The slowdown in Western Australia’s economy may cloud the opening of its Perth luxury hotel towers, whilst sluggish markets in the US have also delayed the sale of a stake in its planned US$1.5 billion Las Vegas casino.
Australia.- Crown Resorts has announced that the slowdown in Western Australia’s economy will dampen the opening of its Perth luxury hotel towers whilst depressed American markets have delayed the sale of a stake in its planned AUD2 billion (US$1.5 billion) Las Vegas casino.
Despite the economic slowdown, the development will hit both its December opening deadline and its AUD645 million (US$487 million) budget. Crown Towers is to be the largest hotel in Perth and expected to boost the gaming company’s number of rooms and suites to nearly 1200 at the complex. Whilst the hotel is still likely to boast high occupancy rates due to the lack of high-end accommodation in Western Australia, the collapse in commodity prices has stunted the resources rich state with most mining companies slashing costs to remain globally competitive.
Crown’s chief financial officer Ken Barton explained that the fall-off from the state’s mining boom makes the timing of its high-end entry into the market less than ideal. “While it looks like a fantastic property, it may be opening at the wrong time in the market,” said Barton. “It will be a fantastic asset. It will do very well in that market but probably would have done a lot better if the market was at a different time in the cycle.”
Furthermore, Crown Resorts said it is also experiencing delays in the sell-down of its 74 percent stake in the planned AUD2 billion (US$1.5 billion) Las Vegas casino Alon which it hopes to open in 2018. Deutsche and Credit Suisse are thought to be advising Crown on the Alon financing. Its partners in the project include former Wynn Resorts boss Andrew Pascal along with Oaktree Capital Management.
“Leveraged markets in the US have been a bit challenging the last few months so we haven’t been able to progress the debt financing at the pace we would have liked,” Barton said. “I think we are waiting for a period where we see more stability in the debt markets and that will give us the opportunity to re-engage on the debt funding side and if we make good progress on that I think the equity story gets a little easier as well.”