Inside Asian Gaming

he current mainland Chinese traf- fic growth into Macau is driven primarily by one province—Guangdong. While Shanghai and Beijing are home to a significant pro- portion of the wealthier Chinese population who would look to travel to Macau, only a very small proportion do so currently. This is supported by statistics from the Hong Kong Tourism Bureau,which show that only 15% of Hong Kong’s mainland China tourism comes from Shanghai and Beijing, while over 60% comes from Guangdong.We expect the case would be similar for Macau. We believe that this is driven mainly by inadequate outbound tourism-based infra- structure in China. Looking at rail transpor- tation, the table on the next page shows the time it takes to travel from various provinces in China to the capital of Guangdong (the closest province to Macau). Generally, travel would take at least 12–26 hours. The considerable journey times, together with the quality of the current trains, would be a major discouraging factor for travel from many of the Chinese provinces into Macau. This would be especially true for the wealthier mainland Chinese who would look for ease, convenience and luxury in travel choice. Our infrastructure analyst Anderson Chow, in his report, China Airports —Bigger is Better,said the Chinese airport industry saw a CHINA’A INFRASTRUCTURE T compound annual growth rate of 11–12% in passenger volume in recent years. The rapid rise in aviation demand has put pressure on capacity supply. Currently, 30% of Chinese airports are operating at overcapacity, according to the General Administration of Civil Aviation of China (CAAC). This is occurring more at ma- jor hubs such as Beijing Capital International Airport (BCIA). Not only is the airport facility operating at overcapacity, but airplane load factors are also already over 70% on average. Furthermore, air space capacity limits the number of flights that can come into many of the Chinese airports—China does not have an ‘open sky’ policy, so air space capacity is tightly controlled and influenced by the mili- tary. This can, often without warning, cause lengthy delays to departure and arrival times at different airports. Air space capacity, which is allocated by CAAC, can also constrain pas- senger growth for airports. For example, BCIA currently has air space capacity of 1,100 flights per day, but the actual aircraft movement was over 1,200 on a few occasions in the second half of 2006. We understand the limits are not strictly applied as long as safety standards are not compromised. China’s infrastructure playing catch-up Recognising the significant constraints on travel and the pent-up demand, the Chi- nese government has indicated in its 11th 14 One of the next generation of Chinese trains A typical sleeper berth in a Chinese train