The monthly numbers for March at Cairns Airport were as bad as expected.

As flagged last month the March numbers are negatively impacted by lunar shifts in Easter and the new year. Again the best timely commentary on general market conditions comes from Sydney Airport which also did a data dump on Good Thursday for bad news.

International and Domestic passenger numbers declined 3.8% and 3.4% respectively on the prior corresponding period. As expected, International passenger numbers were impacted by a shift in timing of both Easter and Lunar New Year driving decreases in both seat capacity and load factors. However, strong load factors on North American routes helped boost US traveller growth to 11%. Domestically, the trends for March were similar to the year to date, where a decrease in frequencies, aircraft downgauging and subdued load factors drove a reduction in domestic passengers for the month.

There will be no excuses in April with the tailwinds into Cairns all positive from the later Easter shift and a scheduled domestic capacity increase from Qantas. After that the lunarcy events will be behind and we shouldn’t (?) see negative monthly domestic numbers of that size at Cairns Airport for the remainder of the year.

I don’t know do you?

Who could ever guess that the biggest statistical outcome from a disaster event in Townsville would be an explosion in pokie revenue, up 21% for the month on the previous March?

Note: The graph above is annual growth. March comparison numbers would be boosted by the early Easter in 2018 which would take out the Good Friday trading day for venues in that year and add maybe 3% to growth  rates for the month. This would only be a partial contribution to the numbers north of the Burdekin with Cairns also up 10.9% against 4.5% for all Queensland for the month compared to the previous year.

I usually update the Queensland EGM (pokie) statistics promptly every month. The numbers for February were released a couple of weeks ago and I haven’t posted because I’m completely flummoxed by the results.

Flooded Townsville exploded with pokie revenue win/loss up an astounding 33% on the previous year in February. That’s about an additional $2 million flushed down the machines in the wake of a disaster.

It has even thrown an extreme wonk into the annual data:

I don’t know what to make of it and not sure I believe it. Having analysed this data for a while now I can think of a couple of possible partial explanations but not sure I find any satisfactory to explain this extraordinary outcome. Barring any rational explanation I can only suggest it could make a good sociology thesis.

Meanwhile the Cairns growth numbers continue above the Queensland average. Mostly in the suburbs but some interesting numbers down in Innisfail. More significantly the Douglas pokie boom is over. Douglas and Cairns City SA2 (ex casino) are both double digit negative for the opening two months of the year.

Travelling back through Brisbane Airport yesterday a quick check on my budget Acer Spin road warrior discovered the Cairns Airport statistics for February. However by the time I arrived home the Airport web site seemed to be undergoing an update with links moved and all I could find on the performance page was the message “Sorry, there are currently no listings.” Luckily the PDF was still open on the road warrior:

1. Maybe i’m too pedantic but how does an organisation like Cairns Airport manage to post online a document with such obvious errors in some of the growth percentages without being picked up by somebody? Maybe it will be corrected when reposted?
2. The numbers and trend are awful. You have to go back to the dark days following the GFC crunch to find a negative domestic month of this size. The -7.9% is correct for the month and now -1.65% annual and falling.

However those early month seasonal factors also come into play as well as recent climatic events. As the largest airport and international gateway Sydney Airport’s ASX listing provides the best timely benchmark. Sydney also posted February numbers this week and the monthly commentary is worthwhile posting on seasonal and capacity factors:

The number of International passengers moving through Sydney Airport in February was slightly ahead of the prior corresponding period (pcp) growing by 0.4%. Domestic passenger numbers were down 2.7% on the pcp.

International passenger numbers grew by 0.4%, which is in line with seat growth through the period. As indicated last month, the shift in the Lunar New Year buoyed January while impacting the February comparison.

International passenger growth year to date is 2.9%, representing close to 83,000 additional travellers through the airport. Last year the Lunar New Year shoulder extended into March, so the shift forward in 2019 will impact the March numbers.

Reduced domestic seat capacity (-1.9%) combined with lower load factors (-0.7%) has impacted the February domestic passenger numbers compared to the pcp. In addition, cancellation rates for the month continue to be higher than usual.

