Shanghai Disney Will Not Hurt Macau

Shanghai Disneyland (l.), the US$5.5 billion theme park that opened in Shanghai last week, should not have a negative impact on the Macau tourism market, according to the president of the Macau Travel Industry Council.

Almost 1,000-acre resort

Last week’s grand opening of Shanghai Disneyland, the sprawling US$5.5 billion amusement park developed over five years by the U.S.-based entertainment company, will have a minimum impact on Macau’s tourism market, says Andy Wu Kent Kuong, president of the Macau Travel Industry Council.

Speaking to the Macau Business Daily, Wu said, “I don’t think after the Mainland Chinese have visited the new Shanghai Disneyland, they will stop coming to Macau. Macau has its unique charm. Also, people tend to visit theme parks over the weekends, but they will still use short-term holidays to visit the SARs.”

Macau may end up competing for traffic with the Disney property as the territory develops more mainstream and family-friendly attractions, such as Melco Crown’s Hollywood-themed Studio City resort on the Cotai Strip. And Galaxy Entertainment Chairman Lui Che-Woo has said Phases III and IV of the Galaxy Macau project will include “something special and high-tech” similar to the 3-D movie “Avatar.” As Macau struggled through the third year of an historic downturn, the Chinese government has ordered it to shift away from an economy that for years has been almost solely reliant on gaming.

Shanghai Disneyland covers 963 acres, more than 11 times the size of the flagship Disneyland in Anaheim, California, according to USA Today. It includes six themed zones, two hotels and a shopping area. For Macau, however, theme parks “are not the best use of space,” says CLSA analyst Aaron Fischer. “We still believe there is a massive shortage of hotel rooms, so we would like to see a lot of the available land dedicated to hotel rooms—across a wide range of price points. We would like to see one more arena being added as we do believe there is potential to bring more music and sporting events to Macau.”

Meanwhile, Sanford C. Bernstein analysts say the Macau government can help develop the mass market now that it’s issued its mid-term review. “We believe forthcoming government policies will be constructive (on a longer-term basis) and supportive as they relate to mass market and non-gaming development,” said Vitaly Umansky, Simon Zhang and Clifford Kurz. “Now is not the time to give up.” Even so, the brokerage has cut its growth estimate for 2016, saying gross gaming revenue will decline 3.5 percent for the year—down from its previous forecast of a 1 percent year-on-year rise.

The slow stabilization of the market may be cold comfort for residents of the city, one of the 30 most expensive cities in the world, according to the Macau Business Daily. The city has been ranked as the 12th most expensive city to live in the Asia Pacific region, and outpacing other locations around the world, according to the chairman of the Macau Economic Association, Joey Lao Chi Ngai.

“Despite the fact that the city’s economy has entered an adjustment phase, and while gross domestic product has fallen for some 18 months, we can see that our inflation rate has still been hovering at some 3 percent for the past few months,” he said. “The consumer price index usually lags in reflecting the economic situation of one place. As such, we are still posting inflation despite the fact that our economy has been going downward.”