Macau Growth Under Threat as Chinese Travel Farther

Wynn Casino MacauMacau is facing threats to its growth from China’s slowing economy and greater foreign competition, escalating the need for the world’s largest gambling hub to diversify from its casino gaming roots.
“I’d say the slowdown in the economy and the fact that now the foreign destinations might become competitors” are the biggest risks to Macau’s growth, Pansy Ho, co-chairman of MGM China Holdings Ltd, said in an interview with Betty Liu on Bloomberg Television in Hong Kong.
As Chinese tourists travel more frequently and farther afield, the city could gradually lose its appeal, said Ho, who’s nicknamed “casino queen” by local media. “We’re already beginning to see that the customers coming through our doors are more demanding, they now know how to differentiate.”
Chinese tourists have been powering the growth of Macau which leapfrogged the Las Vegas Strip in 2006 to become the world’s largest gambling hub. Casino operators such as Ho’s MGM China and Sands China Ltd. have added shops, restaurants and entertainment shows to draw mainland travelers as high-stakes gamblers cut spending amid a cooling Chinese economy.
Ho, whose father Stanley Ho held a 40-year gambling monopoly in Macau until 2002, is helping lead a drive to transform the city into a global tourism destination. The 51-year-old sees the need to cut the territory’s reliance on gaming halls that raked in $45 billion of casino revenue last year.

The city has been affected by a slowdown in gambling growth in recent months as bettors cut spending amid a cooling economy and a nationwide crackdown on corruption in China. China’s President Xi Jinping’s clampdown on lavish spending has hurt sales of luxury goods such as Rolex watches and Prada bags.
MGM China fell 2.3 percent, the most since June 10, to HK$27.95, while Sands China declined 1.6 percent to HK$58.95 at the close of trading in Hong Kong. The benchmark Hang Seng Index was little changed.
Macau’s July gross gaming revenue could decline as much as 11 percent from a year earlier, Bank of America Merrill Lynch analyst Billy Ng wrote in a report today.
Macau’s casinos have borrowed from other cultures to re-create features in the past and now mainland customers can afford to travel overseas to experience the original, “real things,” said Ho, who has a net worth of $4.9 billion according to Bloomberg’s Billionaires Index.
To draw more Chinese patrons, MGM China, the Macau unit of MGM Resorts International (MGM), has been adding local flair by playing up the Macanese and Portuguese influences at its properties, said Ho. Sands China competes with Italian singing gondolas and Galaxy Entertainment Group Ltd. with Parisian cabarets.
Macau is the only place in China where casinos are legal. Mainland Chinese tourists accounted for two-thirds of the total visitors to the former Portuguese enclave in the first quarter.
Ho is now extending her family’s footprint to Hengqin in China, an island next to Macau that’s connected by a bridge and is earmarked for non-gaming purposes. She will achieve that with Shun Tak Holdings Ltd., a property to transportation conglomerate set up by her father in 1972 and now run by her.
“We’re building hotels, serviced apartments and a shopping center,” Ho said of a $118 million project. “We’re immediately connected to the custom checkpoint, so we’re almost the first stop once you clear customs.”
Stanley Ho, 92, held a gaming monopoly in Macau that helped build SJM Holdings Ltd. (880) into Asia’s biggest casino company. The Macau government opened up the market in 2002 to foreign rivals such as Sheldon Adelson’s Las Vegas Sands Corp. (LVS) and Steve Wynn’s Wynn Resorts Ltd.

