Macau should be one of the Asia-Pacific (APAC) tourism destinations that will benefit soonest and most significantly from the easing of outbound travel arrangements for Chinese, since the mainland authorities discontinued their ‘zero-Covid’ approach at the turn of the year, says Fitch Ratings Inc.
“Hong Kong, Macau, Thailand and Malaysia will probably benefit most from these trends,” wrote the credit ratings house in a Thursday report.
Of the four places, only Macau and Malaysia have legal casino business, though Thailand is mulling legislation that would allow large-scale gambling resorts.
On January 24 – the fourth day of the latest Chinese New Year holidays – Macau recorded 90,391 arrivals, its highest daily total since early 2020, contributing to a surge in holiday-season arrivals.
Before the advent of the Covid-19 pandemic in early 2020, Chinese tourists had been an important source market for Asia-Pacific casinos beyond Macau.
In recent years, authorities on the Chinese mainland have – according to media there – stepped up scrutiny of outbound mainland residents to screen them for signs they are planning either overseas gambling trips, or heavy-volume gambling in Macau. The latter city is the only place in China where casino business is legal.
Fitch also gave commentary in its update, about other places that could benefit in general from a return of travellers from China.
The ratings house stated: “Chinese tourists could also provide varying degrees of support to macroeconomic performance in Singapore, Vietnam and Sri Lanka.”
Singapore has a casino duopoly and allows locals to play, though they must pay either a daily or annual entry levy. Vietnam has casino resorts across the country, and Sri Lanka also has a casino sector.
Fitch noted that China was one of the world’s largest tourism source markets before the pandemic, with total international tourism expenditure of US$254.6 billion in 2019.
A presentation in August by Praveen Choudhary, an analyst at Morgan Stanley Asia Ltd, suggested the land-based Asia-Pacific casino market had seen circa 80 percent shrinkage of its VIP gambling revenue since 2019, going from circa “US$20 billion to US$4 billion”, with much of the hit being taken by Macau, which has up to now has catered mostly to Chinese players.
Chinese travellers were additionally in pre-pandemic times, ardent consumers of luxury goods, including those from high-end fashion brands, according to general commentary by investment analysts.
Nonetheless “consumer sentiment in China’s early reopening stages could be fragile,” observed Fitch in its Thursday update. “If economic growth across the region falls below our forecasts or consumers’ purchasing power is eroded further by higher-than-expected inflation, for example, this could set back demand for travel,” said the institution.
It also thought several factors might constrain the rebound in outbound tourism, in China and other regional markets.
“We continue to expect a slow recovery in Asia-Pacific’s international air traffic capacity, as it will take time for airlines to resume routes – both within China and within Asia-Pacific more widely – that were previously suspended during the pandemic,” stated the Fitch report.
Several countries in Asia have recently imposed some health controls on people travelling via China, amid a reported uptick in Covid-19 infections in that country after the ending of its zero-Covid policy. A number of other nations in Europe and the Americas has introduced similar checks.
