Fung eyes Chinese market with Aquis Queensland resort

Having received clearance from the Australian Competition and Consumer Commission, plans for the Aquis Great Barrier Reef Resort are full steam ahead. Yesterday a group of investment bankers from Beijing were hosted aboard the new corporate AQUIS Boeing 757 to review plans for the mega resort in Cairns.
Justin Fung, son of Hong Kong billionaire Tony Fung, comes from an investment family dynasty. His grandfather was the legendary broker Fung King-hey and his father, Tony, became chairman of his company Sun Hung Kai Securities, when the elder Fung passed away.

Now Fung is looking at perhaps his biggest investment challenge to date. He is seeking a license to build an A$8.15 billion ($7.6 billion) integrated resort, one of the world’s largest, in Queensland, Australia. The state government there is offering up three licenses -- two regionally and one in downtown Brisbane -- in an attempt to boost tourist numbers and revenue. As yet there is no clarity on the timeline or the terms of the license with regards to tax rates or duration.

The Fung family has been vacationing in Australia since 1998, buying their first property in Noosa on the Sunshine Coast in Queensland, followed by other holdings.

When they came across the site for the proposed Aquis resort and casino they knew it could be turned into an iconic destination if they could obtain a gaming license. The 340 hectare site is only 12 km from the major international airport of Cairns, with direct flights from Hong Kong.

The land is the site of a failed marina project, privately owned by the same individual since 1947. It is now a sugar cane field and has been deteriorating for the last ten years. Environmental concerns mean that there will be no direct access from the property to the ocean and the Great Barrier Reef, but guests will be able to use other tour operators for trips to the Reef.

The Aquis group said it has identified a few “quality individuals” to join what Justin Fung, Tony Fung’s son, calls the Dream Team from all corners of the globe, including Las Vegas, Macau, Singapore and Australia.

There has been a lot of publicity regarding the environmental impact of the resort. A 4,000 page Environmental Impact Assessment, which took one and a half years to prepare, has been lodged and the six-week period for comments has now passed.

However, a group has asked for it to be repealed. The old Yorkeys Knob that residents know and love will certainly become busier. Several infrastructure upgrades will be needed in terms of road, water, power and sewage improvements. Originally the plan was to create a community stadium in the resort, but the company acknowledged that it might not be the best place and is considering creating a community fund for projects in the city centre.

In terms of positioning, Fung is clear that the Aquis will be at the forefront of the growing mass gaming sector, as compared with Crown Resort’s new casino at Barangaroo in Sydney for example, which will provide a more urban entertainment offering targeting VIPs.

Aquis says it will give Chinese visitors access to the unique natural wonders of Australia, combining an outdoor experience with the high levels of entertainment they are used to. Despite the lack of direct access to the Great Barrier Reef, visitors will be able to “experience” the reef within the complex, swim with fish, have their photo taken with koalas.

Fung’s aim is to create a gaming hub, recognized the world over as a desirable destination in its own right due to its privileged location. According to TripAdvisor’s TripBarometer study, Australia is in the top three desired destinations for Chinese travelers, and also topped the “must visit” list for families. However, it is currently only 11th on the list of actual countries visited, signifying room for considerable growth given the right incentives.

Queensland Deputy Premier Jeff Seeney recently toured the Aquis site for the first time to encourage locals to make their submission on the EIS. Mr Seeney said the proposal had the potential to create up to 20,000 jobs in the long term and it could serve as a “major shot in the arm” for the tourism and construction sectors.

“Predictions that this proposed resort could create over 3,700 new jobs during the first stage of construction, 3,500 during the second, and up to 20,000 ongoing jobs is clearly an exciting prospect for Cairns and the Far North Queensland economy,” he said.

He said that the State Government was in “strong support” of the project, but it was subject to approval from the Coordinator General (CoG).

Gaming facilities at the Aquis Resort would include 750 gaming tables and 1500 gaming machines. If it proceeds, the resort will also include eight hotels, high-end retail shopping, an aquarium, two theatres, and convention and exhibition facilities.

The Queensland Government expects to make a final decision on whether the Aquis Resort will receive a casino license in 2015.

Aquis Casino Acquisitions Ltd has also recently received clearance from the Australian Consumer & Competition Commission for its acquisition of the Cairns Reef Casino, with the ACCC saying it was satisfied that there would be little overlap in the two projects. Aquis Casino Acquisitions also plans to acquire the Casino Canberra.

Critics of the proposed resort projects in Queensland, including that proposed by Aquis, say they risk becoming white elephants if they don’t succeed in attracting Asian visitors as the local population is too sparse to support such large developments.

Reef Casino, which reported its results earlier this week, said the local economy had been soft and it doesn’t expect much change in the second half of the year. It also reported a 20 percent decline in table revenue, as direct flights to China had returned to a seasonal basis and visa restrictions there had affected visitor numbers, highlighting the potential risks.

The latest tourism figures for Australia show strong growth in visitor numbers and spending from China, though overall tourism growth was slowest in Queensland at just 1 percent in the year to March. Overall, visitor numbers from China increased 14 percent to 697,000, nights increased 2 percent to 29.9 million and trip expenditure increased 15 percent to $5.1 billion.

Other casino operators in the country also recognize the need for a unique product offering to attract Chinese visitors to Australia, especially given the increasing number of casino resort options in the Asian region, closer to home.

“For people to fly to Sydney from Macau, they’re flying over some pretty attractive casinos along the way and they wouldn’t make the trip if there wasn’t something unique here,” Echo Entertainment CEO Matt Bekier recently told Bloomberg in an interview.