Grand Lisboa Palace to open with 300 gaming tables, focus on high-end: SJM

The company provided details on its launch plans during its 1Q21 earnings call with analysts on Tuesday, including a detailed focus on how its gaming areas will look once operations finally get underway at the HK$39 billion (US$5 billion) IR.

According to analysts, SJM management confirmed that Grand Lisboa Palace will hold a partial opening before the end of Q2 with 304 gaming tables and 1,034 slot machines during the initial stages plus around 300 hotel rooms – rising later to 1,892 rooms once its two boutique hotels – Palazzo Versace Macau and Karl Lagerfeld Hotel – open in the coming months.

SJM said it has not yet received its allocation of new to market gaming tables from the Macau government but anticipates between 150 and 200 based on recent allocations to its Cotai peers. The remainder will be moves from existing properties.

The early focus will be on the premium segments, including VIP, with junkets said to be “optimistic about prospects at the property and according to management eager to start operations,” as per a note from Credit Suisse analysts Kenneth Fong, Lok Kan Chan and Rebecca Law.

“Premium mass operations and marketing are ready to go, and the success of Grand Lisboa Palace largely hinges on the ability to execute on that very competitive segment.”

While SJM continues to lag behind its competitors in terms of market share while it waits to finally open Grand Lisboa Palace, the company told analysts it is confident of reclaiming “better than fair share” once first guests are welcomed.

“We are very skeptical that this can be achieved at Grand Lisboa Palace,” said Bernstein’s Vitaly Umansky, Louis Li and Kelsey Zhu.

“Competition on Cotai is very strong and product offering is very competitive (and in often cases will be superior). Marketing prowess, loyalty programs and service levels are also likely to remain strong (and better) at many other properties. We do not expect Grand Lisboa Palace to even get fair share on Cotai (at least in the first few years).

“Management believes junkets are very keen on the Grand Lisboa Palace product.  That may be so – Grand Lisboa Palace will take some junket share in the market. However, margin will be very questionable.

“We need to wait and see what GLP will offer with respect to junket incentives and credit – which could be a key driver of share gain (with significant impact on profit potential).”

Grand Lisboa Palace will open with around 2,000 staff, rising to 6,000 once fully ramped.