SJM Holdings Likely Delaying Opening of $5B Grand Lisboa Palace on Cotai Strip Due to Pandemic

Posted on: March 19, 2020, 08:32h. 

Last updated on: March 19, 2020, 11:06h.

SJM Holdings is prepared to open its $5 billion Grand Lisboa Palace casino resort on the Cotai Strip at any moment, but may be forced to push back the grand opening until 2021 because of the COVID-19 pandemic.

SJM Holdings Grand Lisboa Palace
Envisioned by SJM Holdings founder Stanley Ho, Grand Lisboa Palace isn’t expected to open this year, though it’s ready for business. (Image: Paul Yeung/Reuters)

As reported earlier this week, construction on the massive project completed in 2019. SJM has filed the appropriate paperwork with Macau’s Gaming Inspection and Coordination Bureau to commence operations later this year.

JPMorgan gaming analysts covering Asian markets don’t believe it will happen.

SJM has not changed official target opening of end 2020, as construction has already been completed and opening date will be dictated by the progress of government approvals (which is unpredictable),” said analysts DS Kim, Derek Choi, and Jeremy An.

“The management’s level of conviction on this timeline seems lower than a quarter ago (understandably so), and we keep first-quarter 2021 opening in our model (which we think is a consensus view by now),” they added.

Slow Response

SJM has long been behind the eight ball when it comes to Cotai. The area first developed by Las Vegas Sands more than a decade ago is today where the richest high rollers take their gaming dollars.

Though it was the first licensed casino operator in Macau, as it held a gaming monopoly on the enclave for decades until it was returned to China in 1999, SJM is the last to Cotai. Founded by billionaire Stanley Ho and maintained control by his children today, Grand Lisboa Palace is the company’s effort to regain some of the major market share losses it has incurred over the last 15 years.

COVID-19 has brought non-essential business to a standstill around the globe. And that is expected to delay Macau officials from signing off and issuing necessary approvals to allow the $5 billion integrated resort to welcome guests.

Grand Lisboa Palace measures 5.6 million square feet, with more than 90 percent of the area devoted to non-gaming facilities. The resort features three hotels – Grand Lisboa Palace, Palazzo Versace, and Karl Lagerfeld – with 1,900 occupancies.

New Cases

Along with its Grand Lisboa casino on the Macau peninsula and the forthcoming Grand Lisboa Palace in Cotai, SJM Holdings operates Casino Oceanus at Jai Alai, Casino Taipa, and 16 satellite (third-party) casinos.

Gaming has come to a screeching halt because of the coronavirus. A mandatory 15-day closure in February resulted in gross gaming revenue (GGR) nosediving 88 percent to $387 million. JPMorgan is forecasting casino win to drop 80 percent this month.

After going 40 days with no new coronavirus cases, three new patients this week tested presumptive positive for the deadly respiratory disease in the enclave. As a result, the Special Administrative Region government announced a ban on all travelers except those coming from China, Hong Kong, or Taiwan.

SJM chairman Daisy Ho told investors this week, “The disruption of SJM’s business due to the outbreak of COVID-19 is expected to have a material adverse effect on the group’s results in the first half of 2020 and potentially beyond.”

“It is not possible to predict the full extent or duration of the impact, however, as it will depend on the progression of the disease and efforts to control it,” she added.