Capacity for increasing overseas visitor pool limited – Analysts
By Nelson Moura Limited hotel room growth capacity and low attractiveness in its offerings limit the capacity for the Macau SAR to expand its international tourist pool, experts consider in a seminar held today (Thursday).
The France Macao Chamber of Commerce (FMCC ) today held a new webinar in partnership with Macau Business revolving around the theme “Macau Gaming at Crossroads: The Public Tender and Beyond”.
The debate included Jorge Costa Oliveira, former commissioner for legal affairs for the Macau Gaming Commission; Vitaly Umansky Managing Director & Senior Analyst of Global Gaming for Sanford C. Bernstein and Alidad Tash, Managing Director at 2NT8 Limited, while being moderated by Macau Business Director, Jose Carlos Matias.
While discussing the capacity of the SAR to follow through with the government goals of diversifying its non-gaming segments and expanding its number of non-mainland visitors, Umansky considered the notion that Macau could turn into an international destination as “unrealistic in the short to medium turn”.
“It is probably unrealistic in the longer term as well unless the Macau infrastructure or economy is somehow completely transformed, which is not a two or three-year process. Under Macau’s updated regulatory framework for gaming, the Chief Executive will have the discretion to reduce tax payable on casino gross gaming revenue as an incentive for operators to bring in more customers from overseas.
Of the 7.7 million visitors reported in 2021, some 91 per cent originated from mainland China as pandemic-related travel restrictions brought international visitation to an almost effective halt.
However, even in 2019, in pre-pandemic times, mainland visitors already represented two-thirds of the total 39 million visitors reported at the time.
“On the Chinese government front we can debate all day long if they will open up and when it happens but nobody knows unless you are sitting in Chairman Xi’s head you are not going to know when anything will happen,” he added.
“My assumption is that after the borders reopen things will happen and then we will have a whole new discussion around what the Chinese economy will look like, are people still willing to spend money”
Umansky added that all said and done, Macau remains a small space with limited hotel room capacity for further growth.
“There are only 38,000 hotel rooms, and it can grow a little bit more. They were running at 92 per cent occupancy in 2019, which doesn’t give a whole lot of room to grow unless you get rid of Macau gaming customers, but then nothing could replace its economic contribution and then no diversification can happen.”
At the same time, the business environment in the region has changed considerably within the Asia Pacific region with other jurisdictions offering competitive destinations and attractions for the typical gaming traveller.
Meanwhile, Alidad Tash expressed that the fact that dealers in Macau have forcibly to be locals, Mandarin and Cantonese speakers of a low level of education, does not offer a welcoming environment to attract a different crowd of Japanese, Korean, Singaporean, Filipino or English-speaking gamblers.
“As long as Macau continues to have these areas which require a more welcoming culture it will continue to not be so attractive to foreigners as other jurisdictions. It just will not be going to happen”
Meanwhile, Jorge Costa Oliveira mentioned that Macau was “never a place for gamblers of other jurisdictions” outside of mainland China, including Hong Kong, while having lost even potential in terms of attracting VIP business from other countries and regions.
“Wealthy players coming from Indonesia, for example, were lost in the 1990s because casinos in Las vegas could provide better deals for junkets,” the legal expert noted.
However, while he agreed that it was not “wise” to replace a model dependent on mainland gamblers for other international customers he posited that this was “never tried” before and offered the potential for new streams of revenue.
“I battled for this within the gaming commission for a long time but the weight of Macau junkets was huge as the local component of gaming […] They don’t see any rationale to go beyond China since there was so much growth potential,” he stated.
“However in my opinion, if you put pressure enough on the concessionaires they will find junkets in India, Japan, Southeast Asia and many other places. It is a matter of putting pressure and offering the conditions, something that has never been done in Macau”
The analysts used the Meetings, Incentives, Conferences & Exhibitions (MICE) as an example of the difficulty of developing the city into an international destination for conferences or events, considering the difficulty for oversea travellers to obtain visas, lack of international flights to the SAR, and the abundance of cities within the region with developed MICE sectors, such as Hong Kong, Singapore and even Zhuhai.