GGRAsia – Sunday before normal casino hotel ops: Macau’s SJM

Sunday before normal casino hotel ops: Macau’s SJM

Aug 24, 2017 Newsdesk Latest News, Macau, Top of the deck

One of Macau’s six gaming operators has said it could be Sunday before normal operations are resumed at its self-managed casino-hotel properties, following Wednesday’s Typhoon Hato.

That is according to a staff memo issued by SJM Holdings Ltd in the name of executive director Angela Leong On Kei, and seen by GGRAsia.

“Normal operation should resume on August 27,” said the memo.

The document added: ‘Between August 24 and 26, employees who are scheduled to work can choose whether to attend to work. If they show up according to the schedule, they will get pay normally. If they are absent, they will be considered taking a leave of absence.”

SJM Holdings said in an emailed reply on Thursday afternoon – to an enquiry from GGRAsia – that Typhoon Hato had resulted in power supply “failure” at the firm’s Grand Lisboa and Hotel Lisboa properties on the peninsula.

“We are still waiting for CEM [the local electricity company] to resume full power to the hotels and rest assured that the hotels will remain fully operational once power is resumed,” stated the firm.

Most of the Macau casino-hotel operators have played down the impact on gaming operations of the unusually ferocious storm.

Typhoon Hato struck Macau with wind speeds of more than 200 kilometres per hour (124 mph) according to the local weather bureau.

It contributed to the death of nine people and injured more than 240, as well as damaging some Macau casino resorts and causing flooding in certain districts.

One investment analyst covering Macau casino stocks has raised the prospect of slow end-August and early-September performance in VIP and premium mass gambling for Macau’s casinos in the aftermath of Typhoon Hato.

“We expect VIP and premium mass to be quite modest over the coming days and weeks as these customers are likely to divert their trip and come back to the market only once things have returned to normal,” said a Thursday afternoon memo from Grant Govertsen, of Union Gaming Securities Asia Ltd.

According to Macau’s gaming regulator, in the second quarter, VIP play as a proportion of all casino gross gaming revenue stood at 57.0 percent, compared to the 51.5 percent contribution made by VIP in the second quarter 2016.

Weather bureau resignation

On Thursday afternoon it emerged that Fong Soi Kun, the head of the city’s weather forecasting service – the Meteorological and Geophysical Bureau – had resigned in the wake of the Typhoon Hato disaster, which the government said was the worst storm recorded for 53 years.

According to some reports, a number of casinos in the traditional downtown gambling district were without adequate power and water as late as Thursday afternoon.

“As of the afternoon, we believe some of the peninsula flagship properties were still without full power or water,” said Mr Govertsen.

He stated that – following a walk around properties on the peninsula and on Cotai – it appeared that Grand Lisboa and Hotel Lisboa were “closed” as of Thursday daytime, while MGM Macau, operated by MGM China Holdings Ltd, was “only partially operational”.

Grant Bowie, chief executive of casino operator MGM China Holdings Ltd, told Chinese-language newspaper Macao Daily News that casino operations at MGM Macau on the city’s peninsula were suspended from Wednesday night until Thursday morning.

MGM China said in a statement to GGRAsia on Thursday afternoon: “While this was an exceptional situation, we have been working closely with the combined support of the Macau government and the utilities companies including our power, water and telephone services to restore operations and protect our employees and guests.”

The firm added: “We have sustained some damage to the building, which is relatively minor and we believe will not have any impact on our return to normal operations.”

Sands China Ltd said in a Thursday statement that services at its Sands Macao property on the peninsula were “significantly reduced on Wednesday 23 August due to power and water outage”. But the firm added: “As of earlier this evening we have largely resumed normal operations as power and water supply are being progressively restored.”

The firm separately confirmed that day that a media event scheduled for August 28 to mark the 10th anniversary of the opening of its Venetian Macao resort, had been cancelled due to the typhoon emergency.

Brokerage Sanford C. Bernstein Ltd said in a Thursday note that according to its latest information at that time, Galaxy Entertainment Group Ltd’s StarWorld Hotel in downtown Macau was “not operating”.

