Star Entertainment Brings Hong Kong Deal Back to Life

Star Entertainment has pulled an unexpected turnaround, reviving a stalled deal to sell half of its $3.6 billion Brisbane resort to its Hong Kong partners, Far East Consortium and Chow Tai Fook Enterprises. The agreement collapsed earlier this month, but both sides have now shaken hands on terms that are much the same as before. News of the revival sent Star’s share price surging by 32% on Tuesday.

For the casino operator, it’s a much-needed break. Star has been under pressure from almost every angle: tougher rules, fewer tourists walking through the doors, and rising costs hitting both its customers and its own bottom line. The Brisbane resort was meant to be a glittering jewel in its crown, but the cost of building it has left the company with heavy debts. The $53 million sale price, $45 million of which had already been paid earlier this year, will give the business some breathing room.

There’s also a bigger trend working against Star and other hotels with casino facilities in Australia. More players are taking their gambling online, cutting into foot traffic at physical venues. According to Alex Hoffman, insights found in this Card Player pokies payout chart help explain why. The main point is that online platforms give players a wide choice of games, easy access from home, and clear information on payouts, making them an attractive alternative to visiting a venue in person. Players no longer need to leave their home (or couch, for that matter) if they want to play a few casino games. This plays a role in the declining need for physical casinos found in Star’s hotels.

Just weeks ago, it looked like the deal with Star’s Hong Kong partners was dead. Talks broke down on 1 August when the investors refused to extend the negotiation period. Star even started refunding the $45 million it had already received. Now, the same investors have agreed to go ahead with the sale, and that money will stay put. Star hasn’t said what changed their minds.

The deal also includes some extra property changes. Star will take control of two-thirds of two Gold Coast hotels that are still being built, which were previously under the Hong Kong investors’ control. It will also keep its rights to develop more projects at the Gold Coast site in the future, should the market improve.

Investors reacted instantly to the news. Star’s shares jumped sharply, a rare positive movement after months of watching the stock sink towards record lows. While the sale alone won’t solve all of Star’s problems, it’s a welcome step towards stabilising the company’s finances.

Far East Consortium’s shares in Hong Kong were put into a trading halt after the announcement, and neither it nor Chow Tai Fook commented publicly. Without a clear explanation from them, industry watchers are left guessing about what brought the deal back together.

The sale still needs the green light from the relevant authorities, and regulators are expected to keep a close eye on the process. Australian casino operators have faced intense scrutiny in recent years, and any major transaction will likely be examined in detail.

Star will release its annual results on 28 August, which should give a better idea of how much this revived deal can help and whether the company can build on the momentum it’s just regained.