Interview with Nigel Morrison, Managing Director of SKYCITY
On the 20th anniversary of SkyCity, Phil Taylor spoke to chief executive Nigel Morrison about his belief the new convention centre will join the Sky Tower as an iconic building, and to neighbours who live by a gaming and entertainment company that never sleeps.
The Sky Tower has overcome early scepticism to become an iconic image of the Super City, more photographed than Rangitoto Island, Auckland Harbour Bridge or One Tree Hill when it still had its lone pine. It is ubiquitous and disparaging labels from its early days, such as The Hypodermic, are seldom heard.
"Can you image the Auckland cityscape without the Sky Tower?" asks Nigel Morrison, SkyCity Entertainment Group's chief executive. "You wouldn't be able to identify it. Every photo you see has it in there. It has been embraced." That may be part of the city's growing comfort in becoming an international city but also reflects the effort put into showing it in its best light. "We try to do a good job lighting it," says Morrison, and the company spent "$70,000 or $100,000" on fireworks off the tower on New Year's Eve.
The Sky Tower was built a year after SkyCity began operation and listed on the New Zealand stock exchange in February 1996. The company's Auckland operation (it has casinos in Hamilton and Queenstown and in Australia) has grown from a block of land in the inner city acquired in a swap deal between the council and a development company that had accumulated a swathe of land near the top of Symonds St.
The Sky Tower couldn't be built there because of protected viewing lines from the summit of Mt Eden (Maungawhau). Instead it developed the block that includes the Federal St restaurant precinct.
SkyCity is about to begin to develop the block to the west which will be dominated by the New Zealand International Convention Centre that legislation passed in 2013 allows it to design, build, own and operate.
"I think we are an important player in the fabric of the city," says Morrison. "We have invested over the last five or eight years significantly in recreating ourselves. We have focused in taking experiences upmarket and trying to develop a more luxurious entertainment offering, a range of things from gaming, from private rooms, to focusing on the international business to the restaurants we have in Auckland, with Masu and The Grill, Gusto, the Sugar Club at the top of the tower, and really partnering with these fantastic chefs."
The restaurant hub has been a hit with Aucklanders. Morrison's sense is 80 per cent of diners are locals but with a good number coming from around the country.
Do you have to be rich? "I don't think so," he says, "New Zealand is still very good value." Room rates of $200 to $300 a night were half the cost in Europe or some of Australia's city hotels. The restaurants are the creations of big-name chefs but are owned by SkyCity. The idea came from a charity auction several years ago where a table for four at Peter Gordon's Dine, which was based in SkyCity's The Grand Hotel, sold for $5000.
SkyCity auctioned a table at one of its restaurants.
"Ours got $500, and it became clear that no matter how good we were going to be, while we were the brand and we were the operator it just wasn't going to work with people."
The solution was to partner with the chefs and give them their creative heads. SkyCity found the spaces, paid the bills and told the chefs to design what they liked. Masu is by Nic Watt, Gusto at the Grand and The Grill by Sean Connolly, Al Brown did Depot and Federal Delicatessen, and Peter Gordon has The Sugar Club at the top of Sky Tower.
"A big challenge was keeping our corporate mentality out of it. We needed to let those guys go and exercise their individual flair and creativity, and those guys don't work well in corporates. It was hard but it was important to let those guys go." Only Red Hummingbird didn't thrive, replaced by the Federal Deli.
Revellers at the Federal St festival. Photo / Supplied
Morrison said the company footed much of the bill for the makeover of the street, spending $10 million to pave it. It fits with SkyCity's push upmarket and increasing focus on the high-roller sector - what the company terms "international business". Most guests are from Asia. SkyCity is considering buying a jet to fly high rollers into Auckland and around its properties as international players become increasingly important to its business. That sector grew 50 per cent in the four months to last October 31 compared to the same period the previous year and produced $4.5 billion revenue.
"We're almost at the cusp of saying, 'should we be getting a private jet to fly these players on?' Or at least a jet that shuttles around Australasia and can pick them up in Sydney or Melbourne and take them to Auckland, fly them down to Queenstown, fly them back to Auckland, fly them to Adelaide and then they can leave," Morrison told Radio New Zealand this week. Australian rivals Crown and Echo each had four jets, he said.
SkyCity is also proud of playing host to international celebrities who come to New Zealand, and wastes no time in getting them into convenient photo opportunities - often preparing to jump from the top of the Sky Tower. Beyonce, Bill Clinton, Justin Timberlake, Prince William, Heidi Klum and One Direction are among those who have stayed there.
