SJM Holdings announced the deal in a Wednesday filing to the Hong Kong Stock Exchange, and a separate press release.

Conversion of the 14,845 square metres (159,790 sq. ft) of space – on floors 21 to 29 of the block in Jilin Road, Hengqin, plus a retail unit at Xinde Jie – is likely to take two years, SJM Holdings said in its filing.

Referring to its Macau operating unit, SJM Resorts Ltd, the parent stated: “The three-star hotel will complement SJM Resorts’ existing five-star hotels such as Grand Lisboa Palace and Grand Lisboa – which are around 10 minutes’ drive and around 30 minutes’ drive from the [new] property, respectively – and capitalise on the expected high demand for budget-friendly accommodation.”

The proposed acquisition and conversion “would allow SJM Resorts to expand its market reach by attracting a new segment of budget-conscious travellers,” said the firm.

“This would diversify our portfolio, expanding our reach into the mass market and increasing overall revenue streams,” it added.

Hengqin has been earmarked by China’s central government as an area to develop the so-called “1+4” policy, to help diversify Macau’s economy from casino gambling. The title indicates the tourism industry, plus four nascent industries: “big health”; modern finance, high-technology business; and conferences and exhibitions as well as culture and sport.

Connected transaction

Daisy Ho Chiu Fung, chairman of SJM Holdings, was cited in the press release as saying: “By leveraging the synergies between Macau and Hengqin, we aim to create conditions for the diversified development of Macau’s industries and contribute to its integration into the national development agenda.”

She added: “The proposed acquisition is strategically situated at a prime location, next to the 24-hour Hengqin Port, and in close proximity to our existing hotel portfolio in Macau.

“It will help broaden the group’s customer base and play a key role in advancing the development of the Macau-Hengqin tourism sector.”

According to Wednesday’s filing, the site is to be acquired from Shun Tak Holdings Ltd, a property, shipping, hospitality and investment conglomerate started by SJM Holdings’ founder, Stanley Ho Hung Sun.

The filing said Ms Ho’s family interests “control … more than 50 percent in the voting power of Shun Tak Holdings, which owns 100 percent equity interest in the potential vendor” of the site.

Shun Tak is chaired by Ms Daisy Ho’s sister, Pansy Ho Chiu King, who is also the company’s managing director.

Ms Daisy Ho also serves as an executive director and deputy managing director of Shun Tak.

The block is said to be close not only to Hengqin Port – the immigration control point to and from Macau – but also the intersection of the Guangzhou-Zhuhai Intercity Railway, linking ultimately to China’s high-speed rail network.

The new property is also near the newly-opened Macao Light Rapid Transit Interchange station, “benefitting from high foot traffic and a full range of amenities, including a 43,000 square metre retail mall, apartments, office and hotel,” said Wednesday’s filing.

Last month, China’s State Council approved new measures that further ease Macau-bound travel rules for residents of neighbouring mainland-China city Zhuhai, as well as for mainlanders resident on Hengqin island next door to Macau.

On December 2, the new “Hengqin Line” for Macau’s light rapid transit (LRT) system started operations.