Domestic at Sydney was flat in January so it is noted that they have also experienced a slightly slower negative growth start to the year with international growth also below annual growth in the opening months.

Local media, tourism and lobby groups seem to have finally discovered the slow tourism narrative with the Cairns Post running a campaign on it for a week and we were even feted with a visit from Kate Jones. A Sunday jaunt to Port Douglas (for some Pickled in Port drunken gingers) and a weekday evening wander around the city this month both indicated a quiet March also with some businesses taking the opportunity for a break.

April will be a key month to watch with additional Qantas capacity to Cairns scheduled from March 31. Easter also moves later into April with Good Friday last year on March 30. Hanrahan says if we can’t get a positive growth month in April with a tailwind from those factors then we’ll all be rooned before the year is out.

No respite in January numbers at the Airport with domestic down -4.7% on the previous year.

Difficult to know without again any commentary from the Airport. Sydney Airport reported increased domestic traffic towards the end of the month related to pull forward of Chinese new year which should have been a boost for the month. On the other hand January in Cairns was impacted by heavy rainfall and floods with tour operators like Experience Co reporting cancellations.

International held up which may be related to direct Chinese traffic but will have to wait a couple of months for BITRE route data on that.

Experience Co half yearly this morning following the recent guidance downgrade:

Adventure Experiences

The growth on the prior period, has been driven by the full period contribution of the 1H18 acquisitions, in particular Big Cat, Tropical Journeys and Great Barrier Reef Helicopters (‘GBRH’).
Overall, with over 98% of our Adventure Experience business located in Far North Queensland our earnings have been impacted by record rainfalls in late 2018 and a softer tourism market, which is reflected in period on period decreases in airport arrivals (both domestic and international). Market commentary attributes a significant driver to be domestic airline capacity and ticket pricing, which is driving down the all important domestic incoming passenger volume, noting that Cairns international patronage often comes via other major Australian centres.
These factors were the primary drivers of the revised earnings guidance issued in February 2019, as these conditions continued into early 2019.

Many of the Cairns businesses were acquired during the previous corresponding period in 2018 so what we don’t get this time is a direct comparison as previously provided, Update on Experience , which flagged very modest comparative growth between peak dry season quarters for the FNQ components.

Perhaps we have a more savvy management with market responding positively to Bob East (ex Mantra CEO) exercising control.

I did log in to the results conference call but was cut off for another call. The results presentation is worth a look and has a trio of interesting graphs:

Not sure on the record rainfall with Cairns Aero 300mm short of the 2000 calendar record with Cyclone Steve the monthly record in February 2000. There is material for a rant post though on the way this has been presented and rainfall statistics.

Most interest is in that FNQ hotel occupancy from TTNQ. Dransfield Hotel Futures is a few months away and not sure when the next Accommodation Monitor from TRA is due. However this indicates that the growth in recent years occupancy has stalled and reversed. That is despite the reduced capacity during the period from the Crystalbrook transformation of the Tradewinds which was returned from December.

Was looking for a Friday dump from the airport but it was Reef Casino (RCT) which got in with an annual result after market closed. $10.1 million is the lowest result since 2010 as flagged in the distribution estimate in December: Hard grind at Reef

Commentary wasn’t as forthcoming as hoped particularly nothing on trading since and into the Chinese new year period.

Complex performance Rental paid to Trust  Total complex rentals to the Trust were 4.4% lower due to more challenging trading and economic conditions in 2018 even as visitations to the casino increased by 6.0%.
Casino 

Electronic games Revenues were 4.0%# lower than 2017. We continued to implement measures and take action to increase our competitiveness in the local market. 

Table games Revenues were 12.8%# higher than 2017. Stronger premium play was in a large part due to an improved Chinese New Year tourist season. Softer grind play was mainly due to an overall softer China tourist market. Hotel 

Room accommodation Record revenues were 17.8% higher than 2017. Successful yield management, product packaging and leveraging off Accor’s global and Australian network continue to be key to a good performance.

