The Star Sydney Established in year licence expires in 093 Exclusivity until November 019 Recently announced a $500m refurbishment and expansion program seeing further investment in the property over the next 5 years 3

4 1 ECHO ENTERTAINMENT GROUP ASSETS WITH POTENTIAL TOURISM APPEAL Historic appeal of assets largely to the local catchment area and international tourists generally Investments made, underway and planned it s about repositioning properties as Integrated Resorts and destinational assets Asian customers, predominantly Chinese, provide a significant future growth opportunity for our VIP and mass market business, driven by: Broad appeal of Australia generally as a destination Echo s markets in Sydney and SEQ having particular appeal to Chinese visitors 4

5 BUILDING INTEGRATED RESORTS TO CAPTURE AUSTRALIA S TOURISM OPPORTUNITY KEY POINTS 1 Overview of Echo Entertainment Group 3 Inbound Asian tourism is expanding quickly due to economic, demographic and behavioural changes Australia especially Sydney and South-East Queensland is well placed to capture a large share of this upside, but needs more capacity and capability 4 Echo is transforming and expanding its properties to capture this opportunity 5 Earnings momentum and balance sheet position Echo well 5

6 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 1 Jun 13 Jun 14 Jun 15 Jun 04 Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10 Jun 11 Jun 1 Jun 13 Jun 14 Jun 15 GROWING INBOUND TOURISM AUSTRALIAN INBOUND SOURCE MARKETS Inbound Source kets Inbound Holiday trips to Australia By country of residence (thousands) per year Record $33.4B spent by International visitors in FY015 Growth is coming exclusively from Asia New Zealand Top Western kets Japan Top Eastern kets China China now accounts for 1% of all trip spend to Australia 300 UK USA 00 South Korea Singapore Behavioural changes provide opportunity 100 Canada Germany Italy 100 Malaysia Wealth creation in Asia driving growth in outbound trips 0 France 0 Hong Kong Taiwan Indonesia Consumption patterns changing towards longer trips and experiences Travel cycle is: Domestic Asia Asia-Pacific Economic contribution based on the average spending of $7,36 by a Chinese tourist in Australia Economic contribution Direct Indirect Total GDP/consumption $7,36 $6,699 $14,061 Additional employment (for every 1,000 incoming Chinese tourists) Source: PWC / BDA keting Planning / Austrac TRA International Visitors in Australia Year ending 30 June 015 / Boston Consulting Group and McKinsey & Company Meet the Chinese consumer of 00 6

7 GROWING INBOUND TOURISM AFFLUENT CHINESE LIKE TO TRAVEL Rising incomes in China a key driver of increasing outbound travel -4 million Chinese millionaires in 014 taking an average 18.5 vacation days a year Higher incomes result in smaller travel groups Urban household consumption By category. % Personal items Education 9 5 Transportation. recreational and cultural Luxury travelers spending over US$10,000 per visit on average trip length of 7.8 days As wealth increases behaviours change Communications 10 Apparel 10 Health care Consumption patterns shift towards experiences Household products 43 Travel to more exotic destinations and further from home 8 0 Food Discretionary Semi-necessities Necessities Source: Boston Consulting Group, McKinsey & Company and Hurun Report Chinese Luxury Consumer Survey 014 7

8 BUILDING INTEGRATED RESORTS TO CAPTURE AUSTRALIA S TOURISM OPPORTUNITY KEY POINTS 1 Overview of Echo Entertainment Group 3 4 Inbound Asian tourism is expanding quickly due to economic, demographic and behavioural changes Australia especially Sydney and South-East Queensland is well placed to capture a large share of this upside, but needs more capacity and capability Echo is transforming and expanding its properties to capture this opportunity 5 Earnings momentum and balance sheet position Echo well 8

9 3 AUSTRALIA WELL PLACED, BUT WHAT CHINESE WANT FROM THEIR TRIP TODAY Immersive experience Seeing the best of the country Friendly locals Appeal of stunning natural environment There is so much great natural beauty Uncontaminated natural scenery of beaches, animals and forest Seeking active and passive engagement Eating by the water Snorkelling on the Great Barrier Reef Chinese Tourists Top Activities Leisure ( 000s) per year Good view, good food, good people Strong F&B influence, link to local culture Meet with various people to enjoy the city's best food and tea Street culture Events enhance immersion To attend sporting events, to explore the country's culture and history High end accommodation and experiences Shopping is very important High quality accommodation Chinese Tourists Accommodation Leisure ( 000s) per year Botanic Gardens Historic sites Sightseeing National Parks 11 Eating Out Beach Source: Summary of 014 qualitative research with Chinese long haul travellers - BDA keting Planning Shopping Total (RHS) Wildlife 00 kets 100 Museums / galleries Standard Accommodation (<4 stars) Rental Accommodation Luxury Accommodation (4-5 stars) 1 Friend / Relative Serviced Apartments Total (RHS)

