Macau’s future is arriving by train, plane, bridge and ferry. A series of reports from boutique investment bank Sanford Bernstein suggest that ongoing monumental transportation infrastructure improvements in and around Macau will support and even encourage the casino capital’s transition to a tourist destination. Their studies say overnight Chinese tourists will remain the key growth drivers to reach 40 million visitor arrivals in 2020 – from 31 million last year – as Macau becomes better linked to the mainland and the world through these multi-billion dollar investments. Transforming these mammoth connectivity enhancements into destination game changers largely relies on government, not just in terms of bricks and mortar – which Macau finds challenging enough – but in terms of sound policy on an equally broad scale.
Authors of the Bernstein transportation report, Senior Analyst Vitaly Umansky and colleagues Zhen Gong and Yang Xie, cite the usual suspects: the Hong Kong-Macau-Zhuahai bridge, China’s high speed rail system, Macau’s Pac-On Ferry Terminal, light rail system, and airport improvements, coupled with the development of Cotai’s neighbor, Hengqin island, into the Orlando of China with multiple theme parks and 20,000 hotel rooms. Aside from adding capacity, new infrastructure will reshape the way visitors reach Macau, redirecting tourist traffic from the Macau peninsula’s Gongbei Border Gate and Outer Harbor ferry terminal toward Cotai arrival points.
Some improvements are already completed, such as linking Zhuhai to the mainland’s high speed rail system. More will come online this year, starting with the long delayed replacement for Taipa’s temporary ferry terminal, additions to Hengqin’s Chimelong theme parks and hotels, perhaps even the Pearl River delta bridge that will make Hong Kong’s busy hub airport just a half-hour by bus from Macau and provide an alternate to the ferry from Central Hong Kong. The Macau light rail, a decade behind schedule, will eventually run to Hengqin, connected to the Chinese train system, bringing mainland visitors directly into Cotai via the Lotus Bridge border crossing.
The tourism report by the same Bernstein analysts sees increased penetration rates into the mainland market translating to more overnight visitors, supported by both transport improvements and greater hotel capacity in Macau and Hengqin. Bernstein estimates Macau is currently attracting just 3.2% of the mainland’s “addressable market” with household incomes above US$15,000 totaling more than 300 million, compared with Macau’s 30% penetration rate for Hong Kong and rates for U.S. casinos around 25%.
Getting more people in is only half the battle; Macau needs to create a win-win situation for visitors, business and residents. That’s not just up to casino operators and others in the hospitality sector. Authorities in Macau and Beijing have a big role to play. There are practical matters, such as how to handle the human and vehicular traffic arriving by bridge. A 30% increase in visitors must not lead to a 30% increase in casino shuttle buses. There needs to be a visa mechanism that allows mainland visitors to Hengqin easy access to Macau without compromising China’s controls on its citizens’ visits to the city. Labor laws must let the hospitality industry employ not just enough staff but aim for the world’s best and brightest while promoting the training of local workers to lift them to that elite level.
Singapore has iconic Marina Bay Sands and Resorts World Sentosa (with its Universal Studios theme park) due to rules government laid down for casino licensees. Hengqin is being shaped under similar policy prescriptions. Macau suggested it was moving in that direction when officials said they would use non-gaming attractions and local enterprise opportunities to determine gaming table grants for new resorts. But Macau didn’t live up to its suggestion with equal table allocations to policy-deaf Wynn Palace and attraction-laden Parisian Macao. Making Macau a more compelling destination requires concrete incentives and, more importantly, stakeholder cooperation. Operators and the government have enough money and enough of a market to do spectacular things for the city beyond knockoffs and name brand shopping. It’s past time to start.