“US Casino groups have obviously invested too much and too quickly in Macau” said Pierre Gervois, Publisher of China Elite Focus Magazines, a publishing group specialized in luxury travel magazines for High Net Worth Chinese travelers. “I remember having a conversation in 2011 with one of their executives in Shanghai, he was very excited about investing more in Macau, and I warned him that the new generation of Chinese gamers wanted to go to Vegas, not Macau. I distinctively remember he did not believe me!”
While Pansy is in charge at Shun Tak, her younger brother Lawrence Ho, whom she described as a “friendly competitor,” has gone his own way. He set up Melco Crown Entertainment Ltd. in a joint venture with Australian billionaire James Packer.
“For me, I try to step out of my father’s shadow and do something on my own,” Lawrence said in a separate interview at City of Dreams, Melco’s biggest casino in Macau. “I’ve been trying to prove myself.”
The company is building casinos in Macau and the Philippines, and is also keen on expanding into Japan, the world’s third-largest economy. It plans to invest more than $5 billion in Japan if the country legalizes casinos, said the Melco Crown co-chairman and chief executive officer.
Lawrence’s endeavor to push into Japan is part of his strategy to expand overseas as he sees constraints such as land and labor shortage at home.
Melco Crown, which currently operates two casinos in Macau, has almost doubled its revenue to $5.09 billion in 2013 from $2.64 billion in 2010. SJM had $11.3 billion revenue last year from 20 casinos in Macau.
Melco Crown (MPEL) dropped 2.1 percent to HK$92.20, while SJM fell 2.4 percent to HK$20 at the close in Hong Kong trading.
“Lawrence really wants to grow his gaming enterprise beyond Macau and grow his portfolio,” said Pansy, his elder sister. “In my case, I’d like to really do more for the general well-being of Macau, promoting Macau as a destination.”

Source: Bloomberg

China wants Thailand to allow Chinese tourists to visit without visa

Chinese-tourists-ThailandChina has reiterated its request for Thailand to allow its nationals to visit without a visa, the same privilege as its diplomats and government officials, Foreign Ministry permanent secretary Sihasak Phuangketkeow said while on an official visit in Beijing.
China is the number one source of tourists who come to Thailand. Last year, the Tourism and Sports Ministry reported that more than four million Chinese visited Thailand in the first 10 months of the year.
Beijing’s top officials made the no-visa request during Sihasak’s official visit to Beijing last week. He met Deputy Foreign Minister Liu Zhenmin as part of the second China-Thailand Strategic Dialogue as well as Foreign Minister Wang Yi and State Councillor Yang Jiechi.
It was the acting Foreign Minister’s first visit to China since the military seized power in late May. China’s repeated no-visa request comes at a time when Thailand needs “friends” to lean on after a number of Western countries issued low-level sanctions against the country and downgraded diplomatic relations.
They have insisted that Thailand return to democratic rule and have election.
Chinese officials told Sihasak that it regarded Thailand as a good friend, a strong partner and a close relative – the two countries were like brothers and their relations would always move forward even in the face of internal or external woes.
He was also told China would not interfere in Thailand’s internal problems.

Sihasak said Beijing’s no-visa request would be forwarded to the National Council for Peace and Order (NCPO) for consideration. “The Foreign Ministry will gather pros and cons of the free-visa privilege and submit them to the NCPO to substantiate this for consideration,” he said.
If approved, the visa-free privilege would means Thai people could travel to China without a visa.
Sihasak’s visit to China was also used to brief Chinese officials on the junta’s efforts to undertake reforms via a three-phase roadmap and restore political stability and create an environment conducive to long-term economic development.
The briefing was part of the junta’s campaign to explain the Thai political situation to other countries.
China hoped Thailand achieves that as soon as possible so as to promote investment confidence, Sihasak said.
Thailand and China will celebrate the 40th anniversary of diplomatic relations between the two countries next year.
Sihasak said many changes and developments had taken place throughout the 40 years and both countries should treat each other as equal partners. They should help each other move forward and if a problem occurs, deal with it together.
He also revealed – without elaborating – that Thailand wanted China to open its market to Thai agriculture products and not use its hygiene standards as a measure to limit Thai products.
He said China had expressed an interest in investing in many projects in Thailand, particularly projects to enhance connectivity in the region under the Master Plan of Connectivity. It seemed especially interested in dual-track trains.
China also expressed an interest in infrastructure projects that would link neighbouring countries with it. Beijing would like Thailand to finalise details of the projects as soon as possible, but that could happen, he said, when an interim government and a Legislative Assembly are in place.
Source: nationmultimedia.com

Outbound Chinese tourists to surpass 100 million in 2014. Northeast Asian airlines first to benefit