10 3 AUSTRALIA WELL PLACED, BUT AUSTRALIAN TOURISM MARKET OUTLOOK Overnight visitor expenditure has potential to reach $ B annually for Australia International visitation from Asia to Australia forecast to grow to 3.5m by 00 China forecast to provide 40% of total inbound expenditure between Forecast top 5 international visitors ( 000s) Australian tourism industry potential ($bn per year) Total overnight visitor expenditure $70bn in 011 $84bn in 014 Source: Tourism Research Australia, Australian Bureau of Statistics 10

11 3 AUSTRALIA WELL PLACED, BUT THE OPPORTUNITY IS SIGNIFICANT So where are the opportunities in relation to inbound tourism Australia s Competitive Ranking China Australia s % vs. other out of region countries Airline capacity and direct flight access Aspiration (%) Awareness (%) 1 st 1 st Investment in hotels, particularly high-end luxury accommodation Intention (%) Visitation (Rank) 1 st Visa accessibility and streamlining process Hong Kong South Korea 1 st nd Thailand 3 rd Taiwan 4 th Macau 5 th Japan 6 th Singapore 7 th Malaysia 8 th Indonesia 9 th France 10 th United States 11 th Italy 1 th Vietnam 13 th Switzerland 14 th Australia 15 th Source: Derived by BDA from CDP Survey Wave / Tourism Economics / ABS / China National Tourism Administration / Tourism and Events Queensland 11

13 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY WHAT IS ECHO IS DOING 1. Transforming casino and hotels into a world class Integrated Resort Large scale and diversity of experiences High quality accommodation Develop attractions of relevance to target customers. Partnerships Joint venture with Chow Tai Fook Enterprises and Far East Consortium Delivers capital and distribution reach Working with distribution networks like China Travel Service 3. Building and incorporating brands well known in Asia Incorporating trusted and renowned brands into our property offering Proposed Ritz-Carlton and Rosewood Hotels Investing in The Star brand 4. Creating local experiences and connections Developing deep and committed relationships in each market Leverage local attractions to extend customer experience off property 5. Becoming China friendly Making language and signage at our properties China friendly Providing world-class customer service Training staff proposed new Asian centric Hotel and Hospitality School 13

14 Singapore visitor arrivals (m) 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY INTEGRATED RESORTS SINGAPORE CASE STUDY Originally coined in Singapore, the term Integrated Resort refers to a casino development that is considered an all-encompassing destination in itself and is built at scale with diverse and quality offerings Tourism into Singapore had experienced a prolonged period of stagnation from 1990 s to early 000 s In 005, the Singapore Tourism Board unveiled plans to transform Singapore s visitor economy by 015 Development of Integrated Resorts became core to Singapore s strategy Integrated Resorts became fully operational by mid-010: In 011 Singapore experienced a record year for its visitor economy A 13.8% increase in visitor arrivals (to 13. million) and an 18% increase in tourism receipts By 013 visitor arrivals had grown to over 15 million Singapore international visitor arrivals Million per year Integrated Resorts open: RWS in Feb-10 and MBS in Apr LTM CAGR: +8.5% year extrapolation as at 005: +3.1% CAGR 4.0 Dec-00 Dec-01 Dec-0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-1 Dec-13 Dec-14 LTM Source: Singapore Tourism Board Statistics 14

15 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY INTEGRATED RESORTS INVESTMENT The Star Sydney Past $870m expansion in 011 Short-term $500m over the next 5 years seeing Refurbishment of existing hotel and apartment tower Significant expansion in Food & Beverage and luxury retail Expanding gaming across all levels (mass through to International VIP Rebate business) Other arrival works and features Long-term More hotels More food & beverage More retail and entertainment facilities More car parking Expanded connectivity Jupiters Gold Coast Past Annual maintenance investment Short-term $345m expansion and refurbishment of the existing property seeing: Refurbishment of existing hotel / apartment tower New 80 room 6-star suite hotel Significant Food & Beverage expansion Expanding gaming across all levels (mass through to International VIP Rebate business) Long-term Image for concept purposes More hotels More food & beverage More retail and entertainment facilities More car parking Expanded connectivity Queen s Wharf Brisbane Past Operated as Treasury Brisbane Long-term Image for concept purposes Queen s Wharf Brisbane will be up to a multibillion dollar investment over the next 7 years should Echo and its partners be successful and include: The iconic signature Arc building Spectacular restaurants and bars Five new premium hotel brands, three 6-star venues, including Ritz-Carlton and Rosewood Fifty restaurants and bars Dozens of unique attractions, including a spectacular water and light show Riverfront moonlight cinema 1 football fields of public event space 8,000+ jobs 15

16 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY QUEEN S WHARF BRISBANE Queen s Wharf Brisbane is a once in a lifetime project that will cement Brisbane as a must visit tourist attraction that will include: The iconic signature Arc building A spectacular Sky Deck, giving stunning views of the Brisbane River and skyline, complete with restaurants and bars fully accessible to the public Brisbane s first six-star hotel, as well as four additional internationally-recognised hotel brands including Rosewood, Dorsett, The Ritz-Carlton and The Darling Infinity resort pool overlooking the Brisbane River and Southbank Fifty restaurants and bars, from hatted fine dining to pop-up cafes Dozens of unique attractions, including a spectacular water and light show in the new River Arena Moonlight Cinema offering gold class and outdoor roof top cinemas, black tie event space plus outdoor performances Cohesive Bridge-to-Bridge precinct, integrating heritage and new architecture 1 football fields of public event space Significant retail facilities including local and international brands Image for concept purposes 16

