Grand Lisboa Palace to Focus on Macau VIP, $5B Resort SJM’s Biggest Bet to Date

Posted on: May 5, 2021, 07:13h. 

Last updated on: June 3, 2021, 03:09h.

The $5 billion Grand Lisboa Palace, SJM Holdings’ first integrated casino resort on the Cotai Strip in Macau, hopes to open before the end of June. 

Grand Lisboa Palace SJM Macau Cotai Strip
Grand Lisboa Palace, a $5 billion undertaking, is seen complete on the Cotai Strip. The Macau resort is SJM Holdings’ largest investment ever. (Image: Inside Asian Gaming)

During the company’s first-quarter 2021 earnings call this week, executives said they are still waiting on their table games allocation from the Macau Gaming Inspection and Coordination Bureau (DICJ). SJM said it wishes to have approximately 300 table games and more than 1,000 slot machines when it welcomes its first guests. 

The 300-table target is considerably more than what the DICJ typically allows for new integrated resorts. The gaming regulator’s standard for new large-scale casinos is usually around 150 to 200 table games. SJM is seeking a higher issuance of table games because of its focus on the premium segment and VIP junkets.   

“Premium mass operations and marketing are ready to go, and the success of Grand Lisboa Palace largely hinges on the ability to execute on that very competitive segment,” a note from financial Credit Suisse explained. 

Late to Cotai

SJM Holdings is the casino empire of the late Stanley Ho, the so-called “King of Gambling.” For decades, Ho held a monopoly on casino gambling in Macau, and it made him a billionaire numerous times over.

Ho’s monopoly ended soon after Portugal returned Macau to Chinese rule in 1999. Another late billionaire — Sheldon Adelson and his Las Vegas Sands — transformed Macau into the world’s richest casino market by expanding into Cotai. 

The five new commercial casinos include Sands, MGM Resorts, Wynn Resorts, Galaxy Entertainment, and Melco Resorts. The license holders in Macau followed Adelson to Cotai. Adelson sought to build China’s version of the Las Vegas Strip, and he did that and more.

Today, the Cotai Strip is home to 10 integrated casino resorts. It’s also the go-to spot for Macau’s highest of rollers. SJM, however, is only now entering Cotai with its Grand Lisboa Palace.

Analysts are skeptical SJM will be able to grab any substantial market share on Cotai anytime soon.

Competition on Cotai is very strong and product offering is very competitive. Marketing prowess, loyalty programs, and service levels are also likely to remain strong (and better) at many other properties,” declared analysts at Sanford C. Bernstein.

“We do not expect Grand Lisboa Palace to even get fair share on Cotai (at least in the first few years),” the note added.

Q1 Earnings

SJM Holdings told investors this week that it lost HK$647 million (US$83.3 million) during January through March. Gross gaming revenue dropped 29 percent to $310.2 million, and total net income was similarly down 29 percent to $317.9 million. 

Despite the results, company officials are optimistic regarding the firm’s outlook, which is highly dependent on Grand Lisboa Palace’s performance. 

“SJM’s results recently have begun responding to the resumption of leisure travel to Macau,” said Ambrose So Shu Fai, SJM vice-chairman and CEO. “We look forward to further gradual improvement in market conditions for the rest of 2021.”