Studies On Macau Suggest More Moderately Wealthy Chinese To Travel Abroad Over Next Decade9/26/2017
The growing wave of Chinese tourists will break across the world with unprecedented force and in unexpected ways over the next decade. Some of that future is taking shape in Macau, which will likely remain a bellwether for these emergent trends. That’s the message from a pair of new studies, one peeking over the horizon and one peering deeply into today’s mainland China gambler in Macau.
Investment advisor Sanford Bernstein is issuing a series of reports under the heading of China Abroad, examining the cross-sector impacts of increased outbound Chinese travel. Bernstein’s team of more than a dozen analysts on three continents forecasts that overseas trips from mainland China will grow from 135 million last year to 260 million by 2025, 100 million of those incremental trips to destinations beyond Hong Kong and Macau.
Chinese travelers will spend US$411 billion and remain the world’s largest consumers of luxury goods. After all, Chinese visiting the Hermes flagship store in Paris today seeking a place on the purported secret waiting list for leather goods may not receive their Birkin or Kelly handbag until 2025. Ordering that bag in person, and thus avoiding value added taxes in both France and China, means their trip to Paris is effectively free, or at least feels that way.
Bernstein suggests that China may seek to bring more of that spending home by cutting luxury taxes, a policy sure to find favor with the vast numbers of designer outlets in the mainland. But the sheer number of travelers and the snob appeal of having Gucci loafers from the original Florence shop or a Tiffany necklace from Fifth Avenue, where Holly Golightly or Melania Trump may have tried it on, will ensure China dominates global luxury sales. The real change will be Chinese travelers moving “from the middle cabin to the middle seat,” as Bernstein puts it. Today, Chinese travel beyond Hong Kong and Macau is dominated by ultrahigh net worth consumers, the type who travel business class and wear designer clothes. Bernstein estimates they earn at least four times the US$9,000 average annual income of the top fifth of mainlanders. The new travelers will also come from China’s top income bracket, but at the less wealthy end of that pool.
Macau, which last year registered 20 million mainland arrivals, one in seven of the global total, previews how some of these trends will play out. Morgan Stanley’s annual survey of 1,000 mainland Chinese gamblers in Macau and the U.S., finds that while Macau’s overall number of mainland arrivals has held steady, the number of unique visitors has dramatically increased, from 4.7 million in 2015 to 8.7 million this year.
Even though high rollers are leading Macau’s gaming revenue recovery, the growth in numbers, according to Morgan Stanley analysts led by Praveen Choudhary and Thomas Allen, is coming from the so-called grind mass segment, tourists who gamble, not gamblers who travel, taking advantage of bargain rates on dramatically expanded guest room supply. Retail has also had growth spurt in supply, and, along with the usual luxury suspects, features more fast fashion and even mid-market names like Marks & Spencer. Individual gamblers are visiting Macau less frequently – down from 4.4 trips in 2015 to 2.5 this year – and trying other destinations, a trend Morgan Stanley sees accelerating. However, high end gamblers are the ones most likely going further afield, to Las Vegas, or Australia or Europe, simply because they’re part of that small group that can afford such trips. Even though VIP play is leading Macau’s gaming revenue recovery, Bernstein says mass market play will drive Macau’s growth in the long run, while Morgan Stanley warns of risks to top tier premium mass market gaming. Across the globe, Chinese high rollers will still be there and still matter, but they’ll be swamped by the emerging wave of more moderately rich travelers. The new winners will be destinations that can serve them best, and it will take more than baccarat and Bulgari to win that contest.
0 Comments
Leave a Reply. |
CORWIN GROUPLatest News Archives
October 2021
CategoriesBy submitting this form, you provide consent for Corwin Group to email you occasionally with industry news and promotions. You may unsubscribe from these emails at any time.Testimonials & Disclaimer
Important Disclosure: By visiting this site, you agree to be bound by CorwinGroup’s Terms of Use and Privacy Policy. CorwinGroup.com is intended for accredited investors and otherwise qualified investors who understand and accept the risk associated with private investments. Investing in private investments on CorwinGroup involves risks, including, but not limited to market and industry risks, risks related to a specific property, currency fluctuation risk and liquidity constraints. Investments are not bank deposits and are not guaranteed. There is a potential for loss of part or ALL of the investment capital. CorwinGroup does not endorse any of the opportunities that appear on the site, nor does it make any recommendations regarding the appropriateness of particular opportunities for any investor. No correspondence or information provided on CorwinGroup.com or by any representative of CorwinGroup should be construed as a recommendation of a security. Each investor is advised to conduct his/her own due diligence as CorwinGroup does not provide any investment advice, business advice, or tax or legal advice. CorwinGroup is not registered under the Securities & Futures Act or the Financial Advisor’s Act. Neither the Securities and Exchange Commission in the country nor any federal or state securities commission or any other regulatory authority has recommended or approved of the investment or the accuracy or inaccuracy of any of the information or materials provided by or through the website. Please read Corwin’s Terms of Use for more detailed terms and conditions to which users of CorwinGroup are subject. |