The past two years have been a difficult period for Macau since the Chinese President Xi Jingping announced a campaign to crackdown corruption and government official’s lavish spending, triggering significant slumps in visitor arrivals and revenue growth in the tourism and gaming sectors in Macau.

After two years as of 2017, Macau’s resilience has been demonstrated through the growing visitor arrivals, hotel performance, and casino revenue, even after the detrimental Typhoon Hato.

Macau

On 23 August 2017, the Category-10 Typhoon Hato struck Macau to become the worst natural disaster the city had encountered in more than half a century. Four days later, another Category-8 typhoon battered the city, leaving extensive damage to the Special Administrative Region. The typhoons took the lives of ten people and deprived 50 per cent of the population of power and water supply for a week. The Four Seasons Hotel had to close its casino and restaurant operations while the Wynn Hotel was left without water and power. The Macau Government Tourism Office (MGTO) requested its tour agent partners to suspend group tours to Macau for a week to allow the city to recover from the aftermath of Typhoon Hato.

The negative impact from these two typhoons in Macau is evidenced by a 0.6% decline in visitor arrivals in August 2017 compared to the same period in 2016. Additionally, visitor arrivals from July to August posted a 1.8% decline in 2017, in contrast to a 3.1% and 14.5% increase during the same periods in 2016 and 2015, respectively. Despite this misfortune, Macau was still able to capture a 2.4% year-on-year growth in visitor arrivals in the following month of September, at 2.5 million.

With the additional increase in hotel room supply, total quarterly visitor arrivals to Macau in the third quarter of 2017 posted a 2.1% year-on-year increase to 8.3 million, compared to 8.1 million in the same quarter of 2016. This emphasises the resilience of the Macau market and quick recovery, surpassing 2016’s performance. Collectively, year-to-date through September 2017 registered an additional one million visitors to total 23.8 million, a strong 4.2% year-on-year growth.

During the third quarter of 2017, the top five key source markets remained the same (in order of size): mainland China, Hong Kong, Taiwan, South Korea, and Japan. Supported by China’s buoyant economy, mainland China continued to be the largest source market constituting 69.6% of the market or nearly 5.8 million travellers to Macau. This figure reflects solid growth of 6.6% compared to the same period in 2016.

The growth in the number of visitors from South Korea was also outstanding, at 27.8% in the third quarter of 2017 compared to the same period in 2016. The 211,000 visitors may be attributed to Macau’s adaption of the automated immigration clearance services for Koreans in 2016 and the city’s successful promotion initiatives in South Korea, where gambling for locals is restricted to one single, remote casino. As the Japanese government is encouraging its citizens to go abroad, Japan registered a 7.7% year-on-year growth to 82,000 visitors in Macau.

The increase is indirectly aided by the rising popularity of the city’s an-hour-away neighbour, Hong Kong, among Japanese as well. A 14.4% year-on-year increase in Japanese visitor arrivals to Hong Kong was recorded during the third quarter of 2017. This growth is partially attributed to expanding flight capacity between Japan and Hong Kong, including new flights added by both the legacy carriers and low-cost carriers, such as Hong Kong Express, Jet Star and Vanilla Air from Tokyo and Peach from Osaka.

On the contrary, Hong Kong and Taiwan both faced a decline of visitors to Macau. In particular, Hong Kong arrivals plunged significantly by 11.3% to 1.5 million compared to 1.7 million in the third quarter of 2016. The negative impact from the typhoons was one contributor to the decrease in Hong Kong visitor arrivals together with an aggressive hotel promotion campaign in place the year earlier. To a lesser extent, Taiwan also saw a 2.6% decrease to 282,000 visitations in Macau.

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About Christy Tung
Christy Tung Christy Tung joined HVS Hong Kong as an Analyst in August 2017. As her primary duties, Christy conducts market research and data analysis in Market Studies and Feasibility Studies in the Asia Pacific region.

Prior to joining, Christy has gained a wide array of hospitality experiences in Hotel Operations, Revenue Management, and Sales and Marketing from multiple international hotels, including Hilton Boston Back Bay, the Langham Sydney, and the Langham Boston.

For more information please contact, ctung@hvs.com

About Daniel J Voellm
Daniel J Voellm Daniel J Voellm, Managing Partner HVS Asia-Pacific, is based in Hong Kong is based in Hong Kong and has provided advice in all major markets across 18 countries in the region. Daniel Voellm started his career at HVS in the New York office; as Vice President at the global headquarters, he conducted a wide range of appraisals and market studies as well as underwriting due diligence services in 22 US states and in Canada.

Daniel brings a strong understanding of the hospitality industry to HVS. His experience in hotel and food and beverage operations in Germany, Switzerland, England and the USA is complemented by an Honours Bachelor of Science degree from Ecole Hôtelière de Lausanne in Switzerland. Daniel works closely with key institutional and private owners of hotel properties, financiers, developers and investors, and has gained a strong understanding of their investment requirements and approaches to assessing the market value of investment properties. Daniel further advises on property and concept development and strategy.

For more information please contact, dvoellm@hvs.com