Hotels keep pace with soaring visitor numbers

Tourism growth continues to be robust in Macau despite hurdles such as China's proposed visa tightening policy and the United States subprime crisis. The region's market leader in hotel investment and advisory services, Jones Lang LaSalle Hotels (JLLH) identified Macau as one of the key growth markets in Asia over the next five years. The firm states that Macau will benefit from intra-regional travel which will be the key driver for growth in the region.

Based on JLLH Digest Asia 2008, the city will continue to experience strong growth in its tourism and hotel industry and market sentiment remains strong. A record 30.6 million international visitor arrivals is expected this year, a 13.3 per cent increase on last year. A compound annual growth rate of 11.6 per cent is also foreseen in inbound travellers between this year and 2010.

Chee Hok Yean, JLLH executive vice-president and head of corporate advisory Asia, said success was driven by the liberalisation of the gaming industry in Macau.

'The Individual Visit Scheme is another factor which has helped bring in Chinese travellers, with arrivals from the mainland tripling between 2002 and 2007,' said Ms Chee.

'The opening of new casino resorts including the Venetian Macao, MGM and Wynn Macau has helped increase the average length of stay and hence spending in Macau.'

Occupancy for four and five-star hotels reached a nine-year high in 2007 when the opening of the Venetian Macao heralded a new generation of integrated resorts on the Cotai Strip set to transform the city into Asia's Las Vegas.

Five-star hotel occupancy peaked at 78.2 per cent while four-star hotels reached 84.7 per cent, showing a 17.6 per cent and 17 per cent year-on-year increase in average daily rate (ADR), respectively. Revenue per available room (revpar) in four- and five-star hotels reached a 10-year high last year. A 38.1 per cent year-on-year growth was recorded in revpar in five-star hotels to 1,171 patacas while four-star hotels' revpar reached 453 patacas on a 24.1 per cent year-on-year growth.

Moreover, JLLH expects average hotel occupancy levels to stay within 65 to 75 per cent.

'New benchmark levels of revpar and ADR will be established over the next few years,' said Ms Chee. 'We are seeing the development of Macau into a world-class, multifaceted destination.'

About 31,400 new rooms are under construction or being planned from this year. If all projects materialise, existing hotel room inventory will be tripled. At the end of last year, Macau's hotel room stock stood at 16,148 in 82 establishments. This can be classified into 52 hotels with 15,586 rooms and 30 guesthouses with 562 rooms. Compared with 2006, there were 3,167 rooms added to the city, up by about 25.5 per cent.

Bear in mind all these expected additions should be internationally branded properties with superb quality. About 59 per cent (18,570 rooms) of this new supply will be at Las Vegas Sands' Cotai Strip. Other developments at Cotai are Galaxy Cotai Mega Resort and Macau Studio City that will generate 4,405 rooms.

At Macau Peninsula, JLLH said more than 2,400 rooms are expected to be ready between this year and 2010. Major development includes Sofitel Macau@Ponte16 (408 rooms), Grand Lisboa Hotel (430 rooms) and the Mandarin Oriental Lago Nam Van (213 rooms).

This year, three international flags are joining the competition, bringing their opulent hospitality. These are the 431-room Grand Lisboa, the 360-room Four Seasons Hotel and the 408-room Sofitel Macau at Ponte 16, which opened last month.

The Grand Lisboa, next to the Hotel Lisboa, was designed by Khuan Chew and is a 52-storey golden lotus-shaped building. Each room has a jacuzzi, 60cm-diameter rainforest shower, steam bath and a 40-inch, wide-screen high definition television.

The Sofitel Macau sits on a waterfront site in the Inner Harbour of Pier 16, which is one of the oldest districts in Macau.

Industry players are concerned about filling this new supply of rooms. The mainland accounts for 55 per cent market share of visitor arrivals and hit 14.9 million following a 24.1 year-on-year increase.

The Macau Government Tourist Office is looking into emerging markets such as the Middle East, Russia and Vietnam to tap more visitors.

Florinda Hotels International executive director Alan Ho is optimistic about the group's subsidiary company, Lisboa Hotel.

'Whether Macau needs more hotel rooms or whether we are heading for a glut depends on whether China supports Macau 's tourism development plans by making it easier or more difficult for mainlanders to come,' said Mr Ho.

'The industry has received mixed signals in that regard. This, of course, is normal. Crystal balls, whether they are for financial or political forecasting, are difficult to read.'