Inside Asian Gaming

inside asian gaming April 2015 6 Getting Past China D iversification remains one of Macau’s loudest buzzwords, a government imperative for casino operators and a key to making Macau the world center of tourism and leisure envisioned by Beijing’s Five Year Plan for 2011-15. Economic diversification has proven elusive in view of Macau’s gaming-centric tourist mix; customers want what they want. Another potential area of diversification, greater variety in Macau’s visitor pool, has been largely unexplored, an outcome of what’s been sound financial judgment, if poor risk management. Now, with edicts out of Beijing again discouraging high rollers away from visiting Macau, the decision to focus on the China market highlights Macau’s vulnerability, deepens the current downturn and limits options to reverse it. Yet there’s no assurance that tourists from beyond Greater China—the mainland, Hong Kong and Taiwan —will visit Macau in great numbers; that Macau casino operators really want them; or, if they come, that Macau can delight them. Visitor arrivals to Macau shattered the 30 million barrier last year, rising 7.5% to 31.5 million, following two years of sluggish growth. Tourists from Greater China, Macau’s top three markets, rose 8.5% to Feature In Focus Reduced spending by mainland visitors highlights the need for Macau to expand its tourist sources. Whether more international travelers will visit and whether Macau can handle them remain to be seen By Muhammad Cohen 28.6 million, 90.8% of total arrivals. The Macau Government Tourism Office, “working to diversify visitor source” through presence in 17 cities on four continents, plus Beijing, Taipei and Hong Kong, says Macau is succeeding in drawing the broader international market. “In 2003, the number of international visitor arrivals—Greater China excluded—was around 500,000, accounting for 4.2% of the total number of visitor arrivals,” MGTO’s media department states. “Ten years after, in 2014, the number increased to 2.8 million, which represented 9.2% of the total visitor arrivals.” Those numbers, though accurate, present a skewed view. The SARS outbreak hit arrivals across the board in 2003, and it wasn’t until 2004 that Sands Macao ushered in the post-monopoly era in gaming. In the years that followed, visitor arrivals rose dramatically in all segments. By 2006, the year Macau overtook Las Vegas as the world leader in gaming revenue, total arrivals had increased to 22 million, with 1.6 million or 7.4% from beyond Greater China. In 2008, Venetian Macao’s first full year of operation, total arrivals were 23 million, just over 3 million of them international, 13.3% of the total, high marks to date on both fronts. After a dip in 2009 as the global economic slump reached Asia, international visitor numbers topped 3 million again in 2012 and have tapered since. JOURNEy TO THE SOUTH Since 2003, there’s been a much bigger trend at work. Mainland Chinese visitors to Macau have risen from 5.9 million, 48.3% of total arrivals in 2003, to 21.2 million, 67.4% of total arrivals last year. Since July 2003, the Individual Visitor Scheme has allowed mainland Chinese to travel to Macau (and Hong Kong) without joining a group tour. The program has expanded from an initial four cities to more than 50, encompassing some 300 million of the mainland’s richest citizens. Despite headwinds including President Xi Jinping’s anti- corruption drive and China’s slowing economic growth, Macau’s mainland arrivals grew 14.1% last year. Since 2008, mainland arrivals have not just have accounted for all of Macau’s tourism growth but offset falling arrivals from Hong Kong and Taiwan, respectively