Tourism | Analysis: Many more visitors spending much less

Macau retailers saw little to no improvement to their business in the last quarter even as tourism authorities boasted a record number of visitors.

The latest data from the Statistics and Census Service shows that while the number of visitors increased by 13.8 percent year-on-year in the fourth quarter of 2018, tourist spending (excluding gaming activities) climbed just 1.3 percent.

Accordingly, per-capita spending in the fourth quarter decreased 11 percent year-on-year to MOP1,844, with the spending of same-day visitors leading the decline.

As reported by the Times last week, Macau lawmakers from across the spectrum are finding common ground on tourism-related issues.

Lawmakers Pereira Coutinho and Leong Sun Iok are calling on the government to be more strategic in tourism promotion, focusing on quality over quantity. In the words of lawmaker Leong Sun Iok, Macau needs to “attract tourists of high consumption [value],” rather than low-spend visitors who add little to the local economy while contributing to a growing over-tourism problem.

The lawmakers’ calls come as a string of recent policies from the mainland designed to curb money laundering and capital outflows are beginning to take effect.

The policies, which include facial recognition at ATMs to match the identity on bank cards and the mandatory declaration of valuables flowing across the border, have the effect of deterring wealthy visitors from bringing funds into the Macau SAR and deflating per capita spending in the process.

Moreover, the final quarter of 2018 may be indicative of an emerging inverse correlation between visitor spending and visitor growth.

Tourist spending grew by 23 percent in 2017 to reach MOP61.32 billion, while visitor arrivals were up 5.4 percent to 32.6 million. In 2018, the two metrics started to converge, with a 13.6 percent increase in non-gaming spending and a 10 percent rise in the number of visitors. In per-capita terms, visitor spending for the whole year rose by 3.5 percent, despite the 11 percent decrease in the final quarter.

The correlation is in part due to the fact tourist spending dropped harder and more suddenly than visitor numbers in the aftermath of the 2014 gaming crunch.

It took seven consecutive quarters of year-on-year decline in visitor spending before a recovery was noted in the third quarter of 2016. Meanwhile, annual visitor arrivals have not fallen below the 30-million mark post-2014, slipping just 2.6 percent in 2015 and increasing 0.8 percent in 2016 and 5.4 percent in 2017.

The most recent business climate survey on restaurants and the retail trade showed a similar sentiment among business owners in these sectors. About 36 percent of interviewed restaurants and 39 percent of interviewed retailers registered a year-on-year increase in revenue in December 2018, while 33 percent of restaurants and 43 percent of retailers reported a decrease.

Retailers and restaurant owners were more optimistic in their expectations for January, with 73 percent and 78 percent of those interviewed anticipating revenue growth, respectively.

The first quarter of 2019 may also find a bounce in visitor spending from the holidays earlier this month. This Chinese Lunar New Year Golden Week saw a record number of tourists arrive in the city, beating the tourism authority’s preliminary estimates to climb 26.6 percent to more than 1.2 million. It is yet to be seen how the significant jump this year will translate into visitor spending.

Japan bringing the money

Per-capita spending by visitors in the fourth quarter declined almost as fast as the number of visitors grew, according to information released yesterday by the Statistics and Census Service.

Overnight visitors spent on average MOP3,064 in the fourth quarter and same-day visitors spent MOP678, dropping 4.2 percent and 17.3 percent respectively.

Visitors from mainland China spent an average of MOP2,091, down by 13.5 percent year-on-year, just as visitors from Singapore (MOP1,710), Malaysia (MOP1,594) and Taiwan (MOP1,577) also saw declines.

Conversely, average visitor spending was buttressed by those from Japan (MOP2,281) and Hong Kong (MOP1,053), which increased by 18.2 percent and 2.8 percent respectively. DB