Hainan Airlines - Chinese touristsThe number of Chinese outbound tourists in 2014 will likely exceed 100 million, more than the population of Germany and nearing the population of Japan. Yet this will still account for less than 10% of China’s population taking one international trip a year. Importantly too, the growth rate is very high.
These are obviously market-changing opportunities for airlines, especially in North Asia, where most Chinese travel to when going abroad. But in the short term the opportunities are mixed for countries as overseas Chinese tourists shift destination preferences.
This first of a two-part report looks at Chinese demand for travel to Northeast Asia, where growth is generally positive. Japan experienced challenges in late 2012 and early 2013 as political tensions saw visitor arrivals dramatically fall; Japan has since rebounded. South Korea was a beneficiary and continues to maintain momentum; Chinese visitor arrivals are up 57% in the first five months of 2014.
Nearly 100 million Chinese travelled abroad in 2013, almost double 2009’s rate of 49 million. Such seismic growth brings structural change to tourist economies and the airlines that transport passengers. 2013’s rate is equivalent to less than 8% of China’s population taking one overseas trip a year.
With the exception of 2009, since 2005 annual outbound tourist growth rates have been over 10%. While 2013 saw a slower growth rate of 16% compared to the 18-20% rates from 2010 to 2012, China in 2013 recorded an increase of 13.8 million outbound tourists, more than 2012’s 12.9 million. As more tourists travel abroad, growth rates are expected to soften.

From an aviation perspective of China’s international market (which also accommodates inbound and sixth freedom passengers), 74% of international seats to/from China are from Northeast and Southeast Asia – mostly Northeast.
Given the high share of Northeast Asia, it is unsurprising China’s four largest destination countries/regions for international seats are within Northeast Asia.
Thailand, the world’s second largest tourist destination, was fifth (first was London as Bangkok slipped due to the political environment), while the US was sixth.
China’s “Big 3” airlines – China Eastern, Air China and China Southern – are the three largest carriers with international seats to/from China. The next five largest carriers are all foreign, with only one other Chinese carrier – Xiamen Airlines – breaking into the top nine.

Growth is most profound in Korea. 2012’s 2.8 million Chinese visitors increased 28% year-on-year, and 2013’s 4.3 million represented 53% growth – nearly a doubling of 2011’s figures. Visitor arrivals to Korea are up 57% year-on-year in the first five months of 2014. Korea has been the largest recipient of short-haul travel as Chinese shift away from Southeast Asia and Japan. Consequently, for most Chinese airlines Korea has surpassed Japan in being one of – sometimes the – highest yielding market.
The visitor numbers are staggering on their own, but are also fundamentally re-shaping Korea’s tourism industry. Whereas Chinese visitors in 2012 comprised 23% of all visitor arrivals to Korea, so far in 2014 they account for 40% of all inbound tourists.
The economic impact is probably too big to be actually understood. But with large size comes risk from effectively betting the house on one source market that – as other countries have found – can rapidly change due to a number of circumstances.
Korea is one of a handful of markets (Hong Kong, Japan and Macau are similar) where options for sixth freedom flights to China are few and impractical, largely leaving the market to point-to-point operators. The Korea-China market is comprised of scheduled flights under a constrained bilateral but also a charter sector that has grown as Korean carriers – especially LCCs – have operated effectively regular flights under the charter banner. China has now clamped down on this practice, imposing restrictions on what qualifies as a charter flight.
Gervois magazine - The new travel magazine for millennials travelers in the United StatesThe Korea-China bilateral was expanded in May-2014, but this mainly added flights to second and third tier Chinese cities, where yields tend to be lower. Even then the addition was rather small and certainly less than Korean carriers could fill.
Korean Air is adding three weekly flights to Guangzhou, but the outbound China flight will depart Guangzhou around 01:00 and arrive in Korea at 06:00. While the times may seem off-putting, they are what slots are available, and gives an indication of the demand that Korean Air expects despite the times. (Overnight short-haul services can be popular for Chinese tourists as they see the flight allowing them to maximise time and minimise hotel nights.) Korean Air and Asiana are the largest carriers by far in the market.
Chinese visitors to Japan declined sharply in Sep-2012 due to political differences between China and Japan over disputed islands. The first eight months of 2012 experienced record inbound tourism figures. Those highs, combined with the lows in the last five months of the year, still constituted 37% growth. Growth in 2013 was down but still recorded an 8% decrease. A rebound occurred  in Sep-2013 and has carried through since, with the first five months of 2014 experiencing a 91% increase. But even at its peak in 2012, the 1.4 million Chinese tourists that visited Japan were only half Korea’s 2.8 million in 2012 – despite Japan being much larger.

