SJM Partners With Versace to Build Luxury Hotel in Macau

Aug. 21 (Bloomberg) -- SJM Holdings Ltd., Asia’s biggest casino company, said it is planning a luxury hotel with Italian fashion house Gianni Versace SpA as it seeks to lure the wealthiest Chinese gamblers to its upcoming Macau resort.

The five-star Palazzo Versace hotel will be built at SJM’s planned resort on the city’s Cotai area, which is Asia’s equivalent of the Las Vegas Strip, according to a statement from the companies yesterday.

The casino operator founded by Hong Kong tycoon Stanley Ho is partnering with Versace as it pushes to catch up with competitors such as Sands China Ltd., which already have premium Cotai hotels for high-stake gamblers. SJM currently runs 20 out of the 35 casinos in Macau and has none on the Cotai Strip, which is becoming increasingly popular with mainland Chinese tourists.

“SJM is doing the same thing everybody else is doing to lure high-end gamblers,” Grant Govertsen, an analyst at Union Gaming Group, said by phone today. “Building a hotel under a luxury brand sort of makes sense as it will have an appeal to wealthy Chinese visitors.”

The high-stake gamblers, or so-called VIPs, accounted for two-thirds of Macau’s $38 billion casino revenue last year. Deutsche Bank AG has estimated that the city’s casino revenue will rise 17 percent to $44.5 billion this year.

SJM shares rose 0.2 percent to HK$19.18 in Hong Kong trading today. The stock is up 6.6 percent this year compared with a 4.3 percent decline for the benchmark Hang Seng index.

The hotel will be the first Palazzo Versace in Asia. It has projects in Australia and Dubai.

Gambling Monopoly

Ninety-one year old Ho held a Macau gambling monopoly for four decades until 2002, when the government issued licenses to foreign players such as Sands and Wynn Resorts Ltd. He was initially reluctant to copy the Vegas-style glitz of his U.S. competitors, which added hotels with spas, penthouses and family-style entertainment.

SJM in May became the last Macau casino operator to receive government approval to develop a Cotai complex. It said the resort will have 2,000 hotel rooms and about 700 gambling tables.

The casino operator will need to cater to both mass-market and VIP visitors, said Govertsen.

“The Versace hotel is more likely to be a boutique hotel, taking up a small portion of room supply in SJM’s Cotai resort,” he said. “SJM is going to have another hotel brand to make up the rest.”

Sherman Yu, a spokeswoman for SJM, declined to provide further information on the project. The company, together with Donatella Versace, co-chairman of the fashion house, will hold a press conference on Sept. 5 to announce details.

The casino operator last week joined MGM China Holdings Ltd. and Melco Crown Entertainment Ltd. in reporting higher profits in Macau, the world’s biggest gambling hub and the only place in China where casinos are legal. New attractions, added hotel rooms and an improved rail connection are drawing more mainland Chinese visitors to the former Portuguese colony.

To contact the reporter on this story: Vinicy Chan in Hong Kong at vchan91@bloomberg.net

To contact the editor responsible for this story: Stephanie Wong at swong139@bloomberg.net