Dependance on Chinese market and Beijing assistance to counter any impact of Japanese gaming market – Consultant

Integrated resort and gaming expert, Niall Sean Murray, indicated today that he believes the dependence on the Chinese market, and the control Beijing has on Chinese tourist flows will protect Macau from any future competition from a Japanese market.

“The same question came up before for Singapore if those two IRs coming up would draw out some of our customers away. We still have a huge dependence on our visitation from Mainland China. Luckily inbound tourism is controlled by Beijing, it decides who gets out and who doesn’t and where they can go to. You still need to get a visa to travel out of China. So if the numbers are going out of balance and the two SARs are not getting the fair share of the market they can always increase the gauge and allow more people to come out to Macau and Hong Kong,” Murray noted.

A specialist in integrated resorts and chairman of Murray International, Murray held a talk organised by the French Macau Chamber of Commerce today on the development of integrated resorts in Macau.

The consultant noted that the Chinese central government also controls the visas for Chinese citizens wanting to travel to Japan, and believes the ‘One Country, Two Systems’ policy will still lead Beijing to look after the two SARs in the short, medium to long term.

“In addition to that you see that Japan is increasing a lot of tourism due to their hard work in bringing people over from China, those people have been coming without gaming and they are a different market segment,” he added.

Currently, Chinese wishing to travel to either Hong Kong or Macau have to hold an Exit-entry Permit for travelling to and from both SARs, with permits available for individual visits, tour group visits, business visits, and family reunion.

Of the more than 33.4 million visitors that came to Macau in the first 10 months of this year, 71.2 per cent came from Mainland China with 52 per cent being same-day visitors, a demographic that due to proximity, according to Murray, spends on average four and a half hours in Macau, a reality that won’t be reflected in Japan.

“I still believe the penetration rate for China is so low that there are so many more areas that can be opened up. I think we still have many many years to enjoy our partnership with the Mainland,” he added.

Another factor was that the number of integrated resorts would also be much lower than the more than 40 casinos existing in Macau.

Three areas for integrated resort development will be chosen by Japanese authorities, two metropolitan areas and one regional area, with 67 areas considered eligible for these developments.

The Japanese cities of Osaka, Yokohama, Tokyo, Chiba City, Nagoya, Hokkaido, Nagasaki, and Wakayama have all expressed interest in having IRs developed, but with Murray noting that list would likely change in the future after regional elections make local governments more comfortable in putting their hats into the ring.

However, the regulatory process will still be long and very detailed, with Murray telling MNA that Osaka is on track – if it can select an operator suitable for certification – to be the first location to see a property developed with the city intending to have it ready before the World Expo in the spring of 2025.

The joint bid made by MGM and its Japanese partner Orix was said by Murray to be the most well-positioned to be the first in Osaka, with the venture having proposed a US$10 billion integrated project for the city, with a multi-purpose event center, some 100,000 square meters in space and 3,000 rooms.

“But some of the other jurisdictions are trying to catch up and skipping elements of the process to try and keep up like Yokohama,” he noted.