It is not an honor to have been named by hotels.com has having the highest average room rates in the region; rather, it is a sign of weakness.

As mentioned yesterday in this newsletter, we believe the mass visitor market is becoming saturated and Macau’s resorts need to do a better job of marketing the destination to an audience outside of Guangdong. But they are hampered in this endeavor by three things: 1) The MGTO’s insistence on marketing Macau as nothing more than a destination for heritage trails and MICE events; 2) The difficulty of getting to Macau, given its miserable air services and embryonic rail links; and perhaps most important, the shortage of available and affordable hotel rooms.

An average room in Macau, according to the hotels.com survey published by Macau Daily Times, cost HK$1,492, up almost 20% on the previous year. That beats neighboring Hong Kong by around a third.

Moreover, the situation appears unlikely to be addressed anytime soon. Galaxy will be bringing another 2,500 rooms onto the market this year, but they are all aimed at a high-end audience and we are pretty sure their hospitality supremo, Heinz Roelz, will not accept anything less than a premium on the market average for those.

Sands China is talking about opening only 1,000 rooms in Lot 5&6 next year and, now that Shangri-La has pulled out, we don’t know if those will still include smaller rooms aimed at business travelers who like the Traders Hotel brand. We think it could still take years, not months, for Sands to finish the rest of the 6,000 rooms slated for the rest of Lot 5&6.

Meanwhile, COD is still trying to figure out which brand to put on its next hotel tower, and we don’t see Lot 3, Macao Studio City, Wynn, SJM 1&2, or MGM coming online until well beyond 2016, which would take their owners uncomfortably close to the concession expiry deadline anyway.

Help may be on the way across the border in Hengqin, where the State Council-directed zone will surely put up hotels designed and priced for the Chinese market faster than Cotai can. But it’s still not ideal, given the lack of 24-hour access to Macau across the Lotus Bridge.

So, what are we left with? A great short-term situation for the incumbents, where room rates and gaming table win-per-day numbers keep climbing, but a worrying longer-term trend as Macau prices itself out of the itineraries for the booming numbers of mainlanders traveling abroad in the next few years. Stay tuned to see how it pans out. Copyright and use with permission of IntelMacau.com