Casinos to benefit as China visa walls crumble

As China’s outbound tourism market continues to balloon, a growing number of destinations are easing visa requirements to woo the mainland traveller, with casinos in those countries likely to be among the key beneficiaries.

In 2015, total outbound tourism from China rose 10 percent to 128 million. However, if you exclude Hong Kong and Macau, outbound travel was up 28 percent. According to CLSA Research, 2016 is also off to a good start with growth of more than 50 percent in Australia, Vietnam, Singapore, the Philippines and Japan.

Tourism spending rose 53 percent from $140 billion in 2014 to $215 billion in 2015, says the World Travel and Tourism Council.

China is expected to become the fourth-biggest source market for international tourism after the U.K., U.S. and Germany, with far flung countries such as Iceland expected to receive more visitors from China this year than from any of its Scandinavian neighbors, according to Wolfgang Georg Arlt, professor for tourism management and director of the China Outbound Tourism Research Institute.

To capitalize on the expansion and accompanying spending, about 52 countries have now put in place beneficial visa policies for Chinese tourists, Cotri says.

In November, Vietnam lowered the fees for Chinese visitors entering on a single entry tourist visa from $45 to $25. China has become the country’s major source market for arrivals with one out of five tourists coming from China. Last year saw 1.78 million Chinese travel to Vietnam, up 91.5 percent on the 12 months prior.

Playing catch up 

Eager to catch up with its regional neighbor, Thailand started in November to issue multiple entry visas to Chinese tourists with a validity period of six months. The two types of visas on offer since November are a single-entry visa with a validity period of three months, costing 230 yuan ($36), and the other a multiple-entry visa costing 1,200 yuan.

According to the Thai Tourism Authority, the Chinese are now by far the biggest source of both visitors and expenditure, totalling 4 million arrivals in the first six months of 2015, up 111 percent to over 1.89 million compared with the same period in 2014. Expenditure from this group amounted to 190.9 billion baht ($5.4 billion), up 138.9 percent over 79.9 billion baht in January to June 2014.

Malaysia also recently followed suit by introducing a visa-free program and an e-visa program, intended to pave the way for more Chinese tourists into the country. Chinese can enter Malaysia visa-free from March 1 to December 31, 2016, for a period not exceeding 15 days.

"We have made it easier for tourists from China to come to Malaysia as the competition to attract them is very stiff," Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi was quoted by The Star newspaper as saying, adding that neighbouring countries are becoming competitive in their policies.

Nepal has also waived a $25 visa fee starting from this year, while the U.K. was among key long haul destinations recently lowering the visa application cost for Chinese tourists. According to the new visa protocol, the cost of applying for a two-year visa will be reduced from GBP 324 ($461) to GBP 85, which is almost a 75 percent decrease.

In South Korea, restrictions were also eased after the Middle East Respiratory Syndrome outbreak to boost visitors, while Jeju Island offers 30-day visa free entry to Chinese travellers. Nomura estimates visitation from China to South Korea and Japan will double by 2020.

As nations compete for the Chinese, the destinations on the mainland’s doorstep, casino-hub Macau and Hong Kong have for the first time in many years lost arrivals, “a trend that is likely to continue,” said Georg Arlt.

Macau losing out?

“To my knowledge governments do not officially connect the easing of visa policies with gaming visitors, but in effect the easing of visa policies by giving multiple-entry visas is helping Chinese outbound tourism especially for frequent travellers like gamers, which in effect is resulting in Macau losing gamblers to its regional neighbours, such as Cambodia, Nepal and Laos etc. along with other countries in Asia, Europe and America.”

According to CLSA analysts, gaming operators are likely to be key beneficiaries of increased Chinese visitation. It expects Chinese tourism to the Philippines to be one of the biggest gainers, with 28 percent compound average growth forecast through to 2020 as it catches up with regional neighbours.

As a result, the firm projects 10 percent growth in gross gambling revenue to 2017 for the three operators, but expects Bloomberry Resorts’ Solaire and Melco Crown’s City of Dreams to outperform.

Although Australia has been a favorite market for the aspirational Chinese traveller, visa applications have been notoriously complex, prompting calls for change from James Packer, the former head of Crown Resorts and other business leaders.

However, recognizing the significant impact of tourism on the Australian economy, Prime Minister Malcolm Turnbull said this week that Australia will introduce eased restrictions on a trial basis.

"China is Australia's most valuable tourism market. More than a million Chinese visited Australia last year contributed A$8.3 billion to our economy," Turnbull was cited as saying in Shanghai at the start of a trip to China.

Australia easing

Australia will trial visa applications in Chinese and offer online visa applications from China for the first time. It will also introduce 10-year validity visas and eight student visa categories will also be reduced to two.

According to CLSA, Australia’s casinos are now getting about 50 percent of their VIP revenue from China, though the Chinese proportion of the mass and premium mass market is harder to ascertain.

The firm says it has in the past estimated 5 percent to 10 percent of the mass revenue comes from China, though recent strong growth in mass market revenue in the high-single to double-digit range, against a backdrop of sluggish local retail sales, suggests that mix could be a lot higher.

Tourism Australia estimates that Chinese visitor expenditure rose 45 percent in 2015 and research suggests a high proportion of all visitors will go to a casino.

Undoubtedly, looser visa policies will be attractive for gamblers but whether this translates into higher gaming revenues for casinos across the region is still too early to say, said Arlt.

“This process gained momentum just about a year ago,” but it makes it “easy for instance for a Chinese gamer in Sichuan to fly from Chengdu to Kathmandu in the afternoon (3 h flight), gamble through the night and return next morning without much effort,” he said.