Macau Matters | Hotel diversification

Richard Whitfield

The media reported recently that Melco Crown had asked for its new Studio City hotel to be downgraded to 4-star to align with the Macau Government policy of diversifying the hospitality and tourism industry offering in Macau. I think that such a policy of hotel diversification would be misguided, to say the least.
I have done an Internet search but cannot find any further information on this government policy, but this may be because I am limited to reviewing information in English, which can often be limiting in Macau where it is not an official language. However, it may also be because information on this policy is not publicly available, which seems to be the case for substantial elements of local government policy. The government’s penchant for secrecy is something I do not like about living in Macau.
Going back to this supposed “hotel diversification policy”, Macau is a very small place with very limited space and so the potential number of hotel rooms is limited by necessity. In such situations I think it only makes sense to maximize the potential income from limited resources, and in the case of hotel rooms and restaurants this means offering the highest quality rooms/meals that can attract the highest prices. We want tourists with the highest spending power paying premium room rates and eating in high quality, expensive restaurants. This should maximize the tourism spend within Macau.
Some would argue that focusing on serving bigger spending tourists will raise the living costs for locals. But if the last 10 years of tourism growth has shown us anything, it is very clear that while rising tourism has increased local living costs it has also led to much bigger rises in local incomes, so that locals have seen a large net benefit.
People seem to forget that Macau does not sit in a vacuum, and is surrounded by nearby, relatively low cost locations like Zhuhai. Macau hoteliers and restaurateurs cannot compete on price with their compatriots in Zhuhai so why try? I firmly believe that a far better market positioning is to focus on higher quality offerings in Macau. We should see Macau and Zhuhai as dual cities that have complementary strengths.
Zhuhai is also a very important living cost management resource for many locals. Many local residents frequently visit Zhuhai to shop and to eat. Increasing numbers of Macau residents also live in Zhuhai because of its lower living costs.
This same argument applies for shopping, entertainment, restaurants and other aspects of life in Macau and Zhuhai. We need to dissolve the artificial border between Macau and Zhuhai and consider the combination to be a dual city, which it has been in reality for many years.
Following a dual city strategy, to me it seems clear that we need to make travelling through the Macau-Zhuhai border as easy and painless as possible for both tourists and locals. We need 24-hour border openings and simplified and streamlined immigration procedures much more than policies for hotel and restaurant diversification that only reduce Macau’s competitiveness.
Macau and Zhuhai can take complementary roles in the development of our region – and isn’t integration with China the long term goal anyway, so let us push forward in this direction and not promote competition between these two halves of a dual city.
Let us rethink Macau’s tourism “market positioning” to focus much more on the quality and uniqueness of what we have to offer, and not fall into a price competition trap that we can never win.