17 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY QWB JOINT VENTURE STRUCTURE The Queen s Wharf Brisbane joint venture to develop a large-scale, connected and integrated resort and entertainment precinct Experience in operating Casinos and world class Integrated Resorts Capabilities to operate other non-gaming elements critical to the success of the Integrated Resort Urban regeneration and mixed use development capabilities Deep relationships and tourism distribution platforms in Asia 1 50% 5% 50% 5% 50% Integrated Resort Operator Agreement QWB Integrated Resort Queen s Wharf Brisbane Non-gaming Development Vehicle 3 CTFE or FEC receive referral fees for any VIP business introduced to QWB IR 17

18 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY QWB CHOW TAI FOOK ENTERPRISES Flagship private investment holding company owned and controlled by the Cheng Family in Hong Kong Founded in 199 as a gold and jewellery retailer Today one of the largest diversified consumer and hospitality companies in Asia with a proven track record in long-term tourism and infrastructure investments Deep and entrenched knowledge of Chinese consumer behaviours Business portfolios in over 50 cities spread across Greater China, Asia, Europe and Americas Operates the largest jewellery retailer in the world by number of outlets with over 1 million VIP members in China and 1.3 million worldwide. Also one of the largest pure-play jewellers in the world by market capitalisation One of the largest department store chains in China with 41 department stores in 0 cities with a VIP database of over 3.9 million members Approximately 60 hotels worldwide through the Rosewood Group and 3rd party hotel brands (Four Seasons, Hyatt, riott, Renaissance, Etc) 3 Hong Kong Convention & Exhibition Centre - New World Development, A$1. billion Trump Place, Riverside Boulevard Hudson River, West Side NYC - Dr. Henry Cheng, Far East Consortium & Related Entities, A$3.3 billion Greenwich Peninsula Regeneration Project, London - CTFE, 01 (ongoing) - A$.0 billion Hyatt Regency Hotel and Casino, Manila - International Entertainment corporation, A$190 million 18

19 4 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY QWB FAR EAST CONSORTIUM One of Australasia s largest developers with operations in property, hospitality, and car parks Founded in 1960 in Hong Kong and listed on the Hong Kong Stock Exchange in 197 Commenced Australian operations in 1994 Development and hotel divisions focus on Asian middle class consumers Over 7,000 hotel rooms in operation, increasing to 10,000 in 3 years 1 Chinese Wallet strategy Over A$.5 billion of projects completed and a further A$3.0 billion of projects on the way International operations and developments Property Division Investment Holdings & Property Development OPERATING STRUCTURE Far East Consortium (35-HK) ket cap: HKD5.6bn (A$.5bn net assets) Car Park Division 88 car parks worldwide 75% Mkt cap: HKD3.bn United Kingdom Singapore hotels under development Property development/investment properties One hotel operating China Property development/investment properties 10 hotels operating/ under development Northbank Place Melbourne Flinders Wharf Melbourne Ritz Carlton Development Perth Hong Kong Property development/investment properties 10 hotels operating/ under development 3 Malaysia Property development Five hotels operating Car park operations Australia and New Zealand Property development/investment properties Car park operations Upper West Side Melbourne Royal Domain Tower 50 Spencer Street Melbourne Melbourne 19

21 5 ECHO STRATEGY TO CAPTURE THE OPPORTUNITY RETURNS FROM INVESTMENT IN SYDNEY The $870m transformation of The Star in Sydney was a pivotal point for the property The transformation included the complete re-orientation of the property to embrace the harbour and the city skyline, as well as: The introduction of numerous award winning restaurants and nightlife facilities A new luxury hotel, The Darling, complete with a 16-room luxury spa The 4,000 capacity Events Centre High-end retail facilities Expanded and up scaled mass market, premium and VIP gaming facilities through the property The Star normalised earnings now in excess of the $340m EBITDA target provided at the start of the redevelopment in 009 Normalised Gross Revenue ( $m) Normalised EBITDA ( $m), , , ,0 66 1,188 1,30 4 1, FY0 1 FY0 13 FY0 14 FY FY0 1 FY0 13 FY0 14 FY0 15 1

22 5 ECHO WELL POSITIONED EARNINGS MOMENTUM AND BALANCE SHEET Strong earnings momentum built over the last couple of years and conservative gearing levels which provide balance sheet capacity to fund these shareholder value enhancing developments Statutory EBITDA ($m) FY0 13 FY0 14 FY Gearing (Net Debt / EBITDA) (times) FY0 13 FY0 14 FY Statutory NPAT ($m) FY0 13 FY0 14 FY EBIT / Net Interest Expense Ratio (times) 1 Image for concept purposes FY0 13 FY0 14 FY0 15 Note: 1 Based on 1 months trailing actual

23 BUILDING INTEGRATED RESORTS TO CAPTURE AUSTRALIA S TOURISM OPPORTUNITY PRESENTED TO MORGANS QUEENSLAND CONFERENCE OCTOBER 015 3