SkyCity Entertainment Group's gaming business is showing promise for the casino operator with trading stronger than expected since it reopened on May 14.
Revenue from electronic gaming machines has recovered to 80 per cent of the daily average in the eight months preceding the pandemic. That's in contrast to the casino's table revenue, which has experienced a slow start with physical distancing rules restricting the number of people gathering around a roulette wheel or a game of blackjack. In the last week, table revenue was still only half of normal domestic business.
Hotel operations haven't reported the same pace of recovery with closed borders blocking its typically large cohort of foreign visitors.
SkyCity's occupancy has averaged 32 per cent since reopening, although it has been as high as 90 per cent on weekends when special discounts are running. Average room rates are approximately 35 per cent lower than before the Covid-19 pandemic.
The company's food and beverage revenue is growing, but will be significantly lower until the country moves to alert level 1. SkyCity Online Casino now has 21,000 registered customers and was profitable in April and May.
Recovering revenues and tight cost control helped SkyCity's Auckland and Hamilton properties to generate positive cash flow since reopening. The company is still receiving the government wage subsidy with some staff unable to be deployed until alert level 1 takes effect.
Prime Minister Jacinda Arden has been signalling she may fast track the move to level 1 following pressure from her coalition partner. The alert level will now be reviewed on June 8 and New Zealand could move to alert level 1 in the coming weeks. Ardern will provide details on how level 1 will operate later today.
SkyCity chief executive Graeme Stephens reiterated that the company expects to be a smaller, domestically focused business, and will go ahead with laying off 700 staff to keep the casino sustainable.
"Unfortunately, this remains necessary to ensure that SkyCity's businesses are sustainable in the medium and long term and can continue to support the thousands of jobs that will still remain," he said.
Stephens said a funding plan will be finalised in the next few weeks in order to support the business in the medium-term. SkyCity holds about $330 million of cash and undrawn debt facilities.
The shares rose 1.9 per cent to $2.67 at market open this morning, paring its loss this year to 34 per cent.