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China – Grand Lisboa Palace is ‘make or break’ for SJM

By - 14 June 2017

Brokerage firm Sanford C Bernstein has labelled Grand Lisboa Palace as ‘make or break’ for SJM holdings, the company that once held a monopoly on casino gaming in Macau.

In a research report called ‘The competitive landscape in Macau – a look at the six gaming operators,’ Bernstein detailed a number of problems on the horizon for SJM, who plans to open Grand Lisboa Palace in the second quarter of 2018.

The company’s Vitaly Umansky, Zhen Gong and Yang Xie wrote: “SJM has significant exposure to low quality peninsula-based satellite properties and a lack of scale and product quality to focus on premium mass. The company is losing market share in both VIP and mass as players move to higher quality offerings. Until Grand Lisboa Palace opens in 2018, SJM lacks presence on Cotai. The key catalysts to look at are over-reliance on satellite casinos which are uncompetitive and losing ground in defending its VIP market share – the company would need to reverse this trend, but it may be difficult in light of competition. Grand Lisboa Palace may be a ‘make or break’ development for the future of SJM.”
“SJM used to be the dominant VIP operator when looking at both its owned business and the satellite operation,” the report added. “However, SJM has been experiencing market share loss in both divisions as the property quality is lacking relative to competitors and many junkets prefer to work with other operators. The satellite business will continue to suffer share loss.

“Grand Lisboa Palace may allow SJM’s owned casino business to regain some lost share. The opening of Grand Lisboa Palace will be the real test of the company’s ability to stem the tide.”

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