SkyCity Entertainment Group has seen facilities within New Zealand perform ahead of internal expectations, after entertainment and accommodation facilities in Auckland, Hamilton and Queenstown (excluding the Wharf Casino) reopened on May 14, 2020
The Auckland-headquartered firm still sees its SkyCity Adelaide Casino remain closed, however development works on the property are said to be progressing well and remain on budget and on time.
Based on the South Australian government’s current three stage approach to easing lockdown restrictions, SkyCity expects to be able to reopen the establishment in late June or early July.
Domestic customers have returned to the SkyCity properties despite limited capacity restrictions around mass gatherings and physical distancing requirements.
Gaming businesses in Auckland and Hamilton are said to have delivered “very pleasing” performances, particularly in electronic gaming machines, while table game revenues have been steadily improving after a slow start, reflecting a return to around 50 per cent of normal business.
SkyCity’s online casino “continues to trade strongly” having recorded 21,000 customer registrations as of May 31, 2020, and was profitable in both April and May.
The health and safety of customers and staff remains a key focus, with SkyCity adhering to the Ministry of Health’s guidelines for operating at alert level 2 by currently restricting entry to all SkyCity’s New Zealand casinos to premier rewards members only.
The non-gaming aspects of the business will take longer to recover as they have a reasonably high international component to their customer base.
Hotel occupancy averaged around 32 per cent over the ramp up period, with much higher occupancy over the weekends (up to 90 per cent) due to special offers.
Food and beverage revenues are growing steadily, but the group expects these to remain significantly lower than pre COVID-19 levels until the country moves to alert level 1.
The New Zealand Government recently signaled that the alert level 2 settings will be reviewed on June 8 and that a move to alert level 1 could come within the next few weeks. The reopening of the trans-Tasman border also appears increasingly likely over the next few months, however other international borders are expected to remain closed for some time.
Graeme Stephens, SkyCity Entertainment Group chief executive officer, says that while SkyCity expects to be a smaller, domestically focused business for the short to medium term it is heartening to see early signs that the domestic market is recovering.
“SkyCity has previously announced a need to reduce its New Zealand workforce by around 700 rostered employees in order to right size it for the smaller, domestic market. 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.”
As a result of staff restructuring the operator intends execs to achieve annual cost savings of approximately $50m, as SkyCity continues to develop a funding plan to support the business over the medium term. The company intends to finalise this in the coming weeks.