 Food and beverage Revenues were 0.2%# higher than 2017. Our food and beverage facilities continued to play a key role in supporting our casino operations.
# On a comparative basis without t he impact of AASB 15 Revenue from Contracts with Customers applied for the first time in this period.

1) Room accommodation revenues are driven by both higher occupancy and higher rates associated with reduced capacity in Cairns for the period which is also mentioned previously in the report and in previous posts here. Observers of NVS/IVS expenditure for TTNQ should note increased accommodation rates in recent years.

2) EGM (pokie) revenue down -4.4% is a stark contrast to the regular numbers posted here for booming pubs and clubs in Cairns: Pokies finally rolling over

It’s also a stark contrast to the most recent report from Star Group (SGR) where the annual results report this week pretty much boasted about gains in EGM share for SEQ and particularly Star/Jupiters Gold Coast.

Insurance was also noted in cost increases.

Commentary in the latest report from WGC to the Singapore exchange:

Nothing much changes in commentary except that there have been about 7 additional sales in the quarter which probably isn’t bad given the sales history today and current property climate:

Project Nova City Tower 1
Type Residential & Commercial
Total Units 187
Launch Date 4Q2016 (calendar year)
Units Launched 101
20172Q % Sold* 34%
20173Q % Sold* 34%
20174Q % Sold* 35%
20181Q % Sold* 39%
20182Q % Sold* 50%
20183Q % Sold* 54%
20184Q % Sold* 61%
* % sold based on number of units launched

Still no indication of any construction timetable for Nova and news around the project has been relative quiet of late. A curiosity is sales at Australia 108 in Melbourne which had been as high as 98% before the completion of stage 1 in 2018 but now reported at 89%.

1 Computed based on the number of sale and purchase agreements that have been entered into and still subsisting (less any sale and purchase agreements for those completed units that have been rescinded) or fully settled as at the date of this announcement.

A quick preliminary look at ABS business numbers count data out today for Cairns Regional Council area listed from bottom to top of industry division losses and gains:

Accommodation and Food Services   -29
Construction   -19
Retail Trade   -19
Manufacturing   -13
Electricity, Gas, Water and Waste Services   -10
Rental, Hiring and Real Estate Services   -6
Agriculture, Forestry and Fishing   -4
Information Media and Telecommunications   -4
Arts and Recreation Services   -4
Mining   -2
Wholesale Trade   -1
Public Administration and Safety   2
Education and Training   4
Not Categorised   4
Financial and Insurance Services   6
Other Services   14
Health Care and Social Assistance   34
Administrative and Support Services   36
Professional, Scientific and Technical Services   49
Transport, Postal and Warehousing   207
Total   263

Cairns business numbers were up 1.9% for the year to June 2018 v 2.4% for Queensland. However almost all that gain was in Transport, Postal and Warehousing category (+207 or +21%) and almost all of that was in non employing businesses with turnover <$50k. Is this Uber drivers or something?

Some Queensland analysis from Nick Behrens

Chinese travellers lead the way down under was how the ABS led with the latest overseas arrivals data. China may have overtaken New Zealand but has slowed significantly from previous levels: Short term arrivals data shows Chinese growth slowing further

To update from last month:

December is a more average month in the volatile Chinese arrivals but not sure the most recent months haven’t been just slightly more positive?

Much neglected is the purpose of visit data:

Education may lag a long third behind Holiday and VFR (Visiting Friends & Relatives) over the year but get a load of those peaks around the university calendar. This was a significant  factor in 2017 correlated with Chinese arrivals. Which is why I think in our FNQ context that maybe we should be looking here:

Sydney Airport updated for January today and reported January growth in Chinese numbers at 20%. However this was attributed to end of month traffic with the Chinese New Year period moved forward to earlier February. Domestic at Sydney was flat following recent weaker months.

Lots of Cairns stuff due over the next week: Cairns Airport January; Reef Casino Annual Result; Experience Co half yearly; World Class Global including Nova.