WE'RE NOT DICING WITH CHINA, SAYS THE STAR

Chairman John O'Neill, addressing Star shareholders at the AGM on the Gold Coast this morning, confronted the detention of 18 Crown employees in China over alleged gambling crimes.

"We have no information as to why or for how long those Crown employees, and others, will be detained," says O'Neill.

"I can tell you The Star Entertainment Group has no offices in mainland China, we have had no staff members detained or questioned by Chinese authorities (and) we work within parameters as determined by the Chinese authorities, in the same way we comply with rules and regulations in every other market in which we operate.

"These are early days in terms of the situation in China. We will continue to monitor developments closely, while working with staff and Asian-based external agents to understand the situation more fully as it unfolds."

The detention of Crown staff is understood to be related to the company's activities to entice Chinese VIP gamblers to its properties in Australia and Macau. Such enticements to gamble are illegal in China, although casino owners are free to promote their resort facilities to Chinese nationals.

O'Neill says the VIP business represents 30 per cent of group revenue for The Star, although the company still sources 80 per cent of that from Asia.

Crown's problems in China are seen by analysts as a broader issue for domestic casino operators, including The Star which is developing the $2 billion Queen's Wharf integrated casino resort in Brisbane's CBD and has spent more than $1 billion upgrading The Star Sydney to lure high rollers.

The Star's CEO Matt Bekier told shareholders the company is happy with volumes from its international business despite an 'unusually strong win rate in the year to date'.

"The situation in China has, understandably, created some uncertainty and potential impact on revenue is not clear at this point given the limited information available," he says.

Meanwhile, The Star is progressing with its ambitious capital works program in Sydney, Brisbane and the Gold Coast, arguing that Chinese tourism will be a key driver of business in the years ahead.

"Recent figures show there is no sign of a slowdown in the visitation trends," says Bekier.

"For example, the spend of Chinese tourists was up 27 per cent on last year to $8.9 billion. That figure represents almost 25 per cent of the entire spend by foreign visitors to Australia.

"So the tourism boom continues, and continued expansion and investment in our properties will allow us to maximise our share of the domestic and international wallet.

"Our capital investment strategy is a pure tourism play targeting guests from a range of markets at different price points."

On the Gold Coast, The Star is close to completing an upgrade of 600m hotel rooms, while construction of a new six-star hotel on the company's Broadbeach property is on schedule for completion ahead of the 2018 Commonwealth Games.

Bekier says the company is also awaiting final approvals for a 700-room hotel and residential tower on the Gold Coast property to be developed with Chinese partners Chow Tai Fook and Far East Consortium.

Demolition work for the planned Queens's Wharf development, a joint venture with the Chinese, is expected to start next year.

The company will replace the Jupiters Casino brand with The Star Gold Coast next year, while Queen's Wharf will become The Star Brisbane on completion in 2020-21.

The Star had planned to reveal today its preferred design for a new tower for its Sydney casino property, which is aiming to compete with crown's Barangaroo development.

Bekier says the company needs more time to consider the three short-listed designs following feedback received through the community consultation period.

"In addition to luxury hotel rooms and apartments, this proposed development will double the food and beverage outlets to give us a greater variety of food venues across price points and cuisines," says Bekier.

In an operational update, the company has revealed group revenues this financial year to October 22 are up 12.8 per cent on the same period last year. Domestic revenue, excluding international VIP play, remains flat.