The Star reveals more delays to $2.8bn Queen’s Wharf resort project in Brisbane

The $2.8bn Star resort project at Queens Wharf will now open as much as 12 months or more behind its original timeline, after falling foul of the impacts of the Covid-19 pandemic and Queensland’s wild weather.

Star Entertainment says its Brisbane casino project will be delayed by some six months – and come in over budget – due to escalating construction and labour costs.

The gaming company told investors, in an ASX update on Friday, that the Brisbane Queen’s Wharf redevelopment was not expected to open in the second half of 2023. It had previously been expected to open in the first half.

The total cost of the project will be around 10 per cent higher than the previous guidance of $2.6bn, the company told investors, “due to “escalating construction material costs, labour shortages (and) supply chain challenges”.

Star and its joint venture partners Chow Tai Fook and Far East Consortium – which own a 25 per cent stake in development each – will fund the increase through additional equity contributions and future operating cashflows.

The company said it was still in discussions with the builder, Multiplex, over disagreements over the additional costs and extension of time issues.

In August, the company reported delays at the Queen’s Wharf development that would push the project back from an open that was expected in late 2022.

At the time, Star said it did not know the reasons for the delay but it comes among rising concern from developers and builders that the Covid-19 pandemic was delaying the completion of projects.

It has been a difficult time for Star, which also operates casinos in Sydney and on the Gold Coast, after damning revelations about its dealings with criminal figures were heard at a NSW inquiry into its license to operate in the state.

That has led to an exodus of directors and management, with the company appointing Tyro Payments boss Robbie Cooke, a former Tatts executive, as its new chief executive replacing Matt Bekier who quit in March.

Star shares rose 0.5 per cent on Friday, or 1.5c, to close at $3.08. However, they have fallen 18.6 per cent since December 31.

In its Friday update, Star disclosed that it expected to report adjusted revenues of $1.53bn for the 12 months to June 30.

“In the June quarter, domestic revenue recovered strongly with all properties open on an unrestricted basis,” Star said in a statement. “Domestic revenue in the June quarter was up 11 per cent on pre-Covid levels to $512m with slots revenue up 28 per cent and non-gaming revenue up 26 per cent. Domestic table revenue had not fully recovered but was within 5 per cent of pre-Covid levels.”

The Star Gold Coast performed strongly, the company said, with domestic revenue up 48 per cent on pre-pandemic levels), after a recovery in domestic tourism and with the opening of new hotels including The Dorsett.

“Brisbane domestic revenue was up 13 per cent on pre-Covid levels while The Star Sydney domestic revenue returned to pre-Covid levels,” it added.

But the company faces the loss of its casino license in NSW, with Naomi Sharp SC, counsel assisting the NSW Independent Liquor & Gaming Authority, recommending the review find Star unfit to hold that license.

“It is not enough to bring a corporation into suitability simply to terminate the employment of or part company with a number of senior officers,” Ms Sharp said in late May, noting the departure of Mr Bekier, chairman John O’Neill, and other executives.

The inquiry heard that Star deliberately disguised almost $1bn worth of illegal gambling transactions on Chinese debit cards as hotel charges over a seven-year period, misleading its bank NAB and ultimately the Bank of China. Bigger rival Crown Resorts was hit with a record $80m fine from the Victorian gambling regulator this week over a similar practice.

Star also continued to deal with patrons despite being alerted to links with Triad criminal gangs. It even moved a Chinese junket into a secret gaming room after it flouted money-laundering controls, exchanging bundles of cash from backpacks for gambling chips.

Star also potentially underpaid millions of dollars in taxes to the NSW government, sent fake source-of-funds letters to the Bank of China and continued to deal with certain patrons when Chinese banks would not.