SJM’s Grand Lisboa Palace expected to delay full opening

The opening of a large portion of the hospitality amenities at the SJM’s Grand Lisboa Palace will likely be delayed until more significant demand returns to Macau, brokerage Union Gaming believes.

The gaming operator announced last week that the expected opening of its first Cotai integrated resort has been delayed for the first quarter of 2021. According to Union Gaming, the scale of the opening in terms of rooms and tables is being dictated by market conditions and considering the current trajectory of the recovery in Macau, a partial opening for the resort is expected.

"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," the consultancy said in a note, as reported by Macau News Agency. "Given the current environment, we are expecting a slower ramp throughout 2021 and looking forward to 2022 as the first full year of operations."

On Tuesday, SJM Holdings Co-Chairman and Executive Director, Angela Leong On Kei, stated that gaming operators must re-thinking their approach to the tourist market in order to speed up recovery from the pandemic, including reducing distinctions between VIP and mass gaming as well as having a greater focus on non-gaming attractions, according to a TDM radio report.

Gross gaming revenues increased by 230 percent between September and October to MOP7.2 billion (USD 910.5 million), as visitation numbers slowly increased following the reinstatement of tourist visas for Chinese nationals. SJM itself reported some HK$1 billion in net losses in the third quarter of this year, as net gaming revenue dropped by about 90 per cent year-on-year to HK$841 million.

Union Gaming predicted a modest recovery for SJM throughout the fourth quarter, but noted that without automated visa issuance and improved liquidity and capital outflow from China any material recovery would be difficult. "As it relates to capital controls, SJM hasn’t seen any impact on the mass market yet but said it was hard to assess given the sharp pick up in business after complete closures. However, the company did suggest it would be willing to provide credit for premium mass and direct VIP when Grand Lisboa Palace opens," the note read.

Union Gaming also forecasted that by 2022 Grand Lisboa Palace could be reporting up to HK$1.86 billion in Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA).