The 13 Macau Averages 16 Booked Rooms Per Night, Casino Operators Uninterested in $1.6B Hotel
Posted on: August 31, 2019, 03:00h.
Last updated on: August 31, 2019, 11:37h.
The 13 Macau continues to bleed money despite opening last September, as few visitors are making their way south of the Cotai Strip to the non-gaming hotel property.
Approaching its one-year anniversary, there will be no celebratory party. Instead, parent company South Shore Holdings Limited reveals in its financial year-end report that the property’s occupancy rate is a dismal eight percent on a nightly average price of HK$5,000 ($637).
Built at a cost of $1.6 billion, the ultra-luxurious resort was conceived with the highest of rollers in mind. To date, those VIPs haven’t showed.
The 201-room, all-villa property is located more than a mile south of the Cotai Strip’s southernmost end. Without a casino, analysts believe there’s little to no path to profitability for the high-end hotel that’s not located near any other resort or casino.
In June, the company sold 24 of its 30 red Rolls-Royce Phantoms that were to be used as guest shuttles at a deep discount. The 13 lost $125,000 per vehicle sold.
No Casino Partner
Macau is home to six licensed casino operators – Sands, MGM, Wynn, Melco, Galaxy, and SJM. Each of the gaming companies can partner with hotels to operate casinos on their behalf. But South Shore execs say none of the six have expressed interest.
The entering into of a formal agreement with any concessionaire or sub-concessionaire as operator in respect of any gaming operations in The 13 Hotel continues to remain subject to, amongst other things, the operator making an application and obtaining approval from the Macau Government,” the fiscal report explains.
“Given that no such formal agreement has been entered into, a significant reduction of anticipated occupancy and room rates, as well as forecast revenue, has been made in our business plans,” the company stated.
South Shore says its new business model is refocused to a hotel-only enterprise. “It is now poised to capitalize on its unique, ultra-luxurious theme for establishing of the brand, and market penetration with a view to boost occupancy.”
Odds Against The 13
Each of the 201 villas cost around $8 million to construct and decorate. That’s far higher than the roughly $2.5 million per occupancy price tag at the newly built MGM Cotai and Wynn Palace.
“If the property operates as a standalone hotel, it may be difficult to justify room rates to match its high-end focus,” Bloomberg analyst Margaret Ho said prior to The 13 opening. “Without a casino, it would be nearly impossible to have gamblers book rooms separately with them.”
Ho’s prediction has presumably come true.
Flamboyant businessman Stephen Hung conceptualized The 13 at the height of Macau’s gaming industry in 2013. But the VIP crackdown by China on junket groups took a major chunk out of the high roller business.
Macau casinos transitioned to cater more to the general public. But Hung and South Shore pressed on, with only the VIP in mind. Shares of the publicly traded company are currently $0.01. At their peak in 2014, they were $14.
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