Macau casino operator SJM Holdings expects its long-awaited Cotai resort, Grand Lisboa Palace, to be fully open by the end of 2023, with 1,892 hotel rooms in three towers all ready for occupancy. \
SJM opened the Grand Lisboa Palace Hotel in July 2021. The Karl Lagerfeld-branded hotel followed in December that year, and the Palazzo Versace Macau opened in April. But occupancy has been limited, in part due to labor shortages in the city.
The Cotai property has yet to “achieve a critical mass of patrons to generate sizable profits” given its “poor location” and “lack of destination appeal,” wrote the analyst team at JP Morgan.
“Plus, the demise of junkets means that everyone will need to build up their own high-end business, namely premium mass and direct VIP, which may not be easy for SJM as one may think, given its lack of experience or database in this area,” the team added.
However, “significant cost saving efforts” during the Covid-19 pandemic proved “a key positive” for the operator.
We believe SJM’s all-in operating expenses for self-run casinos by 2024 will be only 5 percent to 10 percent above pre-Covid levels despite significant additional capacity from its flagship (and by far the largest) property Grand Lisboa Palace, thanks to significant cost saving efforts during the pandemic,” said the brokerage’s memo, in a report from GGRAsia.
