The Chinese government’s ambitions to develop further the mainland-territory island of Hainan as an international tourism destination might affect the non-gaming tourism plans of Hengqin Island (pictured), next door to Macau, says brokerage Sanford C. Bernstein Ltd.
The focus of some media commentary – that a possible introduction of horse racing and an international-style lottery on Hainan could somehow be a sign that Beijing is mulling ending Macau’s casino monopoly within China – was “overblown,” said Sanford Bernstein in a Monday note.
But it added that there might be some impact for Hengqin, next door to Macau, which has long been touted as the possible base for a range of non-gaming attractions for tourists, and that could provide a marketing opportunity for ‘two-centre’ holidays between Macau and Hengqin.
“Hainan’s tourism development, coupled with infrastructure improvement and duty free shopping, may shift the focus away from developing Hengqin to the same level as had been originally contemplated,” said the memo from Sanford Bernstein analysts Vitaly Umansky, Zhen Gong and Cathy Huang.
Although they added: “It is still too early to say whether there will be an impact on future Hengqin development plans.”
Macau casino operators, including MGM China Holdings Ltd and Galaxy Entertainment Group Ltd, have shown interest in investing in Hengqin. MGM China said in 2014 Chinese authorities were considering whether to give permission for the firm to invest in a non-gaming project in Hengqin.
Galaxy Entertainment has already signed a framework agreement for a RMB10-billion (US$1.50-billion) non-gaming project on a 2.7-square-kilometres (1.0 sq miles) parcel of land on Hengqin. The firm has plans to build a low rise, low density resort there, according to company filings to the Hong Kong Stock Exchange.
Since then, there has been little fresh news regarding the scheme. In late February, Francis Lui Yiu Tung, deputy chairman of Galaxy Entertainment, reiterated a call for easing of travel formalities between Macau and Hengqin.
In February 2015, Macau casino operator Sands China Ltd announced a partnership with Hengqin’s existing theme park – Hengqin Chimelong International Ocean Resort – for two-centre holiday packages. Chimelong opened in March 2014.
In July 2016, Hong Kong-based conglomerate Lai Sun Group announced plans to develop a Hollywood film-themed amusement park on Hengqin, and to open it by the end of 2018.
In Monday’s note, Sanford Bernstein said additionally that “there is no indication that casinos are forthcoming” in Hainan. “While any casino legalisation on Hainan would create problems for Macau, we do not see casino development in China as a realistic threat to Macau now or in the foreseeable future,” the brokerage stated.
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”Ramp ups [of new Macau casinos] are taking a little bit longer. The market is somewhat volatile at the moment, but we continue to look at all the opportunities and are still very comfortable that things are starting to move ahead”
Chief executive of MGM China Holdings