The massive integrated resort and casino SJM Holdings is planning on building at the Cotai Strip is set to HK$20 billion ($2.57 billion).
Or so that was what the company thought. But with rising labor and construction costs, an additional HK$5 billion ($645 million) has been tacked on to the initial budget, bringing the total cost of the resort to a staggering HK$25 billion ($3.22 billion).
SJM CEO Ambrose So made the announcement at a media briefing, explaining that the company was prepared to do whatever it takes to see the project through, even if it meant having to add more money to build what could very well be one of the most extravagant hotels in Macau’s Cotai Strip.
A lot is certainly riding on SJM to make an impression in the area being touted as Macau’s answer to the Las Vegas Strip. Of the six casino operators in the gambling hub, SJM became the last to receive government approval to develop a Cotai resort so while the operator ended up being late to the Cotai casino party, it’s determined to enter the scene with a bang the likes of which Cotai hasn’t seen in…well, ever.
A big part of that is to ensure that its first venture on the Cotai Strip will be a resounding success, financial implications notwithstanding. SJM recently signed a deal with Italian fashion house Gianni Versace SpA to bring the latter’s Palazzo Versace hotel, which is expected to come with as many as 270 rooms, to Macau and be part of the enormous resort and casino.
The rationale behind SJM Holdings’ budget increase is understandable and a clear sign of the times that doing things ‘big’ just won’t cut it in the Cotai Strip. The competition is getting hot and heavy in the area; MGM China has already started building its new $2.6 billion resort while Wynn Macau and LVS China are also both in the middle of adding new resorts to their existing ones on the Strip.
So excuse SJM Holdings for saying that $2.57 billion isn’t enough to finance its first integrated resort and casino. For as dominant as the operator is in Macau – it operates 20 of the city’s 35 casinos – it’s pulling out all the stops to serve clear notice that its first resort and casino at the Cotai Strip will be one to behold.