NSW Gaming - Industry Outlook

Akin to the broader market (for specialised assets), we have already witnessed slight yield decompression on the back of numerous cash rate rises enforced by the RBA. At such times that rates begin to stabilise/decline, consumers disposable income will rise contemporaneous with a resurgence in discretionary spending, all of which will culminate to support higher levels of patronage and trade throughout the industry. Until such time that market sentiment around gaming machine trade recovers, country hotel excise strategies and threshold increases for venues requiring a LIA will likely deteriorate. Anecdotally, demand for quality gaming hotels with a high/maxed threshold (30) could be further reinforced.

Metro hotels will continue to be largely benefited by their land holding, inherent demand/patronage and strong alternate use prospects. Non-gaming hotels with weak alternate use prospects will require significant investment to reposition to alternate profit centres (eg. accommodation or restaurant weighted trade) to ensure ongoing business viability (which can prove onerous in regional areas with restricted access to the required staff). Demand remains prevalent for quality assets supported by diverse department mixes and consistent turnover.

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