Inside Asian Gaming

INSIDE ASIAN GAMING | November 2008 20 Cover Story The message between the lines seems to be that China is not quite rich enough yet to supply all the sought after high-spending, upmarket tourists. This was never going to happen overnight in any case. For one thing, the Chinese middle class is literally and figuratively young and unevenly distributed. Most of its members appear to live in urban areas, and most of them in the handful of Chinese cities and provinces that have been exposed to direct foreign investment. Guangdong is the pre-eminent and obvious example of such a domestic market. Not just local officials and politicians expressed frustration at the snail-like pace of the move up market. Macau residents concerned about the effects of high volume, low value tourism was having on ordinary life also did so. Policy shift In April, Edmund Ho, Macau’s centrally appointed chief executive, announced an indefinite moratorium on new casino licenses, a ban on new land being used for casinos, and a plan to limit the number of casinos, gaming tables and slot machines in operation. In a plenary session of the Legislative Assembly, he said the number of casino operators would remain the same for “the foreseeable future”, (i.e., three concessionaires and three sub- concessionaires). He added that the government would not approve new applications filed by gaming companies for land use. Projects already under construction,approved,orunderdiscussion with the Macau government, would not be affected, Mr Ho added. Francis Tam, Economy and Finance Secretary, added it was time to “review” the gaming industry after years of rapid development that had put pressure on Macau’s environment and human resources. I n September, Xinhua, China’s official news agency, an institution that can usually be relied on to give some insight on official thinking in the People’s Republic, ran a story captioned:“Research Shows that Daily Visitors of Over 79,000 Will Full-Load Macao”. This is an interesting and arguably partial analysis of current market conditions, given that hotel occupancy levels in Macau have actually been falling, although that in turn is partly a function of rapid expansion in room capacity. Occupancy down, stays lengthen According to the government’s own statistics, in August the average hotel occupancy rate dropped by 7.1 percentage points to 76.7%, with 5-star hotels leading at 80.7%. The average length of stay of hotel guests increased by 0.2 nights to 1.5 nights. At the end of August 2008, the total number of guest rooms available in the hotel sector grew by 799 (+5.1%) from a year earlier to 16,577 rooms. Even if the premise of the Xinhua story and the doubtful syntax of its headline need to be challenged, the gist of the story was clear. Macau could only currently stand receiving 79,000 people per day— for purported reasons discussed later in this article. Rationing not banning Delve into the implications of the headline and it soon becomes clear that if total daily access is rationed, then so too must frequency of individual access if all who want to visit Macau from China are to get a ‘go’. Unlessaccessisdoneonarotationalbasis, rather than a first come first served one, then the Chinese authorities risk the possibility that the divvying out of trips to Macau will become a source of social discontent and resentment within the country rather than the pleasant diversion from long hours and hard work the trips were meant to be. The Xinhua report citing the 79,000-visitors per day ‘limit’ quoted a study it said was published by Macau’s Institute For Tourism Studies (IFT) and commissioned by the Macau Special Administration Region (SAR) government. The study claimed that both residents and visitors became “less than satisfied” with their surroundings and gave generally lower approval ratings to local services and facilities when the daily average number of incoming visitors reached a certain critical level, said Xinhua. This figure was curiously precise, standing at 75,537 daily visitors. The survey was divided into two parts. The first part consisted of questionnaire interviews on 44 selected days of 2007. They covered weekdays, weekends and days Macau’s infrastructure is under strain from the tourist influx No Vacancies China’s official media says Macau is near its current visitor limit