Macau’s tourism development masterplan, which aims to transform the VIP gaming hub into a mass market, diversified leisure destination, forecasts as many as 40 million tourists a year by 2015.
The blueprint contains a clear vision of what the government wants for the future, with tourists staying longer and spending more on non-gaming activities.
However, tourism industry experts say the current obstacles will be hard to overcome and as yet there is not a clear enough consensus between the government and industry as to what “brand” Macau should look like. The territory lacks affordable hotel rooms and many infrastructure improvements designed to improve transport and other bottlenecks have been consistently delayed.
Macau Government Tourism Office Director Maria Helena de Senna Fernandes told local media that the Macau Tourism Industry Development Master Plan aims to boost the tourist industry by expanding the waterfront area and increasing the number of budget hotels. It aims to generate non-gaming revenues of MOP112 billion ($14 billion) by 2025.
The plan sees visitor arrivals at between 33 to 35 million yearly in a low-growth scenario of an increase of just one percent to two percent a year. That could reach 38 to 40 million with a modest growth outlook of about 3 percent to 5 percent.
“Gaming has exerted too much influence on the tourism branding of Macau. Promotions related to non-gaming tourism products should be strengthened in the future,” the plan says. “Macau has the potential to exhibit an impressive image by reconciling its resort facilities, MICE [meetings and conventions], arts and festival events all into one integrated brand.”
Shift in focus
Glenn McCartney, an expert in Macau’s tourism who has worked as a consultant to the government, says the plan is a step in the right direction, with a shift in focus onto more relevant economic pointers.
He says up until now the government has tended to place too much emphasis on hotel occupancy rates and high visitation, which are both flawed measures as hotel stays can be driven by comping and visitation numbers don’t take into account spending ability and length of stay.
“We were certainly not looking at the right indicators but now we’re looking at the right indicators, so that’s good, he said. “We’ve had two years of incremental downturn so it’s not going to work overnight. Competitiveness takes a lot of work. Coming up with a branding strategy takes a lot of time and a lot of work.”
Macau’s total visitor arrivals were 30.7 million in 2015, and it ranked among the top-listed cities in terms of visitation. It came in 6th out of the top 100 cities worldwide in 2014, the blueprint says. Though the numbers are impressive at first glance, those visitors only stay for a relatively short space of time compared with other major cities around the world.
In 2014, the average length of stay in Macau was 1.9 days, while Singapore and Hong Kong saw visitors stay for 3.7 and 3.3 days, respectively, and London and Las Vegas with 4.6 and 4.2 nights, respectively.
In addition, more than 90 percent of visitors to Macau are from Greater China, with 66.5 percent from Mainland China. Only around 9 percent of visitors are from other countries and that presents another challenge. CLSA research has carried out a survey of middle class Chinese on the mainland for the past three years about their preferred travel destinations and found Macau came last.
One of the main problems facing Macau is the lack of affordable hotel rooms. With the new resorts opening up on Cotai, the overall number of rooms will increase by about 40 percent over the next three to four years, however, they will still be far from budget accommodation.
“When we have surveyed people and asked why they didn’t stay the night, 48 percent said the room rate was too high, so we think hotel room rates need to come down to attract more visitors,” CLSA regional head of consumer and gaming Aaron Fischer said in a presentation at G2E Asia in May.
If you actually look at the room rates for some of the leading properties, it’s above $200 and can be $300 at the weekends, he said.
Meanwhile, according to a recent survey of 1,000 Chinese gamblers by Morgan Stanley, respondents reported shorter stays, lower frequency of visits (from 4.4 to 3.3 visits per year) and a decline of total travel budgets.
According to the Morgan Stanley survey, Macau’s problems among Chinese gamblers extend to include UnionPay and foreign exchange risks, as well as the competition posed by the opening of the Shanghai Disney. Dependence on UnionPay cards for cash remains high at 60 percent, said Morgan Stanley, with 55 percent of respondents saying they would shorten their stay or search for cheaper options if the China’s RMB depreciated further
The brokerage also notes that Macau’s gaming recovery may be more reliant on China’s economy than consensus assumes.
The number of visitors from Europe, North America, and other long haul markets has also been declining in recent years, which is not good news for a destination seeking to reduce its reliance on the mainland tourist dollar.
Some analysts have said the opening of super-luxury hotel The 13 later this year may help put Macau back on the international jet set map. Bucking the current market trend towards the mass market, the hotel will be on of the world’s most expensive at about $7 million a key to develop.
McCartney says the trick to pushing Macau forward comes down to the public and private sectors effectively collaborating to ensure there is a consensus on where stakeholders envision the city going. This will lead to a clear branding strategy for Macau which will in turn draw more businesses and associations to its objective.
By getting everyone on board, McCartney says, Macau can move towards attracting much needed leisure visitors. Being serviced by low-cost carriers, opening more affordable hotels for those not concerned about luxury accommodation, improving its infrastructure and raising the profile of its attractions, will help Macau compete with neighboring destinations.
“I haven’t seen that level [of collaboration] and until i see that Macau won’t move forward in changing its image.”
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