Korea has won Chinese tourists with duty free shopping (and general shopping), cultural placement in movies as well as a less-orchestrated general interest in Korean culture. Korea is also a popular stopover point for passengers taking Asiana or Korean Air to North America. Japan is more expensive but optimists see tremendous growth given the vast swathes of the country yet to be developed for tourism.
Spring Airlines serves an increasing number of China-Japan city pairs and plans to launch in Aug-2014 a Japanese subsidiary, Spring Airlines Japan, that will later serve more China-Japan routes.

China Eastern and Air China, the two largest carriers between China and Japan, are restoring their Japanese capacity to pre-crisis levels while China Southern for now remains down. ANA and JAL have increased their capacity slightly.
Hong Kong’s visitor arrivals via air from mainland China grew 20% in 2013 to 4.6 million, faster than the 16% growth observed in 2012. This includes only visitors who arrive by air; the vast majority do so via land border crossings in northern Hong Kong. The number of visitors by air is only available on an annual basis, so we are unable to see change in 2014’s performance.
However, an approximate indicator can be overnight visitors. (Hong Kong has many same-day visitors from around the Pearl River Delta.) Overnight visitors to Hong Kong in the year to May-2014 are up 16%, slower than the overall (same-day and overnight) 18% growth. The Hong Kong Tourism Board identifies that growth in mainland visitors is slowing as competing destinations liberalise visa policies, making it easier tChinese passengerso travel elsewhere.
Cathay Pacific’s wholly-owned regional carrier Dragonair is the largest carrier by far between mainland China and Hong Kong, but Hong Kong Airlines (part of China’s HNA Group) has shown substantial growth.

Macau is the 11th largest destination for international/regional seats to/from mainland China. Macau’s principal interest for Chinese is its proximity (it shares a land border) and its plethora of casinos (with revenue higher than in Las Vegas) compared to mainland China, where gambling is illegal.
China is trying to push Macau to diversify, such as through MICE, shopping and entertainment sectors, but gambling remains its main draw. Only a fraction of visitors arrive by air, where Air Macau (partially owned by Air China) accounts for approximately 65% of the market.
Air Macau once had a less than enviable reputation, but since Air China has exercised greater control the airline has turned itself around and grown. Air Macau has disadvantages, such as a higher cost base than that of a mainland Chinese airline. Further, Air Macau needs to cater to the leisure segment, which wants to depart mainland China in the morning and return in the evening, requiring Air Macau to incur costly overnight parking fees.
See related report: Air Macau takes encouraging steps to support the Macau market as “resort” tourism balloons
In the first five months of 2014, overall mainland China visitors are up 14% while those visiting via the airport are up 20%, consistent with the growth Air Macau put in over 2013 and so far in 2014. However, this is slower than recent years: Mainland China airport arrivals were up 25% in 2013, 21% in 2012 and 24% in 2011. China’s anti-corruption and austerity campaigns are likely impacting arrival figures.
Taiwan continues to be an idealised destination given ties and cultural familiarity. The increasing number of non-stop cross-Strait flights is single-handedly propelling Taiwan’s tourism sector, which remains under the radar in most other markets. However, cross-Strait flights remain heavily regulated. Taiwanese carriers fear liberalisation will occur before slots are available at key mainland China airports, allowing mainland Chinese carriers to use existing slots to mount new services while Taiwanese carriers cannot. Cross-Strait flights are the highest-yielding for carriers, and in 2013 private carriers Juneyao and Spring Airlines were able to enter, albeit with a limited schedule.

