April
2005 - Macau is located on the western bank of the Pearl River Delta in
the Guangdong province of Southern China, intersecting Mainland China and
the South China Sea. Over recent years, the casino-led city has experienced
a tourism boom, fuelled by the liberalisation of the gaming industry in
2002. This has naturally had a knock-on impact on hotel performance which
reached its highest levels to date last year. Results from the HotelBenchmark
Survey by Deloitte show that Macau's revenue per available room (revPAR)
increased by 35.4% to US$63 in 2004.
17m visitors and rising
According to the Statistics and Census Service of Macau, the total number
of visitors to the city reached 17m in 2004, an increase of over 40% compared
to 2003. Macau saw a surge in visitors from all corners of Asia during
2004. With over one billion people within a three hour radius of the city,
this increase is not surprising.
Mainland China remains the Macau's largest source market - accounting
for 60% of all visitors. The Chinese government continues to relax travel
restrictions under the Individual Visitor Scheme (IVS) which currently
account for 21.1% of total arrivals. The IVS started on 28 July 2003 and
allows travellers from certain provinces and cities in Mainland China to
visit Macau on an individual basis. The scheme is expected to expand to
include more cities and provinces. As a result, Macau will look forward
to increasing numbers of visitors from the Mainland.
Macau's second largest source market is its eastern neighbour Hong Kong,
attracting over 5m visitors in 2004. Linked by more than 150 sea crossings
each day, Macau is only an hour away for those tempted to gamble in the
city's casinos.
The potential to take off
The number of passengers passing through Macau International Airport
(MIA) also saw a rise in 2004, up 28% to 3.7m. With no direct routes to
Macau from international destinations outside Asia, there is potential
to push these figures up even further. Macau's close proximity to neighbouring
airports such as Hong Kong and Shenzhen however provide stiff competition.
Although MIA is trying to encourage more low cost airlines to add Macau
to their routes, the cost of flying to the city is still higher than alternative
airports. Therefore, many tourists, both domestic and international choose
to fly to these airports and continue their trip to Macau using alternative
land or sea routes.
The government places its bet
Visitor arrivals are set to increase again in 2005. The Macau Government
Tourist Office (MGTO) continues to develop the city into a tourism hub
focusing on gaming, MICE (Meetings, Incentives, Conferences and Exhibitions)
and leisure markets.
A number of important events scheduled to be held in the city during
2005 will no doubt help increase visitor numbers further. Macau will host
the 54th Pacific Asia Travel Association Annual Conference next week and
a number of prestigious sporting events towards the end of the year. These
include the 4th East Asian Games in October and the 52nd Macau Grand Prix
in November.
2005 will also be an important year for cultural tourism, as the city
hopes to add 12 cultural heritage sites to the United Nations Educational,
Scientific and Cultural Organisation (UNESCO) World Heritage Listing. The
sites include Macau's oldest church, Christian cemetery, lighthouse and
Western theatre. The MGTO hopes this will add to its continuing efforts
to make visitors aware of Macau's unique combination of Chinese and Portuguese
cultures.
The MGTO is also working closely with tourism authorities in the surrounding
Pearl River Delta area, including Guangdong and Hong Kong to complement
and promote regional tourism. By sharing resources and joint promotions,
the region will be able to enhance their competitive edge. Mainland China
is also supporting several infrastructure improvements to bring more people
into the region, including a 30km bridge linking three cities on the Pearl
River Delta - Hong Kong, Macau and Zhuhai. The bridge is set to be completed
in 2008, at a cost of US$531m and is expected to handle 20,000 vehicles
every day.
Hotel performance on a roll
As the graph below illustrates, Macau saw a staggering increase in both
visitor numbers and hotel performance in 2004. RevPAR increased by 35.4%
to US$63. This was driven equally by improvements in occupancy and average
room rate. Although performance has improved year-on-year since 2000, Macau's
average room rate (US$78) is still almost US$60 behind its neighbour Hong
Kong. However, with new hotels and casinos set to enter the city and with
more than one billion prospective gamblers on its doorstep, there is plenty
of potential for Macau to grow its average room rate further.
Macau revPAR performance and visitor arrivals
2000-2004
Source: HotelBenchmark Survey by Deloitte and Statistics
and Census Service Macau
Las Vegas Strip arrives in Asia
When the casino market was opened up to foreign investors in 2002, ending
tycoon Stanley Ho's 40 year gambling monopoly, many world renowned hotel
companies put Macau in their sights. With an estimated revenue of over
US$5 billion in Macau's casinos in 2004, combined with the ever increasing
disposable income of the Asian middle class, no hotel company would want
to miss out on this potential jackpot.
One of the main projects currently underway is the Cotai Strip development,
modelled on the famous stretch of luxury hotels and casinos in Las Vegas.
Spearheaded by the Las Vegas Sands Corporation, an estimated US$6 billion
will be invested in the first phase of the development. This is scheduled
for completion in 2007 and will have 10,000 hotel rooms, entertainment
and business facilities plus an area for concerts and sporting events.
Hotel companies due to operate on the Cotai Strip include Four Seasons
Hotels, Starwood Hotels & Resorts, Marriott International, Hilton Hotels,
Regal Hotels, Dorsett Hotel Group, InterContinental Hotels and Las Vegas
Sands. The Cotai Strip is well on its way to emerging as an international
tourism destination. It took Las Vegas 75 years but the plan is to repeat
this feat in Macau in less than three years.
Also under construction by Wynn Resorts Limited is the Wynn Macau. Due
to open in 2006, the 600-room hotel-casino will be located on a 16 acre
site near Macau's inner harbour. This is directly opposite the city's best
known hotel-casino, Hotel Lisboa.
Winning streak?
It's a little early to predict what impact these new openings will have
on hotel performance in Macau. However, with eased travel restrictions
filtering through mainland China and improvements in infrastructure throughout
the Pearl River Delta region, it is expected tourist arrivals will continue
to grow. As the government continues to promote the city and more investment
is pumped into new projects, the profile of Macau as an international tourism
destination will improve. In turn, this will attract more visitors and
investment helping to boost hotel performance figures even further.
Notes: All analysis in US$
The HotelBenchmark Survey contains the largest independent source of
hotel performance data outside of North America and tracks the performance
of over 6,500 hotels and 1.2 million rooms every month.
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