An emailed statement from the company sent to GGRAsia on Thursday evening didn’t confirm that claim, but did note: “Some of our facilities have resumed normal operations, but we are still working on other facilities that suffered more severe damage.”

Melco Resorts and Entertainment Ltd said in a Thursday statement that the firm’s Cotai operations “continue to operate as normal and our employees have shown exemplary customer service in dealing with guests’ safety and comfort”. It added: “Melco Resorts has been working closely with the government over the last 24 hours to ensure continuity of services across our hotels following Typhoon Hato, including the implementation of power conservation measures.”

The firm operates two properties on Cotai – City of Dreams and Studio City – and one in Taipa, called Altira Macau.

On Friday, a communications firm – on behalf of Melco Resorts – said in an email to GGRAsia that Altira Macau “is now opened and the casino has been fully opened since 4pm yesterday [Thursday]”. Melco Resorts had said in a Wednesday release the property had “suffered from some power shortages,” with the company deciding to relocate guests to its Cotai properties.

Cotai vs peninsula

Union Gaming noted on Thursday: “Cotai is generally in pretty good shape as of this afternoon, which we would attribute to much better (newer) infrastructure, including much wider roads.”

The institution added: “The Macau peninsula, however, is an entirely different story. Navigating the roads still remains incredibly challenging, and is likely to be this way over the coming days as trees and debris are gradually cleared.”

Sanford Bernstein’s analysts Vitaly Umansky and Zhen Gong said in their Thursday note that there would be “a negative impact” on gross gaming revenue (GGR) for the month of August due to the impact of Typhoon Hato. “We are now reducing our August estimate as a result of the disruptions. Our revised August GGR estimate is now in a range of MOP22.2 billion (US$2.78 billion) and MOP22.8 billion. This would represent a year-on-year increase in August of +18 percent to +21 percent, reduced from prior estimate of 24 percent to 26 percent.”

Telsey Advisory Group LLC’s analyst David Katz said “the full impact [of Typhoon Hato] remains a largely unanswered question. Therefore, while we concede there should be meaningful impact to results for the month and ultimately to our estimates, we are deferring any change to our forecasts pending a clearer accounting in a number of important areas, including physical damage and customer access to the market.”

The U.S.-based analyst added: “Among the most important issues in our view is the access to the market by consumers and whether the ferry or air access has been impacted by the storm. While reports suggest that ferry service resumed Thursday morning, the ability of the operators to receive an appropriate volume of customers, particularly in Cotai, remains to be seen.”

At a Thursday evening press conference, Macau’s Chief Executive, Fernando Chui Sai On, apologised to the public for any shortcomings regarding the local government’s work in handling the aftermath of the storm.

Some public criticism had focused on the fact that Macau was mostly dependent on neighbouring Zhuhai for its electric power, and for a significant portion of its water supply. A grid system supplying power from Zhuhai reportedly failed as a result of the typhoon, knocking out power to much of Macau. While power supplies were restored in some parts of the city by Wednesday evening, household water remained cut in some districts late into Thursday night.

Hoffman Ma Ho Man, deputy chairman of Macau casino investor Success Universe Group Ltd, an investor in the Ponte 16 casino resort near the city’s Inner Harbour – which suffered flooding during Typhoon Hato – told Chinese-language Hong Kong newspaper Ming Pao that such a strong storm was a rare event. He stated that since the property opened in 2008 there had been two flooding incidents, with Wednesday’s by far the most serious.

Macao Government Tourism Office (MGTO) said in a Thursday press release it had approached local hotels “for further information on their situations, including their status of water and power supply as well as room reservation”.

MGTO also addressed rumours circulating locally that some hotels might have been seeking to exploit the emergency by quoting extremely high prices to some stranded travellers.

“Up to now, MGTO has received six enquiries, complaints and suggestions regarding visitor itineraries, taxi service and travel agency service. There is no complaint or enquiry about hotel room price up to this moment,” said the tourism bureau.

(Updated 8.50pm Aug 25)