Taiwanese carriers – namely China Airlines and EVA Air – are the two single largest carriers in the China market. They also struggle with the fact that they are unable to transfer mainland Chinese passengers beyond Taiwan. The long-haul ambitions of China Airlines and EVA Air will receive a significant boost when they are able to conduct sixth freedom traffic ex-China.
Mainland Chinese visitors were up 11% in 2013, following 45% growth in 2012 (there was a large cross-Strait flight expansion wave in 2011). In May-2014, mainland Chinese visitors to Taiwan were up 54%.

Source: CAPA – Center for Aviation

Chinese Tourists Were Again Top Spenders Abroad in 2013

global-blue-pictureChinese travelers splurged the most on tax-free shopping last year, accounting for 27 percent of spending as they increased transactions by almost a third, according to Global Blue.
Russians were the second-biggest spenders with 17 percent, though they made the most transactions, while Indonesians placed third with 4 percent, Global Blue, the world’s biggest operator of tax-refund points, said in a study released today.
“The Chinese are easily the most numerous and highest- spending globe shoppers,” said Global Blue. “If the last decade is anything to go by, the amount spent will continue to increase, albeit at a slower rate than recent years.”
Advertisement Tower - Gervois Hotel Rating May 2017 featuring Pierre GervoisTotal spending by Chinese tourists increased 20 percent last year after tripling between 2009 and 2012. France is their favorite destination to spend in, ahead of Germany and Singapore, while fashion is the most important category, according to the study.
The number of Chinese outbound trips, excluding Hong Kong and Macau, will reach 60 million this year, from 53 million in 2013, and swell to 77 million by 2016, Global Blue estimates.
The figures are based on tax-free shopping transactions refunded by Global Blue and subsequently approved by customs, not the value of refund forms issued by retailers, which is greater, according to the study.
Global Blue estimates the total tax refund market is worth about 48 billion euros in the 37 countries where it operates.

Source: Bloomberg / Skift

To contact the reporter on this story: Andrew Roberts in Paris at aroberts36@bloomberg.net.

South Korea’s visa-free Jeju Island has become a Chinese tourism gold mine

jeju-island Chinese touristsChinese tourists are heading to South Korea more than any other destination this year, according to travel agency Ctrip. That’s because political instability has turned many off Thailand, and China’s ties with South Korea have been warming.
But most of all there is the undeniable appeal of Jeju. The resort island off the South Korean coast is drawing Chinese tourists with its subtropical climate, visa-free status, and attractions like casinos and an erotic-sculpture theme park known as Loveland (the link is safe for work; a Google image search for the park is definitely not.)
By offering visa-free travel to a beautiful subtropical island, South Korea may have found a solution to a problem that is causing headaches for cash-hungry tourism agencies the world over. How do you attract the lucrative Chinese tourist trade while limiting the collateral damage done by some of the country’s occasionally uncouth travelers, not to mention the backlash when Chinese tourists feel they have been mistreated?
In 2013, almost four million mainland Chinese tourists visited South Korea, and 1.8 million of them went to Jeju. (The island has also been in the news as the destination of the ill-fated MV Sewol ferry, whose sinking killed nearly 300 people.) If Ctrip’s predictions are correct, the number of mainland tourists visiting South Korea will rise to 5.6 million this year—equal to over 10% of South Korea’s population.

Source: Richard Macauley

Singapore makes new mini-movie to woo Chinese tourists

Chinese tourists beachMade in collaboration with Chinese video site Youku and starring Taiwanese actor Jimmy Lin and Chinese actress Tian Yuan, the 20-minute movie titled “Rediscovering Love” premiered last week.

Lin plays a broken-hearted photographer who retraces the itinerary of his ex-lover in Singapore, visiting places such as the Singapore Flyer, Gardens by the Bay and the Intan, a Peranakan museum in Joo Chiat.

The film also showcases local cuisine such as chilli crab in a bid to market Singapore as a stand-alone destination.

