Visitor arrivals in package tours surged by 133% in May over the same month last year, according to statistics from the government. Mainlanders, who account for 75% of the total, were up 168% year-on-year. For the first five months of the year, however, the rise was just 23%. Notable rises were recorded by Japanese (up 86%) and Koreans (up 400%), continuing their takeoff since the beginning of this year (up 55% and 210%, respectively, for the first five months). Moreover, hotel occupancy statistics showed dramatic year-on-year improvement, too, with the average at 78%, up nearly 20 percentage points.

May last year was the bottom of Macau’s one and only depression since the gaming sector was liberalized in 2002. Outbound travel from China was in the doldrums due to lingering effects from the financial crisis (state-ordered liquidity was working its way through the system) and the swine flu scare made many people stay away from packed casinos where it might have been easier to contract the virus. The next month, everything changed: summer heat chased away the flu and Beijing decided that Macau needed a lift, so it eased restrictions on the IVS permits. So no one should get too excited about these year-on-year comparisons. Moreover, government press releases should always be examined for what’s missing, and in this case it was the month-on-month changes. Actually, May was a record month for gaming revenue but package tour arrivals went down slightly compared to April. This was not due to a slowdown in tourist arrivals, but was the result of a shift in its composition: overall arrivals were up 8% in May over April, because more people were switching back to IVS permits rather than coming in tour groups. It’s nothing to worry about, but is a peculiarity of Macau, given its heavy reliance on day-trip visitors.

That said, the hotel occupancy numbers are encouraging, and we are hearing positive feedback from hoteliers around town about July and August bookings, too. Indeed, compared to last year, when everyone just wanted occupancy rates to get back in the high-90s, the question on some resort managers’ minds this summer will most likely be a perplexing one: what kind of visitors do I want to have in my fully-booked hotel? Long-haul visitors from markets like India, or short-stay visitors from China who play a furious baccarat? It is a luxurious consideration, perhaps. But Macau is unique in that there is an enormous difference between the value of a gaming visitor and a non-gaming leisure visitor – far more so than mature markets like Las Vegas. That is why we get a bit puzzled when we see the big building on Cotai making strenuous effort to lure leisure visitors this summer, giving away very cheap packages for families of four. Is that really good for the bottom line? We have to wonder sometimes how much of a voice the casino managers have in such decisions. If gaming patrons can’t get a room at the Venetian or Four Seasons, will they still play there if they have to stay somewhere else?

The point might be moot, given how the Venetian’s mass floor has been heaving over the past week with day-trippers, and 3,000 hotel guests will be a drop in the bucket compared to the 100,000 people who go through that property on good days. We also buy the argument that mom and dad can always just drop the kids off at the entertainment center, and one family in a room equals two potential gamers rather than a single occupancy. But we would still question whether one dedicated gambler is not perhaps worth more in potential revenue than two parents who might spend a bit extra on better dining and shopping. Anyway, let’s see what comes out in the wash this July and August. We wouldn’t be surprised if this is the summer to beat all summers.

Used with permission & copyright to IntelMacau