Renovation of guest rooms (example pictured) at the Grand Lisboa casino hotel, the Macau-peninsula flagship of SJM Holdings Ltd, will begin during the current quarter, and “should be finished in two years”.
That is according to a Tuesday note from China International Capital Corporation (CICC) Hong Kong Securities Ltd, citing comments by the casino group’s management during a conference call on the first-half results.
The revamp would include “facelift of hotel rooms, addition of casual restaurants, and introduction of retail options,” stated the memo from analysts Shengyong Goh and Liwei Hou, and their colleague, associate Jiayu Wang. No mention was made in the brokerage’s note of the cost of such a revamp.
Grand Lisboa was one of the first generation of large-scale, post-liberalisation properties in Macau, opening in stages from February 2007.
Grand Lisboa generated first-half gross revenue of HKD2.40 billion (US$306.5 million), including casino gross gaming revenue (GGR) of nearly HKD2.27 billion, and non-gaming revenue of HKD137 million.
CICC also mentioned in its note, citing management, that the casino group expects all hotel rooms at its HKD39-billion Cotai resort, Grand Lisboa Palace, “to fully open by fourth quarter 2023”.
SJM Holdings already has two hotel brands fully in use at Grand Lisboa Palace. A third one – Palazzo Versace Macau – had a soft opening in late April.
Although Grand Lisboa Palace’s first-half adjusted property earnings before interest, taxation, depreciation and amortisation (EBITDA) were negative by HKD292 million, CICC said in its memo that “in July and August, EBITDA run rates at Grand Lisboa Palace broke even”.
CICC added: “Management aims to ramp up Grand Lisboa Palace via improved casino yields [and] hiring of additional casino marketing staff: an additional 20 by end-2023.”
Analysts John DeCree and Max Marsh from CBRE Securities LLC observed that one of the management’s strategies for Grand Lisboa Palace was “improving the hold rate with a more recreational customer base”.
They stated in a Tuesday note that Grand Lisboa Palace should “break even… at its current market share of 2 percent, compared with 2 to 3 percent previously expected”.
The first-half loss at SJM Holdings narrowed to HKD1.26 billion, a 54.1-percent improvement on the prior-year period. Group-wide it also recorded positive adjusted EBITDA for the first time since 2019.
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