Property firm JLL upbeat on Macau hotel sector outlook
Property services firm Jones Lang LaSalle IP Inc (JLL) says it is “cautiously optimistic” that business performance in the Macau hotel sector will stabilise “over the medium to long term”.
“Macau has proven itself to be a favoured destination for mainland Chinese visitors and MICE organisers for its accessibility and established infrastructure,” stated the property firm’s hotels and hospitality group in its report “Hotel Destinations Asia Pacific” published this month. The report was referring latterly to the meetings, incentives, conferences and exhibitions trade.
The majority of the casino customers in Macau are tourists. There is however no direct connection between overall tourism figures – including hotel occupancy rates – and casino gross gaming revenue (GGR) in Macau.
JLL referred in its report to the downturn in Macau’s fortunes seen in 2015, which investment analysts had said was linked to mainland China’s anti-corruption crackdown.
“Following a drastic fall in 2015, the mainland Chinese [visitor] market gained some momentum in December 2016, growing by 7.8 percent compared to December 2015, ending the year with a 0.2 percent marginal improvement,” noted the authors.
“Recently, a noticeable increase in VIP gambling numbers is a welcome sign that the market is in recovery,” added the JLL team. Macau government data issued on Monday indicated GGR for the VIP segment rose by 35 percent year-on-year in the third quarter.
Macau’s tourist price index for the third quarter – released on Monday – showed that the sub-index for accommodation increased by 6.75 percent year-on-year and 10.68 percent quarter-on-quarter, but was still down 5.90 percent on an annualised basis.
Data from the Macau Hotel Association show that the average hotel room rate in August – the most recent available data – was MOP1,326.8 (US$165), representing a year-on-year increase of 7.0 percent.
In the year to July 31, the average daily room rate in Macau marketwide was US$167, and the daily revenue per available room was US$146, said JLL, citing data from STR Inc, a research company that tracks supply and demand data for several market sectors, including the global hotel industry.
An August note from Japanese brokerage Nomura nonetheless said a circa 12-percent increase in Macau hotel supply over the “next six to 12 months” could have a negative impact on revenue per available room in the market.
The number of hotel rooms in Macau is set to increase by 39 percent over the next few years, according to government data released in March.
The city is currently on average the fourth most expensive among the nine Asia-Pacific cities most popular with Chinese tourists, said a research report issued in September from brokerage Sanford C. Bernstein and Co LLC, citing data from Budgetyourtrip.com and Sanford Bernstein analysis. The research excluded spending on gaming, retailing and travel costs, but included accommodation.
The number of Macau guest rooms as of August 31 – the most recent data available from the statistics bureau – stood at 37,000, a year-on-year increase of 10.2 percent. They are serving an annual aggregate tourist market comprising circa 30 million arrivals.
JLL said that in another important regional destination for casino customers – Manila in the Philippines – a significant portion of the 1,846 new hotel rooms in the market so far this year had been supplied by the Okada Manila gaming resort. The latter property, promoted by Tiger Resort, Leisure and Entertainment Inc, is slated for an inventory of 993 rooms.
“The outlook for tourism remains bright for the Philippines, amidst continued marketing efforts and infrastructural developments to support the industry,” stated the property firm.
But it added, referring to an Islamist insurgency this year on the southern island of Mindanao and a lone-gunman attack on the Resorts World Manila casino resort in June: “Tourists will need reassuring that the attacks in Marawi City and Resorts World Manila are isolated incidents.”
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