Morrison talks about providing a "premium-branded gaming experience" and says with restaurants such as Masu "we have provided a holistic experience. If it wasn't for the international business we wouldn't have done Masu. In many ways Auckland has benefited from that because we now have these great spaces and restaurants of truly international standard." An equally top-class Cantonese restaurant is planned.
Beyonce prepares to do the Sky Jump at Auckland's Sky Tower. Photo / Supplied
SKYCITY IS a city within the city. It operates around the clock, employs 3500 people, and, come 2019 when the convention centre opens, will cover three downtown blocks. Watching it grow are neighbours, St Matthew-In-The City and the Auckland City Mission.
Odd bedfellows you might think. "We are sandwiched between SkyCity and the City Mission," says Reverend Helen Jacobi. "You find on one side the poorest of the poor and on the other the richest of the rich. That's the kind of world we live in." But, says Jacobi, look past the incongruity of a house of the Lord sitting next to the country's biggest gambling den and SkyCity is a good neighbour, in fact they are business buddies. The church uses SkyCity's catering for some of its own events and hosts functions for casino customers who want a different style of venue. "They are a good business partner for us, for a dinner, a cocktail function or a concert or whatever.
"Obviously we would have concerns, not on the morality but the damage to lives that can occur. I don't think we would have an opinion on gambling per se but we know that people get addicted to gambling and we know that it can damage lives ... but we live in the real world and Sky City is more than gambling, it is hotels and convention centre and restaurants. "The church is here for those people as much as it is for our [other] neighbours at the city mission."
SkyCity was a big contributor to a church restoration fund of $3.2 million that was raised 20 years ago. The vicar who led the renovation, Peter Beck, was pleasantly surprised, noting that he had gone to "see SkyCity's executive director, saying the little church next door is falling down and boy did they buy into it".
Wilf Holt, leader of the City Mission's homeless community team based on Hobson St, said there hadn't been any issues with streeties for a long while and historically those were simple to resolve.
Aussie cricket legend Glenn McGrath hangs out on top the Sky Tower in Auckland. Photo / Supplied
"Until they did Federal St the area didn't change that much because SkyCity is literally that, it doesn't want its potential customers to spend their money outside SkyCity."
"We do see the other side. We see families coming in for food parcels. Gosh, it's easy to bash people who are poor and say 'you shouldn't gamble,' but a solo mother who goes out for a couple of hours with friends having got a babysitter in and who puts a few dollars on the pokies, you know, I don't think they are going to hell."
About two-thirds of the company's revenue comes from gaming, the rest from hotel rooms, hospitality and non-gaming entertainment.
"There are people who will never gamble but they will come to Federal St," says Morrison. He hopes a laneway that will be developed between Hobson and Nelson Streets as part of the convention centre will replicate that area's appeal. Some people will inevitably struggle with gambling but Morrison says data comparing harm from alcohol to that from gambling was about "25 to one". About $3 million - 3 per cent of net profit after tax - is distributed via the SkyCity Community Trust.
"We are not in the business of taking anybody's rent. Everybody has got seatbelts if they want to use them in terms of gaming. A lot of what we have tried to do is to move the property upmarket to attract higher net-worth individuals and really stratify gaming customers so we are giving them the service they expect.
Liam Payne (L) and Louis Tomlinson of One Direction prepare to do the Sky Jump at Auckland's Sky Tower. Photo / Supplied
"There are slot players who will spend $20,000-$30,000 a weekend." Maximum bet per gaming table per hand was recently increased by $50,000 to $300,000 in VIP salons. "The table game the big players play is baccarat and that's because the house advantage is the lowest," says Morrison. "It's a purely random game and the house advantage is only 1.35 per cent. All the Asian high-rollers play baccarat."
England-born, Australia-raised Morrison, 57, was drawn to the industry after working as a corporate funding partner with accounting firm Ernst and Young on the successful bid for the Melbourne casino licence in in 1993. "I thought I'd like to take on something a bit more interesting than being a chartered accountant for the rest of my life."
Before moving to Auckland to head SkyCity in 2008 he worked for Kerry Packer, a mercurial businessman and famed gambler. Morrison, who earns $3.6 million a year, isn't of that ilk. He owned a couple of racehorses that turned out not to be fast enough.
"I lost a bit on the stockmarket recently but look, I'm not a big punter."
Morrison's punt now is to get the convention centre right, and if there is a worry, it is the financial health of China. "We had a commitment to spend $402 million, then we increased that to $430 million. We'll end up spending $470 million. That's some indication of how seriously we take it. We want to deliver something that, as the Sky Tower has become iconic, we would love to see the New Zealand International Convention Centre become iconic."
Demolition is under way and the first sod is set to be turned next month. "All being well it will take three years before we open."
