The HK$594 million (US$74 million) acquisition by Macau concessionaire SJM Resorts of nine floors of office space in neighboring Hengqin for conversion into a three-star hotel will provide the company with valuable room inventory, according to Morgan Stanley analysts, although short-term impact is seen as limited.
In a note, Praveen Choudhary and Gareth Leung described the acquisition as a “strategic” move by SJM given the under-supply of hotel rooms across Macau. They also point to the timing, with a recent government initiative granting multiple entry visas to Macau for Hengqin residents and mainland tour groups “[making] it easier to have a hotel in Hengqin and shuttle [guests] to Macau casinos.”
However, the hotel will not be ready for another 18 months, so there will be no immediate benefit to the company.
Morgan Stanley estimates the new hotel will comprise 300 rooms of around 500 square feet each, implying a cost of HK$2 million (US$250,000) per room.
