Macau gaming operator SJM Holdings will likely open only parts of its new HK$39 billion (US$5 billion) Cotai integrated resort, Grand Lisboa Palace, in 1Q21 with some hospitality amenities to be further delayed, according to Union Gaming analyst John De Cree.
SJM revealed during its third quarter results announcement last week that it was no longer aiming to open Grand Lisboa Palace before the end of this year, with COVID-19 pressures pushing the long-awaited unveiling into 2021.
But even then it looks like the opening will be phased.
“SJM is expecting to open Grand Lisboa Palace in 1Q21, with the scale of the opening in terms of rooms and tables being dictated by market conditions at the time. With this in mind, and the current trajectory of the recovery in Macau, we expect a partial opening,” DeCree said in a Wednesday note.
“All construction is completed and the final inspection and approval processes are underway. The property already has in-house casino staff and much of the staffing for the casino is done.
“Management will look to staff the hospitality segments closer to their opening. We suspect the opening of a large portion of the hospitality amenities would be delayed until more significant demand returns to Macau.”
As the final concessionaire to open an IR in Cotai, Grand Lisboa Palace represents a key milestone for SJM in its quest to claw back some valuable market share in Macau – having fallen from around 31% in 2009 to just 14% in 2019.
According to DeCree, the property – featuring 27,000 square meters of gaming floor, 75,000 square meters of retail and 1,900 hotel rooms across three luxury hotel brands – could also serve as a potential demand driver in luring some visitors back to Macau.
With that in mind, management mentioned during its analyst call last week that it would be willing to provide credit for premium mass and direct VIP play once Grand Lisboa does open its doors, given it is the higher end of the market that is driving recovery.
Nevertheless, based on the current environment, “we are expecting a slower ramp throughout 2021 and looking forward to 2022 as the first full year of operations,” DeCree said.
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