HK/Macau travel bubble positive, but don’t expect a gold rush

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The travel bubble that is being discussed between Hong Kong and Macau would be a positive step in opening up the market, but wouldn’t necessarily lead to a surge in gross gambling revenue for the territory, Glenn McCartney, associate professor of gaming and hospitality management at the University of Macau.

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McCartney, who has been closely following the recovery of the Macau market explains that any opening will be based on data and science and as a result is likely to be slow and cautious. 

“You limit the border opening with HK to the few so you can test the system,” he told AGB in a recent interview. “Unless you’re bringing in the high end, the impact won’t be that big for the gaming industry, it will be a positive, but initially not such an impact.”

Analysts see reopening with Hong Kong as a major positive for Macau, having accounted for about 20 percent of its revenue prior to the pandemic. However, the former city has had more of a struggle in containing the Covid crisis and officials are treading carefully when it comes to opening the doors.

Firstly Macau officials said there needed to be 28 days with no local transmission in Hong Kong. A requirement that has now been met. Then Hong Kong CEO Carrie Lam said she wanted the reopening to coincide with an opening of the Mainland China border, which Beijing says won’t happen until the special administrative region meets certain targets, such as 70 percent vaccination – a level analysts say won’t be met until mid-October.

The Macau government has invited health experts from the Mainland to advise it on how to safely reopen.

In Macau, vaccination rates have been improving after initial vaccine hesitancy.

McCartney says that life in Macau has been fairly normal for most of the last year, with the only inconveniences being the wearing of face masks, which has meant there is no sense of urgency amongst locals to get vaccinated. 

In a recent study, carried out with a colleague, McCartney found that the inconvenience of getting a vaccine was not a factor in the decision and that the government messaging perhaps needs to change.

“There’s a big communication campaign, there’s a lot of messaging, but maybe that messaging should change somewhat,” he said. “It’s a marketing thing, we need to look at what works along the vaccine adoption curve and people at the very end of the product adoption curve will need a bit more messaging to get them to take the vaccine.”

“There’s a company in Macau that has people in Macau doing testimonials. It becomes more personal as to why you need a vaccine. The government could perhaps tweak that messaging a little bit to get more people vaccinated.”

Despite the evident frustration in the industry and amongst stock analysts that the recovery process is dragging, McCartney urges a more optimistic view. Since a travel corridor with Mainland China was opened in the third week of September, Macau has seen nearly 4 million arrivals, which is a tourism level few if any other destination could match last year. 

“I think it’s something Macau should be upbeat about. We’ve been very successful in setting up a very safe travel corridor and we’re seeing that recovery in the casino space too.”

“I support a cautious approach because if you get any cases because you are going too fast then you’ll have a major setback and no one wants a major setback. We could be backtracked many months from what we’ve achieved right now.”

He acknowledged that there has been some slippage due to new outbreaks in Guangdong in June, which saw Macau record its worst month for gross gambling revenue so far this year. But restrictions have eased again as the medical situation has come back under control and analysts are predicting a strong summer. 

Still, at the end of the day McCartney stresses that in order to have the return of large-scale events, Macau needs to reach herd immunity with its vaccine programme. Increasingly governments are mandating a vaccine certificate as compulsory for travel and large gatherings and ultimately this may help to tip the balance. 

“The Foo Fighters concert in Madison Square Garden gathered 20,000 people who all had to show their vaccination certificate. People who do not may be annoyed as they’re a fan and not vaccinated. However, if you want to travel you’re going to have to get vaccinated.”