Golden outlook for Macau tourism
World’s biggest gaming hub expects lucrative holiday week
THE forecast for Macau’s upcoming holiday week looks pretty golden.
Junkets flush with high rollers, full hotels charging five times their usual prices and brand-new entertainment options have the potential to make Golden Week the most lucrative in at least the past decade for the world’s biggest gaming hub, analysts and industry officials said. The calendar also helps: this year’s holiday period lasts eight days instead of seven, making it a “Super Golden Week.”
The expected rush is more good news for Macau, currently riding a streak of 13 straight months with gaming revenue growth. The territory is benefiting from economic expansion in China that’s outpacing the official 6.5% target, pent-up demand after last month’s typhoons and the Chinese government’s decision not to restrict visas before the upcoming Communist Party leadership gathering in Beijing.
“Macau’s gaming business will be strong during the Golden Week,” said Lawrence Ho, chairman and chief executive officer of Melco Resorts & Entertainment Ltd.
“China’s economy is improving, there’s more visitation to Macau, and the city has better infrastructure now.”
Junket operators, who provide credit to their big gamblers, concur. Suncity Group, the largest such operator in Macau, expects its October betting volume to surge between 30% and 35% from last year to about HK$150bil, boosted by Golden Week, said Andrew Lo, executive director of the group’s listed vehicle, Suncity Group Holdings Ltd.
That’s about the same level as before the corruption crackdown started by President Xi Jinping in 2014 -- a campaign that spotlighted government officials’ spending in Macau and triggered a two-year slump in revenue growth.
Eighty percent of the territory’s three- to five-star hotels are fully booked during the Oct 1-8 holiday, and more reservations are expected in the coming days, the Macau Tourism Office said in an emailed statement yesterday. It expects the number of tourists during the holiday week to increase by as much as 5% from about 1.2 million visitors last year.
Those still accepting bookings mostly have suites costing as much as about HK$10,000 a night, according to a check of hotel booking websites Expedia and Booking.com. Just two weeks later in October, those same rooms can be reserved for about HK$2,000.
“Hotel rooms booked by Suncity have been fully taken by clients during the Golden Week holiday,” Lo said. “Suncity expects it may need to pay for extra rooms at high room rates to meet the solid holiday demand.”
And there are new sights for some Golden Week visitors to see. Las Vegas Sands Corp’s new US$2.9bil Parisian, which opened in September 2016, helped bolster the group’s better-than-expected revenue in the second quarter. The Parisian opened a month after Steve Wynn’s US$4.2bil Wynn Palace.
The expected boost will come after casino revenue growth slowed in August because of typhoons that killed 10 people and disrupted power and water supplies at some resorts, according to government-owned broadcaster Teledifusao de Macau.
The natural disasters and suppressed August receipts were among the few blips this year for the only Chinese territory where gambling is legal. Revenue growth accelerated during the three months prior because of more spending by high rollers and an increase in overnight visitors.
The city is expected to post a 14th straight month of gaming revenue growth this month, according to the median estimate of nine analysts surveyed on Thursday by Bloomberg News.
“This Golden Week will be the best in recent years,” said Versiglia Chong, a sales director at Macau-based VT Travel Agency Co. “We’ll see a sea of people at the ferry terminals, in Golden Lotus Square and along the Cotai Strip.”
Last year, the number of visitors from China rose 6.9% to 970,000 during the week, officially known as the National Day holiday.
That’s the most tourists from the country in at least 10 years.
Wynn Macau Ltd. expects a “very strong Golden Week” as its two properties, Wynn Macau and Wynn Palace, are fully booked through the period, the company said in a statement. Its Hong Kong-traded shares have risen 71% this year, compared with a 25% increase in the benchmark Hang Seng Index.
What’s feeding this beast is a Chinese economy that expanded by 6.9% in both the first and second quarters of this year. Also, the number of mainland Chinese visitors to Macau surpassed two million in both July and August, according to data compiled by Bloomberg.
Golden Week could be the busiest holiday in Macau of any holiday during the past four years, Karen Tang, a research analyst with Deutsche Bank AG, said in a Sept 20 report.
That assessment was based on hotel bookings.
Revenue from high rollers has grown by more than 30% in the past four months, even as China tried to curtail capital outflows that topped US$816bil last year, according to data compiled by Bloomberg.
China’s government said last month it would prohibit or restrict domestic companies from making overseas investments in sectors including the gaming industry, real estate, hotels and entertainment.
Still, that’s not fazing Macau legislator Jose Coutinho. “No policies can hurt Macau in the long term,” he said. “Demand is there, Chinese customers love gambling, and the casino industry can eventually figure out ways to avoid the impact of the regulations, including restrictions on capital outflow.” — Bloomberg