GGRAsia – Cheaper Macau hotel rooms, higher occupancy in 1H

Cheaper Macau hotel rooms, higher occupancy in 1H

Jul 21, 2017 Newsdesk Latest News, Macau, Top of the deck

The average occupancy rate of Macau hotels increased 6.3 percentage points year-on-year in the first six months of 2017, to 87.2 percent, according to data from the Macao Government Tourism Office (MGTO) published this week.

The five-star segment experienced the biggest year-on-year increase in occupancy judged on a cumulative basis for the calendar year to June 30. Average occupancy grew to 86.1 percent, up 7.3 percentage points.

The four-star hotel category in Macau recorded a 6 percentage points increase compared to the prior-year period, to 87.7 percent, said MGTO, quoting figures from the Macau Hotel Association.

It was however the three-star hotel category that had the highest occupancy rate in the six months to June 30, at 91.4 percent, up 3.7 percentage points from a year earlier.

While hotel occupancy went up in the first half of 2017, the industry recorded lower hotel room prices during the period.

The average cost of a Macau hotel room during the first six months this year was MOP1,249.6 (US$155.4) per night, according to the Macau Hotel Association. That represented a fall of 3.5 percent from the prior-year period.

The average price in the five-star segment fell by 3.4 percent year-on-year, to MOP1,653.5, while the four-star category saw its average price decline by 2.8 percent, to MOP768.8. The three-star segment recorded the biggest decline in prices in the first half of 2017, with the average price down 7.2 percent year-on-year, to MOP851.

The decline in hotel room rates is occurring against a backdrop of increasing supply. There were 36,300 hotel rooms in Macau in May 2017, up 13 percent from the 32,100 in May last year.

Brokerage CLSA Ltd said in a recent report that hotel capacity in Macau “remains woefully short” for a city that received approximately 30 million visitors each year.

Most of the city’s hotel rooms are in casino properties, and Macau hotels are “highly occupied” but by “gaming customers,” which pushed up average daily room rates “beyond the means of an average mainland tourist,” said CLSA.

Citing its own poll, the brokerage said high room rates “are often cited as the biggest deterrent to longer stays in Macau”.

In the first five months of 2017, visitor arrivals to Macau totalled nearly 13.2 million, up by 6.3 percent from a year earlier. The number of overnight visitors saw a 13.7-percent year-on-year increase to 6.75 million, according to data from the city’s Statistics and Census Service.

The average length of stay of visitors in the five months to May 31 remained flat at 1.2 days, with overnight and same-day visitors staying on average 2.1 days and 0.2 of a day, respectively.

“The hotel room capacity bottleneck, as evidenced by persistently high occupancy rates, suggest that there is strong pent-up demand to visit Macau,” said the CLSA analysts.