Property editor of the NZ Herald

SkyCity eyes up Queenstown for big expansion

Gambling giant believes Queenstown Casino ripe for expansion and more investment.

SkyCity is looking at expanding the company's activities in the tourist centre of Queenstown. Photo / Getty Images
SkyCity is looking at expanding the company's activities in the tourist centre of Queenstown. Photo / Getty Images

SkyCity Entertainment Group is looking at expanding in Queenstown with accommodation, big-ticket sponsorship and new restaurants.

Chief executive Nigel Morrison said New Zealand's sixth largest NZX-listed firm, which has a market capitalisation of $2.2 billion, saw the lakeside tourist mecca as ripe for expansion and more capital investment.

But unlike at many of its other Australasian venues, SkyCity could not offer accommodation within the casino and he hoped to change this, particularly for international big-spending VIP clients.

SkyCity does not own the building it operates from at Beach St in Queenstown and Morrison said it was examining a range of options.

In Auckland, it spent $30 million developing areas above its SkyCity Hotel on Federal suites, opening the Horizon suites dedicated to qualified customers before Rugby World Cup.

A similar project might be considered for Queenstown. "We would like to have accommodation, developing [a] Horizon-style product with VIP gaming rooms and suites," he said.

Ten to 15 large presidential-style suites were needed at least.

"We've bought Queenstown as a potential tourism and high-roller destination. The view is that Queenstown has a great future. We've got right behind the NZ PGA golf championship as the inaugural sponsor of that.

"We can see ourselves getting more involved in getting major events into Queenstown to bring more high net-worth individuals there. Many people fly from China to Auckland and it's very easy to go on to Queenstown."

Casino visitors now mainly stayed at the Sofitel Queenstown or Hotel Novotel Queenstown because they wanted to be in the heart of the tourist township and near the venue, he said.

SkyCity has also held discussions with major Auckland restaurant owners about opening in Queenstown "and they're open to it".

Award-winning chefs Peter Gordon, Al Brown and Sean Connolly all opened at SkyCity Auckland and Morrison indicated it was this group - including Nic Watt - who might consider Queenstown offered them good opportunities. But he emphasised nothing was decided.

He refused to give a figure for SkyCity's Queenstown investment.

"It's too early to say what we would spend but we believe it will be a city of the future for tourism."

One critic said the three-pronged strategy smacked of SkyCity trying to cosy up to Queenstown and be a good corporate citizen by legitimising and reinforcing its existence there.

In December, it sold its half share in Christchurch Casino to co-owner Skyline Enterprises for $80 million, buying Skyline's 40 per cent share in Queenstown Casino for $5 million.

Under joint Skyline Enterprises/SkyCity ownership, bets were limited to $15,000 but Morrison said it would now be possible to increase these to $150,000, the same as in Auckland.

"We want to make sure we have systems in place to bring this in this year," he said of changes to the venue.

Some wealthy overseas visitors to the Queenstown casino spent an average $10,000 to $15,000 a day at shops, sightseeing and activities.

Many SkyCity high-rollers flew into Auckland and Morrison said it would be "easy" to take them on further to Queenstown as part of their New Zealand experience.

Mark Brown, OnePath head of equities, said the Queenstown strategy made sense "as long as the maths, profitability and return on investment capital stacks up ... Queenstown is one of New Zealand's premier destinations for tourists and that should be no different for high rollers.

"You just have to look at the wealth down there so this is not as much of a surprise as Manila," he said, referring to SkyCity's investigations of a new Philippines investment.

SkyCity's half-year result is due out next Wednesday.

Biggest NZX stocks

* Fletcher Building $6.21b
* Telecom $4.38b
* Contact Energy $3.84b
* Auckland International Airport $3.82b
* Ryman Healthcare $2.33b
* SkyCity Entertainment Group $2.27b
Source: NZX, figures based on market capitalisation.

- NZ Herald

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