New Zealand-based SkyCity saw a major boost in earnings compared to the previous financial year. Both Gaming and Nongaming revenue each jumped by 50% or more. The primary earner of the casino group was their Auckland business. SkyCity Auckland alone saw an income spike of over 70% for both Gaming and Nongaming revenue streams.
SkyCity Auckland casino takes pride of place as the primary earner for Skycity Entertainment Group Ltd.
© Fabiana pfernandes/Pixabay
Their Auckland operations remain the shining star of Skycity Entertainment Group Ltd. (SkyCity). Mass-market visitation lent strength to Electronic Gaming Machine (EGM) revenue. However, an anticipated increase in cost-of-living expenses for this core client base could change things. SkyCity forecasts reduced growth in this area.
The second half of the ’22 to ’23 financial year (2H23) saw a slight ease in EGM revenue due to a lifting in capacity restrictions on Table Games (due to COVID-19). Visitors shifted some of their attention to the Table Games. Consistent strength in EGM use offset the variability of VIP play. Reduced EGM revenue will increase future earnings volatility in Gaming.
In quarter four of 2023 (Q4 23) Table Games rebounded due to increased capacity, campaigns and initiatives. Daily table limits are anticipated to decrease or stablise Table Games earnings. SkyCity’s Investor Presentation stated Table Games recovery was slow across the entire group.
Hospitality opening hours increased as staff shortages lifted. There has been increased local and international demand for services in general. Labour wages increased for hospitality workers, causing a 10% rise in total costs for the casino. But with earnings higher than those pre-COVID-19, increased labour costs aren’t a worry.
New Entertainment Destinations
A new bar was created at the top of Auckland’s SkyTower, SkyBar. SkyBar is Auckland’s highest bar, sitting at 182 metres. It offers 360-degree views. SkyTower had more visits from tourists in FY23. The start of 2023 saw New Zealand removed from China’s group travel ban list. SkyBar is in partnership with the champagne house Moet & Chandon.
The Sky Bar, as well as a new casino restaurant, Cassia, has kept visitors pleased with the variety of destinations. Cassia is a modern Indian restaurant that opened in 2014 in Auckland and was recently invited to the casino. Business operation areas were converted to restaurant space, increasing earnings per square foot. Another new restaurant is due to open in the first half of FY2024.
NZICC / Horizon Hotel Update
Insurance and compensation income for the NZICC construction fires confused the interpretation of revenue numbers for some. At NZ$65 million, or over 10% of EBITDA, this is understandable. The New Zealand International Convention Centre (NZICC) and its accompanying car parks are highly anticipated. SkyCity has stated that its construction progress is almost back at pre-fire levels. The NZICC project allowed SkyCity to secure an increase in the number of allowed pokie machines.
Horizon Hotel is expected to open in the second half of FY2024 (2H24). Normal trading levels are forecast for FY25. However, the first half year after its opening will have higher costs and lower revenue. Increased spending for recruitment and campaigns in FY24, along with non-optimised trading levels, means that the hotel is expected to have reduced profit in its first half compared to its second half.
In FY23, SkyCity Auckland received the benefits of the group-wide spend on facial recognition. The facial recognition program offers anti-money laundering (AML) and safer gambling (Host Responsibility) benefits.
