The Star Entertainment Group Ltd (ASX: SGR) share price lifted marginally today at 4% as the casino operator provided an update on its properties reopening. The Star Sydney reopened on 1 June on a restricted basis. From 1 July, the Sydney premises will see further restrictions lifted with 3 July seeing The Star Gold Coast and Treasury Brisbane’s gaming facilities reopen.
Next stage of The Star Sydney reopening
Under the next stage of the reopening, The Star Sydney will be able to host up to 5,000 patrons. Providing a 1.5-metre distance between individuals, all electronic gaming machines and table games will become operational. Spatial distancing and capacity limits will likely constrain visitation and revenue during the peak times of Friday and Saturday nights.
The Star Sydney trading performance improved over June with average spend per visit materially higher than 1H FY20. Nonetheless, given operating restrictions, performance was significantly below normal levels.
Queensland reopenings
The Star Gold Coast and Treasury Brisbane’s main gaming floors and private gaming rooms will reopen on 3 July 2020.
The maximum gaming area patron number will be roughly 2,600 for The Star Gold Coast and 2,300 at Treasury Brisbane aligning with the 4 square metres per patron rule.
Casino operators hit hard by COVID-19
Both Star Entertainment Group and Crown Resorts Ltd (ASX: CWN) were ‘non-essential businesses’ and were forced to close during lockdown. Subject to strict capacity and distancing requirements, properties have gradually reopened. Crown recommenced operations of its Perth casino from 27 June as COVID-19 restrictions were eased in Western Australia.
The closures caused by the coronavirus crisis significantly impacted the casino operators’ share prices. Star Entertainment Group’s share price is 40% below its 2020 high with Crown 24% below its high.
From 1 July 2019 to 23 March 2020 when gaming and non-essential services ceased, Crown’s net profit after tax (NPAT) was $210 million. But both casino operators faced a precipitous drop in revenue during 4Q FY20 which will be reflected in its full-year results.
Foolish takeaway
The casinos resuming operations, even on a limited basis, will see shareholders relieved. Nonetheless, extended closures will have a significant impact on FY20 revenues and profits.
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Motley Fool contributor Kate O’Brien has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Crown Resorts Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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