Australian Hotels Feel the Sting of the Chinese VIP Market Tightening

Following the tightening of the VIP Chinese market, many expected that the Aussie casino operators will suffer. It seems that it is not only going to be the Aussie casino giants who will feel the squeeze, as hotels are going to be included as well. This is because the Cairn’s Reef Hotel has reported a noticeable downturn in the turnover and patronage for the 1st two months of this year. Aussie operators began to tone down their marketing that aimed to attract the VIP Chinese players. This tone down happened after the arrests of eighteen of the staff of Crown Casino this last October after they promoted gambling services to Chinese players on the Chinese mainland.

The Legality of the Situation

It is not illegal for casinos to promote tourism to resorts in China. On the other hand, it is illegal to promote gambling to the Chinese citizens. This is why Crown resorts’ VIP Businesses suffered a decrease of 45% following the Chinese arrest. The same was reported by The Star, which also stated that its VIP numbers decreased.

Cairns Hotel Stance on the Matter

As for Cairns Hotel and Casino, it usually attracted a great amount of Asian tourists. On the other hand, the traditional peaking period during the Chinese New Year’s suffered a decrease, which is a result of the arrests. The chief of the Reef Hotel Casino, Allan Tan did not blame the difficult Chinese environment. Instead, he stated that the cancellation of the direct flights from Eastern China to Cairns was the major reason that caused such decrease.

Mr. Allan Tan stated that they were pretty disappointed. He added that they have gone backwards, as China Eastern flights went from a year round trip, to a seasonal trip to complete absence. He also added that there were no charters as well. Although Mr. Allan Tan did not comment by stating any numbers, but the recently revealed financial report of the casino revealed that this is a serious and an ongoing issue. The reports showed an 11% drop in the revenue. It decreased from 25.1 million dollars 2 years ago in 2015, to reach 22.3 million in 2016. The net profit also decreased by 20.4% to reach 5.9 million dollars. He stated that the numbers went down in 2016, and clearly, they are not the only ones to suffer from such issue.

Despite the clear downturn in the number of overseas visitors to the resort, in addition to the fierce competitions locally coming from pubs, hotels and clubs; Tan stated that the domestic tourism showed strength. This was mainly at the business’ hotel side. The Reef Casino and Hotel recently went through a facelift process, which cost 46 million dollars. This, according to Tan, contributed to the hindered growth, but it would boost the business in the future.