- »Queensland Approves Star Gold Coast Master Plan
Queensland Approves Star Gold Coast Master Plan
The Star Entertainment Group received good news from the government of Queensland. It was an approval of a masterplan of accommodations, entertainment and retail options, food and drink establishments, and resorts.
With a price tag of more than $2 billion, the governmental approval is only the first of many steps to make the plan a reality.
The Star Gold Coast project is a “mega masterplan” with many components.
The Gold Coast Convention and Exhibition Centre will receive an upgrade. The 6000-seat venue requires a “significant facelift” to attract some of the world’s biggest musical acts.
When Star bought the Sheraton Grand Mirage in 2017 for $140 million, it had every intention of upgrading the facility, and that is a part of the plan. Not only will the project include renovations, it will also add a new restaurant, bar, gym, beach club, and adjoining low-rise development.
There will be five new towers up for development around The Star Gold Coast. Of course, two of them are already in process, but the masterplan will put that number up to five and include a five-star hotel. Star also wants to add a Sky Park tourism playground with “adventure, entertainment, and luxury dining.”
Overall, there will be many more hotels and apartments, new restaurant and bar “precincts,” and also high-end resort facilities to rival all in the Asia-Pacific region.
Star Cannot Do It Alone
Some of the approvals and finances are dependent upon others. For example, the Gold Coast Convention and Exhibition Centre is owned by the government.
A large part of the project will rely on two major joint venture partners: Chow Tai Fook Enterprises Limited and the Far East Consortium International Limited.
Chow Tai Fook Enterprises is operated by the Cheng family out of Hong Kong. It has a diversified portfolio that includes real estate, hospitality, and consumer investments. It has “significant financial capacity” to support the Gold Coast plan.
The Far East Consortium began working in Australia in the 1990s and focuses on residential and hotel developments. It has facilitated the development of apartment buildings in the Upper West Side, The Fifth, West Side Place, Flinders Wharf, and Royal Domain.
Earlier this year, Star proposed a second casino on the Gold Coast.
After months of discussions, however, the latest mega proposal does not include a second casino. Star Chairman John O’Neill conceded that two may have been too much. “The Star’s position has always been – we support investment in tourism assets on the Gold Coast – but the Gold Coast market is too small for two casinos.”
O’Neill added that “the introduction of another local casino competitor would force us to defend our local market share at the expense of driving incremental growth in interstate and international tourism.”
He also admitted that in the seven years that a second casino has been up for discussion, it has only cost everyone involved and weighed negatively on Star’s share prices.
“The Star has also committed to delivering the investments with no extra poker machines.”
Promises and Goals
There are many positive aspects to the proposal. But Star wants to ensure some of the numbers catch the attention of decision-makers that must approve the project.
One promise is for jobs in Queensland. The project is supposed to add 1,800 constructions jobs per tower and 3,000 new jobs once the towers are open for business.
Of the entire $9 billion in total investment up for proposal, it will be split between the Gold Coast and Brisbane.
For the Gold Coast:
- $1.5 billion = replacement value of original The Star Grand and Sheraton Grand Mirage
- $850 million = transformation of existing property
- $2+ billion = completion of the masterplan
- $4.35+ billion = total investment
And for Brisbane:
- $1 billion = building replacement value of heritage buildings at Treasury
- $3.6 billion = Queen’s Wharf Brisbane Project
- $4.6 billion = total investment
Reversing Disappointing Financials
When Star Entertainment released its fiscal year report for the year ending June 30, 2019, it didn’t exactly overwhelm shareholders and analysts.
Adjusted revenue was down 1%, adjusted EBITDA was down 2%, and adjusted net profit after tax was down 8.4%. VIP business reported a 30.7% decrease, and core earnings were down 35.6%. Visitors in general were down, and the spend per visitor was also down more than 30%.
The report came with promises of job cuts and a “planned restructuring”. A multi-billion-dollar project could fall into that category.
Initial responses from investors and shareholders has been positive. Share prices went from $4.435 to a high of $4.855 as the news has spread. It seems to have settled between $4.7 and $4.8.