Advertisement Tower - Gervois Hotel Rating May 2017 featuring Pierre GervoisTravel itineraries based on the film will be offered by STB’s tour agency partners in cities such as Beijing, Shanghai and Shenzhen. The marketing drive aims to reverse a slump in Chinese tourist figures.  Arrivals in Singapore in April were 45 per cent lower than in the same month last year.

The disappearance of MH370 on March 8 en route to Beijing from Kuala Lumpur is seen as a key factor. Of the 239 on board, 153 were Chinese.
The recent political turmoil in Thailand and a tourism law implemented by China in October to curb unfair competition have also dampened the market, said Edward Chew, STB’s Greater China regional director.
The Singapore-Malaysia-Thailand route is normally popular with Chinese tourists.

There are signs of recovery in travel bookings for this month and next, Chew noted.
“We are also heartened to see an increasing number of Chinese tourists coming to Singapore as a mono-destination,” he said.

“These travellers tend to stay longer than those on multi-destination package tours.”
China has become an increasingly important market for Singapore. Last year, 2.27 million mainland visitors shelled out nearly 3 billion Singaporean dollars (Bt78 billion) in total, which made them the biggest spenders.

The new micro-movie is the second to be produced under STB’s three-year-old China marketing campaign, “New Discoveries in Your Singapore”.  The first, starring Taiwanese actress Ariel Lin, was launched last year.

STB is using micro-movies as a marketing tool because they offer an effective and extensive reach in China’s cluttered media environment.

STB figures show the first micro-movie has gained more than 3.5 million views on multiple online platforms in China and garnered over 20 million yuan (Bt105 million) worth of media coverage.

Source: Nation Multimedia

Bath (UK) looks to China for tourism boost

Chinese tourists in BathA relaxation of visa applications for Chinese tourists could be about to give tourism in Bath a boost.
Bath, and the city’s famous Roman Baths in particular, is one of the most popular attractions for Chinese tourists in Britain, according to Visit Britain. Last year the Roman Baths attracted 71,000 Mandarin-speaking visitors.
That now looks set to increase as, from the autumn, Chinese visitors to the UK and Ireland will be able to use a single visitor visa without requiring a separate visa to travel to each of these two countries.
According to new research from Barclays, working in partnership with Visit Britain, the South West is the preferred destination for Chinese tourists.
Between 2014 and 2017, the biggest growth will be in spending by visitors from China, the United Arab Emirates and Russia, according to the research. It predicts Chinese spend will increase by 84 per cent from 2013 levels, reaching £1bn per annum in 2017 in a total market of £27bn, and that Chinese spending could reach £1bn per annum by 2017, making up almost four per cent of the total market.
Paul Crossley, leader of Bath & North East Somerset Council, said: “It is obvious that Chinese tourists are going to become even more important to Bath. We must make sure we work together with local tourism businesses to encourage this and to make sure that we cater properly for this market.
“The council-run museums are leading the way in this and we hope that this will help to make it easy for other tourism organisations to provide Chinese-friendly services for visitors.”
To coincide with the visa announcement Bath is launching a campaign to welcome more Chinese visitors.
Bath Tourism Plus has launched the Bath China Welcome programme with the help of the University of Bath. The purpose of the campaign is to give businesses the support they need to help attract the Chinese market.
Chief executive Nick Brooks-Sykes, said: “Our aim is to make Bath the most China friendly destination in England. We are calling all businesses to join our initiative, encourage tourism businesses as well as retailers who want to grow this lucrative market to get involved and contact Bath Tourism Plus.
“This new campaign will help further grow the industry’s current £375-million visitor economy with the launch of a Mandarin website, social media campaign and programme of travel trade and press activity.”
The group is co-ordinating business support activities such as briefings to understand market trends, culture and etiquette as well as Mandarin.
China is now the world’s largest outbound tourism market and the latest data for 2013 shows that the number of visitors to Britain from China grew by ten per cent to hit 200,000 for the first time. For details visit http://www.visitbath.co.uk .
Nick Brooks-Sykes, chief executive of Bath Tourism Plus, and Bath MP Don Foster, with Chinese students from the University of Bath.

Source: The Bath Chronicle