In June 2005 Phase 1 of a NZ$70 million (US$55.38 million) redevelopment of SKYCITY Adelaide was officially opened to the public. A new entrance, the restoration of original chandeliers and a new restaurant were added to the historic Adelaide railway station. Future phases of the redevelopment were to include an entertainment complex, underground car park and landscaping. These have now been delayed pending a long-awaited government decision on the car park.

In its Interim Report 2007, SKYCITY Entertainment Group stated that the Adelaide casino operation continued to improve revenue and earnings performance, and that there had been a continuing positive customer response to the NZ$21 million (US$16.6 million) new facilities. Gaming revenues increased by nearly 10% and operating earnings were up by over 10%. However, the company says that earnings will be affected by the delay to the overall Adelaide casino upgrade.

An October 2006 ban on smoking is also expected to restrict revenues and earnings, much in the way that the New Zealand smoking ban did for 18 months following its introduction in December 2004. Since the interim report was published, a major restructuring plan of SKYCITY Entertainment Group is being undertaken, including a change in Managing Director. Before he went, MD Evan Davies admitted that business was ‘challenging’ and that results had been disappointing. A strategy of acquisitions had been abandoned and the sale of some assets might be considered.

SKYCITY Adelaide is one asset likely to be sold, although the company is still reviewing the matter and has yet to make a decision. The casino is still not performing up to expectations despite its boost in earnings. The Independent Gambling Authority (IGA) has said that any prospective owners would face exhaustive probity checks that could take many months. There is some speculation that PBL, with Crown Casino in Melbourne and a policy of gaming expansion, could be interested in acquiring the Adelaide property. (E-07.18.07)

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