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James Packer Crown Casino Whale Talks Tourism, by Greg Tingle - 19th March 2011

Australia's foremost gambling tycoon, James Packer, is growing tied of the Australian government's lack of action in improving the tourism sector, which in return effects his casino tourism arm, with the high rollers, schools of "whales", super dolphins and the like tipping to be swimming more for oriental waters, rather than down under Pacific Ocean way. Yep, that's the general school of thought.

Singapore is continuing a roaring trade in the casino and resort tourism dollar, and insiders think this this may be beginning to really snatch away some potential business from Melbourne's Crown Casino and Burswood, which now boasts two of the most valuable and profitable integrated 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 told Rupert Murdoch publication, 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 bragging rights of 13 consecutive months of record visitor numbers, achieving its highest visitor arrivals for a single month in December with 1.1 million visitors, 16% up on last year.

Experts tip the main attribute in seeing Singapore's big numbers is last year's launch of the $4.4 billion Resorts World Sentosa casino and the $5.94bn Marina Bay Sands, the second most expensive casino in the world.

Both casino resorts are understood to have accounted for 1.7% of Singapore's nominal gross domestic product last year when GDP leap frogged 14.7%.

Packer has a few more reasons than the average Joe to be a bit worried about the rise of the Singapore dragons (no offence to dragons, including dragons in training or Singaporeans). Singapore is writing the "who to" book and blueprint on casino tourism, just when many experts thought Macau were the experts.

The Singapore dragons wrath on the regional casino market gave birth to an 8% dip in VIP turnover at Packer's two dinkum Aussie casinos, Crown in Melbourne and Burswood in Perth, in the 6 months to December 31. Burswood really felt the pain, with VIP whale revenue down 14.3% compared with Crown's 5.5 % dive.

Crown states 15% of its casino revenues comes from high-rollers. That's a considerable amount.

Packer points to the way Australia sells itself to the world, and specifically affluent Asians, as a tourist destination, and he chooses his words carefully.

"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".

The recent Japanese natural disasters, along with our our own floods and cyclones in Queensland, are expected to put increased pressure on Japanese tourism, the fifth-largest 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.

Packer 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 competitor Tabcorp Holdings, owner of 'Sin City' 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 facilities, hotels, lear jets and more.

"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."

A not particularly well known fact is that last year, Crown received the Employer of the Year award at the Australian Government's Australian Training Awards.

Packer's call for a more integrated tourism strategy for Australia is fully supported by Tourism Australia chairman and ex 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 are seeking is additional assistance from government and the private sector on co-ordinating visa access and improving facilities at airports for VIP high roller tourists.

In Singapore, high rolling whales are greeted by officials at Changi airport, and promptly escorted through a private lounge area for fast-tracked customs and immigration procedures.

"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 advised there have been communications with government and the state and federal tourism authorities. "The doors seem to be open," he says confidently.

Federal Tourism Minister Martin Ferguson agrees casinos have an important role to play in the nation's tourism strategies, as well he should, but he states 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 shared.

"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, also a mate and business associate of Packer, whose "lucky" 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 tourists account for $2.8bn to the Australian tourism industry and by 2017 analysts expect that market will be worth about $5.5bn.

Korea, Singapore and Malaysia are also developing markets for Australia.

In January, Chinese tourists jumped 63% for the month, largely a spin off from Chinese New Year celebrations falling in February. Hong Kong visits were up 26% and Malaysia 25%.

At times like these Packer must be glad his had a global strategy in place, and is not totally at the mercy of the Australian market.

Packer and his time are also further developing online gaming and revenue aspects of Crown Limited, as well as getting his 50% Betfair better stocked with more online gaming offerings, acutely aware of recession resistance online based businesses like PartyGaming and also watching his mate, Richard Branson, take his airline, tourism, communication and gaming business to the next level.

Don't bet against Packer, but the smart money from betting agencies says that its safe to bet against the Australian state and federal government - with Labor set to fall, and a new and motivated Liberal - Nationals coalition ready to impress the people and the business sector

A Media Man spokesperson said 'There's no doubt that the Oprah Winfrey effect has some positive spin off for Australian tourism, certainly awareness leaped. Just hoe much different was made to the bottom line thanks to O is unclear. James Packer makes a good point about Australian tourism. We have a lot more to offer than just kangaroos. Bondi Beach is great, but so are casinos like Crown and Burswood, and our sports tourism and events are always, and how about our Aboriginal heritage. We are world class. More people need to help give the Australian government the message. Casinos are an idea place to help keep things going in the right direction, with all of the tourists, smart money and entertainment to be found."

CEO Magazine Rejects James Packer Interview Rumour...

Bean Media Group, publishers of the influential and highly-regarded business publication, The CEO Magazine, have today refused to confirm reports that The CEO Magazine will be conducting an exclusive interview with Australian businessman, James Packer. The CEO Magazine is Australia's leading business magazine focused directly at high-level executives in Australian companies. The CEO Magazine is a bi-monthly title that provides its readers with a wealth of articles discussing business strategy, expert opinion, analysis, corporate case studies, emerging trends, leadership, growth opportunities and challenges facing our country's leading business leaders. The CEO Magazine explores how Australian businesses can improve the way they manage their operations, staff, technology and supply chains with a view to creating a more profitable and successful business. Whilst The CEO Magazine is extremely meticulous in selection for interviews within the title, rumours of a one-on-one interview with James Packer have surfaced this week. "Due to the high profile nature of The CEO Magazine, it is impossible for us to confirm who will be included in upcoming magazines until publication date. Content is kept strictly between the publisher and any leading senior executive that have been chosen for selection," said a spokesperson for publisher, Bean Media Group. The next issue of The CEO Magazine is due out next month. About The CEO Magazine, Australia's leading business title specifically for high-level and senior executives. The publisher of The CEO Magazine is Bean Media Group, a multi-award-winning media company based in Sydney, Australia

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