Emperor Entertainment Hotel Ltd, the operator of Macau’s Grand Emperor Hotel and its affiliated casino, has recently entered into a revised agreement with concessionaire SJM Resorts. This move is a response to the remarkable recovery witnessed in Macau’s gaming and leisure market throughout 2023, surpassing initial estimates and prompting a reassessment of service fee caps for 2024 and 2025.
In light of the rapid resurgence of Macau’s gaming and leisure industry, Emperor Entertainment Hotel Ltd (Emperor E) has strategically modified its agreement with SJM Resorts. The revised terms address the unanticipated growth in the service fee receivable from SJM, exceeding the originally established Annual Caps.
Background:
The boards of directors from both companies acknowledged the need to adapt to the changing dynamics of the market. Emperor E Hotel Group, through its subsidiary Tin Hou Ltd, operates the Grand Emperor Hotel under a satellite casino agreement. The revised agreement reflects a collaborative effort to enhance revenue and accommodate the evolving landscape of the gaming and leisure sector.
Revised Annual Caps for 2024 and 2025:
Under the updated agreement, the maximum amount payable by SJM to Emperor E for the financial year ending March 31, 2024, has been raised from HK$400 million to HK$600 million (US$51 million to US$77 million). Additionally, for the year ending March 31, 2025, the cap has been increased from HK$600 million to HK$1 billion (US$77 million to US$128 million). This strategic adjustment positions Emperor E to harness the flexibility required to capitalize on the heightened service fee income from SJM and ultimately boost overall revenue.
Short-term Projection:
Looking ahead, the revised caps also address the three-month period ending December 31, 2025. During this period, the cap has been adjusted from HK$700 million to HK$900 million (US$90 million to US$115 million), further illustrating the anticipation of sustained growth in the service fee income.
Emperor Entertainment Hotel’s decision to revise the Annual Caps in collaboration with SJM Resorts demonstrates a proactive approach to capitalize on the unexpected resurgence in Macau’s gaming and leisure market. This strategic move not only reflects the adaptability of both companies but also positions Emperor E Hotel Group to navigate the evolving landscape and boost its revenue streams in the coming years. The revised caps provide the necessary flexibility to accommodate the changing dynamics, thereby fostering a mutually beneficial partnership between the operator and concessionaire in the thriving Macau market.