James Packer has a clear message for the federal and state governments and the Australian tourism industry: "It is time for the rubber to hit the road."
Picture: Bruce Magilton, The Australian
James Packer at the Crown, in Melbourne, one of his two Australian casinos.
Facing a new competitive challenge for the Asian tourist dollar from Singapore, which now boasts two of the most valuable and profitable casino resorts in the world, Packer says the time for talk is over.
"One of the problems for state and federal governments of both political persuasions in Australia is that no one sets any key performance indicators for tourism," he tells The Weekend Australian.
"That lets people muddle about on things with good intentions without ever actually making the rubber hit the road. Whereas in Singapore, it is all about the rubber hitting the road.
"They are a country that used to get the same number of tourists as Australia, around 5 million. They are now at 11 million tourists. We are at 5 million. And they have stated publicly that they have an aim and ambition that they will receive 17 million tourists in 2015."
Singapore has just enjoyed 13 consecutive months of record visitor arrivals, achieving its highest visitor arrivals for a single month in December with 1.1 million visitors, 16 per cent up on a year ago.
The prime reason is last year's opening of the $4.4 billion Resorts World Sentosa casino and the $5.94bn Marina Bay Sands, the second most expensive casino in the world. Or as Packer calls them, "integrated resorts".
Both are estimated to have contributed 1.7 per cent of Singapore's nominal gross domestic product last year when GDP rose a stunning 14.7 per cent.
Packer has more reasons than most to be concerned about the rise of Singapore.
Their impact on the regional casino market led to an 8 per cent decline in VIP turnover at Packer's two Australian casinos, Crown in Melbourne and Burswood in Perth, in the six months to December 31. Burswood suffered most, with VIP revenue down 14.3 per cent compared with Crown's 5.5 per cent fall.
Crown generates 15 per cent of its casino revenues from high-rollers.
But Packer says the issue is about more than just Singapore. It is the way Australia sells itself to the world, and specifically affluent Asians, as a tourist destination. "We are not saying it is the government's fault. We are saying we would like to work with the government to try and make Australia a more attractive and compelling and successful tourism destination," he says.
The issue is even more pressing in light of the recent events in Japan and the floods and cyclones in Queensland, which are expected to put further pressure on Japanese tourism, the fifth-biggest provider of inbound tourists to Australia behind New Zealand, Britain, the US and China.
"We all thought the Oprah exercise (where Tourism Australia last year paid $1.5m for 100 minutes of US exposure on Oprah Winfrey's TV chat show) was fantastic, but when I was in America just recently I saw an advertisement with three Americans in a Land Rover driving around a paddock watching kangaroos. And I thought to myself, it is a lovely image but to be kind, it is very niche, " Packer says.
On this point, he says Crown wants more from what he terms his "silent majority partners".
"The total taxes we paid last year to the three levels of government -- federal, state and municipal -- was well over double our net profit after tax. We believe we are investing in our businesses, providing the government with an excellent economic return for our licences and we also think we are working hard to ensure that our other stakeholders benefit from our business," he says.
"The government is doing very well being the silent majority partner of our company and we are competing against some of the biggest and most successful companies in the world and what we are trying to do is bring more people to Australia to spend money and conduct economic activity here."
Crown and rival Tabcorp Holdings, owner of Sydney's Star City and the Gold Coast's Jupiters casinos, are spending billions of dollars on big capital expenditure programs, including revamped VIP gaming floors and hotels.
"My impression is that we have spent more on capital expenditure in the past five years than any non-mining industrial company in Australia," Packer says. "I think there is a perception out there that these businesses are licences to print money. They are terrific businesses, but they are not that. These businesses have a very significant ongoing capex requirement, which places limits on the real cash available to be returned to shareholders."
Last year, Crown received the Employer of the Year award at the Australian Government's Australian Training Awards.
Packer's push for a more integrated tourism strategy for Australia is fully supported by Tourism Australia chairman and former Qantas chief executive Geoff Dixon, who is also on the Crown board. "While I am obviously a director of Crown, it doesn't change the fact that our integrated resorts in Australia must be competitive with those in Asia, especially Singapore," Dixon says.
"This is not just about Crown, it is about . . . the other integrated resort casinos within Australia."
What Crown and Tabcorp want is more assistance from government and the private sector on co-ordinating visa access and improving facilities at airports for VIP visitors.
In Singapore, high rollers are greeted by officials at Changi airport, and escorted through a private lounge for fast-tracked customs and immigration formalities.
"We have started some initial discussions with Melbourne and Perth airports, and they are quite interested in the concept," says Crown chief executive Rowen Craigie. He says there have been discussions with government and the state and federal tourism authorities. "The doors seem to be open," he says.
Federal Tourism Minister Martin Ferguson agrees casinos have an important role to play in the nation's tourism strategies, but he says there needs to be more research before major decisions are taken that affect the sector.
"Casinos attract high-yield visitors that spend on average double that of other international visitors," he says.
"Through both our marketing efforts such as the $150m global 'There's Nothing Like Australia' campaign and the National Long Term Tourism Strategy, we will continue to work closely with casinos, airlines, hotels, tour operators and the many other hundreds of thousands of small businesses in the tourism sector to ensure Australia remains competitive as a tourism destination.
"That requires encouraging investment in new stock, finding the right staff and reducing barriers to their employment in the sector, while providing comprehensive research to allow informed decisions to be taken."
Chef and restaurant owner Neil Perry, whose seven Australian restaurants include outlets at Crown and Burswood, agrees.
"While I am focused on local clientele, we need a good mix of international tourists to keep this business vibrant," he says.
Chinese visitors represent $2.8bn to the Australian tourism industry and by 2017 analysts expect that market will be worth $5.5bn, equivalent to the entire value of the tourism industry today. Korea, Singapore and Malaysia are also growth markets for Australia.
In January, Chinese arrivals were up 63 per cent for the month, largely the result of Chinese New Year celebrations falling in February. Hong Kong visits were up 26 per cent and Malaysia 25 per cent.
©theaustralian.com.au
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