Australia’s biggest casino company, Crown Resorts, hit hard as Chinese VIPs spend less

Australia’s biggest casino company Crown Resorts reported on Wednesday a sharp decline in spending by wealthy Chinese tourists at its properties, pushing its shares down in their biggest one-day fall in more than two years.

Crown, which is owned 47 per cent by billionaire James Packer, also posted a weaker than expected profit for the six months to December. Turnover from VIPs – largely Chinese tourists on package holidays – fell 12 per cent compared to a 16 per cent rise in the year-ago period.

“People at the premium end have been coming to the property in the same numbers but spending less,” said chief financial officer Ken Barton on an earnings call. “We’re seeing casual restaurants doing better than premium restaurants.”

The decline shows the far-reaching effects of a cooling in Chinese spending that has already driven exporters like Australian vitamin maker Blackmores to lower profit guidance and iPhone maker Apple to issue a revenue warning.

That has been against the backdrop of a China-US trade war and a Sino-Australian diplomatic dispute over accusations of undue political interference.

Shares of Crown fell as much as 6.5 per cent on Wednesday, their biggest daily percentage drop since October 2016 when 18 of its staff were arrested in China for breaking local laws by selling gambling trips there. The broader market was down 0.2 per cent.

“As a destination for Chinese money, particularly on the discretionary side, we have been putting up a fair barrier,” said James McGlew, executive director of corporate stockbroking at Argonaut.