SJM’s biggest bet to date Grand Lisboa Palace may joined the Cotai too late
Grand Lisboa Palace is just about to open two months later but analysts are skeptical about it could get any substantial shares on much crowded Cotai market.
In the first quarter earnings call this week, executives of SJM said they are still waiting on table games allocation from the Macau Gaming Inspection and Coordination Bureau (DICJ). The company wishes to have about 300 table games and more than 1,000 slot machines when it welcomes first guests.
The 300 target is considerably more than what the DICJ typically permits for new integrated resorts. The 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.
SJM have joined the Cotai late
Let us begin with a bit of history… SJM is the casino empire of the late Stanley Ho, the so-called “King of Gambling.” For decades, Ho held a monopoly on casino in Macau.
Ho’s monopoly concluded soon after Macau returned 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. Adelson aspired to create Chineses version of Las Vegas Strip.
In this day and age, the Cotai Strip is home to 10 casino resorts, also a hot spot for high rollers. However, SJM is only now entering Cotai with its Grand Lisboa Palace. That is part of the reasons why analysts are skeptical SJM will be able to seize any significant market share anytime soon.
Difficult to get fair share on Cotai
“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 at many other properties,” declared analysts at Sanford C. Bernstein.
The company told investors this week that it lost HK$647 million (US$83.3 million) during the first quarter. Gross gaming revenue dropped 29% to $310.2 million, and total net income also reduced 29% to $317.9 million.
In spite of the earning results, company officials are optimistic regarding the outlook, which is highly dependent on the performance of Grand Lisboa Palace.
Editing by Rachel Hu