Macau booms as China tourists flood in

HONG KONG: Chinese tourists flocked en masse to Macau during the Golden Week holiday after the world’s largest gambling hub rolled out a busy slate of events, including a poolside dance party with former NBA star Shaquille O’Neal, to entice visitors to casinos.

Tourist arrivals over the eight-day break that ended last Friday reached more than 932,000, taking the daily average to about 85% of 2019’s in the same period, according to official data from the city.

About 76% of the visitors were from mainland China, the data showed.

Visitors were spending big, too. Gaming revenue from mass-market tourists, now the biggest driver of Macau casino growth following China’s crackdown on high-rollers, is likely to have fully recovered to pre-pandemic levels, according to estimates by Citigroup Inc and JPMorgan Chase & Co.

Mass gaming income may reach about 110% of the 2019 level next year, driving casinos’ profits to a full recovery by mid-2024, according to a JPMorgan estimate last month.

Macau’s boom highlighted China’s surging tourism demand, fuelled by revenge travel and a shift in consumer preferences to more experience-related spending in response to an economic slowdown at home.

The latter coincided with the hub’s efforts to wean itself off its reliance on high-rollers and their facilitators and transform into an entertainment hub akin to the Las Vegas Strip.

Macau is the only place in China where casinos are legal.

During the Golden Week, Macau rolled out firework shows, a music festival and concerts by popular Hong Kong singers Kelly Chen and Hacken Lee, in addition to the party featuring O’Neal.

Drawing in more tourists is key for Macau to sustain its recovery momentum, which slowed in September as typhoon-related bad weather triggered a brief closure of casinos.

Despite more people travelling, China’s overall sluggish economic growth and uncertain consumer spending outlook may prove to be a headwind.

While the daily average number of domestic trips across the country is expected to exceed 2019 levels by about 15% in the Golden Week, spending may only increase 5% from its pre-Covid performance, HSBC Holdings Plc estimated.

There are already some signs of slowing consumption in Macau.

More than 10 retailers of products such as clothes, electronics and jewellery said the surge of visitors didn’t result in a major increase in sales, Hong Kong’s Commercial Radio reported, citing Jones Lang LaSalle Inc’s Macau general manager Oliver Tong.

Analysts surveyed by Bloomberg said gaming revenue in October could return to 72% of pre-pandemic levels, the highest percentage since the onset of Covid. — Bloomberg