Lower spend per visitor a problem
As the government of Macau considers a plan to cap annual visitation at 21 million, the world’s No. 1 gaming destination has recorded a 13.5 percent decline in tourist travel for the month of March, according to Barron’s. The number reflects a 17.6 percent decline in visitation from Mainland China, with Individual Visit Scheme visitation declining nearly 10 percent.
The data is not easy to interpret. “There is as much of a visitation problem as a spending problem on the mass market side of the equation,” according to the publication. “There is also the dynamic of higher value players seemingly being replaced by lower value players, which is, indeed, resulting in lower spend per visitor.”
It would not be surprising if many Chinese “are opting to take their leisure dollars elsewhere due to improved access (e.g. easier to obtain visas) or favorable currency swings (outbound Chinese visitation growth to places like Korea and Japan is practically stratospheric),” according to Barron’s.
The government of Macau has proposed a plan to “improve” the issuance of visas to travelers from Mainland China. “Our policy is to improve” the policy on inbound visitation, Secretary for Social Affairs and Culture Alexis Tam Chon Weng told Portuguese news agency Lusa.
A record-breaking 31.5 million visitors came to Macau last year; of those, 21.2 million hailed from Mainland China. Even so, gross gaming revenue in the city fell 2.6 percent year-on-year in 2014, and the slide continues.
According to Asia Gaming Brief, the economics department at the University of Macau forecasts the worst recession in 33 years if current patterns continue. “If the gross gaming revenue continues at MOP 60 billion per quarter, Macao’s GDP is expected to decline at a rate of 14.7 per cent, ranging from a pessimistic estimate of 20.4 per cent to an optimistic estimate of 9.4 per cent in 2015,” said the department’s study.
That said, the opening of new casinos and hotels in the second half “should ease the decline,” the study continued.
The university predicts that unemployment will increase to 1.9 percent from the current 1.7 percent, this year. As that scenario unfolds, Macau’s Secretary for Economy and Finance, Lionel Leong Vai Tac has asked the city’s six casino operators to promote more local workers. According to a statement from the government, it places “great importance on the workers’ careers… such as the opportunities for upward and horizontal mobility.”
Leong warns that the Macau government will look at the employment picture “in the mid-term review of the industry” between 2015 and 2016. The results of the review will determine if the six current casino concessions, which expire between 2020 and 2022, will be renewed.
Sheldon Adelson, for one, seems to think the cap on visitation will lose its momentum before it’s implemented. “The chances of that happening are the same as I wake up tomorrow morning and all my hair will be grown back,” said Adelson, chairman and CEO of the Las Vegas Sands Corp. “It has no chance, in my mind, whatsoever. ”
