Special Report – The “dramatic collapse” of visitation

Are days of mass tourism behind us? Visitation remains a far cry from the pre-COVID 19 period. Experts point to a new normal for the city’s core business.

MB January 2021 Special Report | The COVID-19 year

A new economic model, less dependent on tourism, will probably come into fruition in Macau, but only in 5 or 10 years from now.

Until then, Macau will remain what it is and what it has been: an economy completely dependent on tourists, a finding that the pandemic situation has only confirmed.

Three examples:

– The average occupancy rate of local hotels has reached a historical low in April (12.9 per cent), and the occupancy rate of the five star hotels took a tumble to 6.6 percent (-85.9 per cent from the previous-year period);

– During the National Day ‘Golden Week’, 156,300 people entered Macau, a far cry from the 985,000 visitors in 2019. Rutger Verschuren, president of the Macau Hotel Association, said that for this sector, ‘Golden Week’ was a “week of tin”;

– According to the projections of the World Tourism Organization, the city will need at least three years to get back to the situation before the pandemic;

It would be as easy as it would be redundant to continue this list of examples. We are facing what University of Macau Associate Professor Glenn McCartney called a “dramatic collapse of both visitation and gaming revenues.” His colleague from the Department of Integrated Resorts and Tourism Management, Richard Qiu, points out that “thanks to the quick response of the government, as well as the nature of city (we are not an aviation hub city). We had almost zero social cost directly attributed to tourism during this pandemic,” for example when comparing with Hong Kong.

“If Macau Government is going to design strategies to attract tourists, it should be kept in mind that ‘the more the better’ rule does not fit here” – Richard Qiu

“With the right strategy, I believe tourism is one of the sectors that could recover the fastest and help the economy the most at the beginning stage of the recovery,” adds to Macau Business Professor Qiu, to whom it doesn’t make sense to change the paradigm: “Quite the contrary, I think Macau will rely on tourism sector for a very long period of time in the future, even if we are actually trying to change the paradigm. Nevertheless, diversification within the tourism sector is inevitable and necessary.”

“While the COVID-19 pandemic is hitting harder and persists longer, I still believe, once the vaccine is out (or the cases drop below a certain level globally), the tourism sector can recover in one to two years globally,” Ms. Qiu confided.

Professor Lawrence Fong, also from Department of Integrated Resorts and Tourism Management, is not so sure about this. “I don’t think the number of tourist arrivals will be able to resume to that before COVID-19 in the next couple years. Regarding the estimated number, I do not have a good answer given so many uncertainties.” Sio Chong U, Assistant Professor, School of Business, Macau University of Science and Technology, agrees with that idea: “moreover, the situation in Covid-19 is more complicated than that in SARS. For SARS, there are around 8,000 cases that happened in 26 countries. The ‘safety-first priority’ not only affects the tourists, it also affects the government’s policy. Some countries still limited entering of visitors or even residents from pandemic areas,” he emphasized to Macau Business.

That’s why “it is also time to rethink the entire tourism industry as a whole,” said last August to Macau Business Macau Government Tourism Office, Helena Senna Fernandes. But Ms. Fernandes also admitted that “the recovery of the mainland China’s tourist market is MGTO’s only priority until the end of 2020.” 

The concern does not come only from the side of governance. 

Gaming companies are also trying to anticipate the future: “We need to think about how to increase our tourists, and what they expect to enjoy when they arrive. In addition to the gaming industry, is there any other better environment to increase the number of tourists coming to Macau and spending more? That’s what our current strategy focuses on,” said SJM Holdings Co-Chairman and Executive Director Angela Leong. “There are opportunities in every crisis, and today is an opportunity to rethink the future of tourism and to reinvest in its potential,” is the understanding of Pansy Ho (STDM and MGM). 

“We will have to rethink how we look at issues such as climate change and the environmental footprint we leave, due to our habits, with travel being one of them, which contributes to generating carbon dioxide and which will contribute to generating waste. We will have to rethink the entire tourism industry,” explained to Portuguese-spoken newspaper Ponto Final Fanny Vong, President of the Macao Institute for Tourism Studies.

“Nevertheless, when the government designs strategies to reboot tourism sector after the pandemic, caution is needed,” sentences Richard Qiu. “The IVS not only provides Hong Kong with the fast recovery from SARS, but also became one of the reasons that the Hong Kong tourism market entered an antagonistic stage. This happens when the tourism influx exceeds the carrying capacity of the society. If Macau government is going to design strategies to attract tourists, it should be kept in mind that ‘the more the better’ rule does not fit here,” Professor Qiu advises.

Read more | Special Report – Two weeks in February