Golden Week worse than expected, next months to showcase pace of recovery – Analysts

Analysts consulted by Macau News Agency (MNA) considered that visitor numbers for the National Day Golden Week period were worse than expected and considered that it might be a sign the city will need to reinvent its touristic attractiveness.

The recent eight-day holiday period between October 1 and 8 reported a total of 156,300 visitors, with a daily average of 19,538, an 86 per cent year-on-year fall.

Despite the resumption of the issuing of individual tourism visas for the whole of Mainland China on September 23 tourism numbers remained at only about 15 per cent of the almost 1 million reported in last year’s Golden Week period.

“The number is a bit disappointing. Although I did not expect we can reach the same amount of tourist of last year, the recovery is still very slow. I think the main reasons are the inconvenience to make a trip outside China (nucleic test), and there are a lot of attractions to China that can attract domestic travelling,” Institute for Tourism Management Visiting Assistant Professor Penny Wan told MNA.

Currently, tourists are still required to present a negative nucleic acid test to enter the SAR or local gaming areas and visa procedures for tourist visas are still not as speedy as in the pre-pandemic period.

However, the same requirements are not in place for travel within Chinese provinces with Golden Week visitor numbers within the mainland actually higher than last year, as the lack of international travel options led Chinese travellers to turn inwards.

“Unless this barrier is relaxed and simplified, I do not see we can draw a larger number of tourists from mainland China,” Professor Wan added.

The tourism sector researcher also noted that Chinese nationals used to come to Macau for shopping but since they can just do it safely through online platforms, they have one less reason to come to the city.

Tourism analyst Glenn McCartney also expressed its surprise at how poor the visitation numbers were during the holiday period, and considered the numbers surprising and unexpected “from operators to investors” and even to himself.

“It was subdued and unexpected […] We didn’t have anything to compare it to and no forecast can be made with a lot of accuracy since a pandemic like this has never happened before. Still it fell short of people’s guess estimates,” the Professor in International Integrated Resort Management at the University of Macau told MNA.

The tourism researcher stated that “some lessons need to be learn” from the lacklustre Golden Week and the reasons for the low visitor numbers should be studied and analysed.

“There’s issues with the testing in China, also different policies for different cities. Also maybe a bit of miscommunications as some people maybe did not know they could travel to Macau without quarantine[…] It could also be some of the underlining issues, the pressure over the gaming sector, the blacklist and issues with liquidity. That could have had some impact,” McCartney added.

The fact that Chinese travellers can safely travel within China without the health and safety measures imposed in the SAR could have also been a factor, but for McCartney a lot of the reasons are still unknown.

“But one thing it tells me is that we can’t rely on the 2019 blueprint of marketing the city. One thing we learned in the past two decades is the built it and they will come principle, a mentality that we open the borders and they will come in droves […] We really have to think about really get strategic with our marketing now,” he noted.

For the tourism researcher this would include more targetted social media promotions in the mainland and re-analyse the attractiveness elements of the city to mainlanders, by surveying and studying what attracts them to the city and what would make them comeback.

“We really need to be more data driven going ahead”

This year Chinese authorities have stepped up efforts to clamp down on capital flows out of the country via gambling operations.

In June, the Chinese central bank and top monetary authority, People’s Bank of China, issued a statement stating that combating cross-border gambling-related financial chains would be a ‘major political mission’ assigned by China’s Central Government.

The country’s Ministry of Culture and Tourism also announced in August that it would establish a “blacklist” of cross-border gambling tourism destinations, which will restrict Chinese citizens’ travel to overseas cities and scenic spots on the list.

The issue has also impacted the usual financing channels used by VIP players via junkets operators and reduced available liquidity in the Macau SAR, with Reuters reporting that several clients have even proceeded to withdraw their deposits in local junket VIP rooms.

A recent survey involving Chinese tourists and conducted by the Macau Research Centre also showed that 20 per cent of tourists who came to Macau after the resumption of the individual visa scheme claimed to have come mainly for gambling, a worrying sign for people who expected a bump to the record low gaming revenue numbers.

Local gross gaming revenues have dropped by 82.5 per cent year-on-year to some MOP38.6 billion (US$4.8 billion) between January and September.

Data collected by Sanford C. Bernstein analysts indicates that gross gaming revenue for the October 1-7 period was approximately MOP1.9 billion, with an average daily rate 79 per cent lower than last year at MOP279 million, but 279 per cent higher than the average in September.

VIP volume was also 80 per cent lower than last year, with mass decreasing 70 per cent year-on-year.

Bernstein considered that concerns around junket liquidity could still weigh in on junket operators results, with the return of mass base customers to drive growth in the medium term.

Still, the brokerage expected visitation to increase in the following months, with the simplification of the visa process and maybe the elimination of the Covid-19 test to be essential for this recovery.

“The driver of recovery will be confidence levels of customers to travel and spend, opening up Hong Kong to Macau travel and increased frequency of air transportation within Greater China to airports in Guangdong/HK/Macau to facilitate long-haul travel,’ the brokerage indicated in a note.

There were eight airlines operating 22 destinations – 17 to Mainland China, one to Taiwan and four to South East Asia destinations during the Golden Week, with almost 17,000 passengers carried to and from the Macau International Airport, five times more than in September.

However, Professor Wan was not that optimistic, pointing that recovery was also hanging on the progress of the control of Covid-19 cases in China and globally, and China’s policy on the test requirements and procedures.

“The recovery of China’s economy is also a factor. Only if business, factory and shops begin their operation and businesses after the recovery of Covid-19 that people will have more economic power to travel. These two months become crucial to determine if Christmas and New year holiday can bring see the recovery. But personally, I am not that optimistic,” Professor Wan added.

For McCartney the next weeks and months until the end of the year will be essential to assess if the Golden Week was small step for recovery or if numbers will go down again and “alarm bells” will start ringing.