HOTEL PRICES UNLIKELY TO DROP

2014/12/11

From:Macau Business Daily

Another ranking, another record. Macau is the world’s third most expensive destination for accommodation. Despite providing some of the cheapest 5-star hotels, according to German travel website GoEuro.

Macau ranks third most expensive overall in the 2014 Accommodation Price Index compiled by GoEuro.com, a Berlin-based travel search website. GoEuro has undertaken a study of 150 cities and over 60,000 properties to analyse the price effect on the industry and how this affects travellers.
Macau is among the most expensive overall after New York and St. Moritz in Switzerland and is followed by Miami and Nassau in the Bahamas.
Accommodation is the number one expense for both business and leisure travellers, topping the price of transport by 25 per cent and dining by 40 per cent, according to GoEuro.
Speaking about why Macau’s hotels are so expensive, the president of the Macau Hoteliers and Innkeepers Association, Chan Chi Kit, told Business Daily it’s because supply has yet to meet demand.
“Currently, there are around 28,000 hotel rooms. Macau has an average of 30 million visitors a year. The hotel occupancy rate is relatively stable at around 85 per cent. There’s still an increasing need for hotel rooms as the number of visitors keeps growing. And the hotel price is unlikely to drop,” said Mr. Chan.
One thing worth noting in the 2014 Accommodation Price Index is that although Macau ranks third in the overall chart, in the category of 5-star Hotel Price Index the SAR doesn’t even get into the top 20, at US$353 per night.
The hospitality industry expert explained that it’s mainly because a lot of Macau’s hotel projects are closely linked to gaming facilities.
“Macau’s hotels serve casinos. Many luxury hotels are casino-resorts, which means that during the low seasons the gaming operators will launch all sorts of promotions to attract gamblers. Sometimes, accommodation is offered for free as a means of getting to the real deal,” he said.

Budget Accommodation

Macau Government Tourist Office (MGTO) claim on their official website that ‘Visitors can easily find accommodation in Macau which caters to their specific needs and preferred budget range’ and ‘Visitors seeking basic accommodation can find a variety of budget hotels and pousadas (inns) in downtown Macau’. MGTO director Helena de Senna Fernandas has pledged many times on various occasions to improve hostels and budget accommodation in the city in order to build a ‘Centre of World Tourism and Leisure’.
But how much does budget accommodation cost in Macau?
According to MGTO’s official website, under the ‘budget accommodation’ category, a 2-star guesthouse located in downtown Macau near the Inner Harbour called 5 Footway Inn costs MOP3,000 (US$375) per night for a single room. Five minutes walk away, a 2-star hotel called Macau Masters charges MOP1,740 for a standard twin room and MOP2,610 for a sea view suite room per night. For some, it may be better than a corner suite in the 5-star deluxe hotel Altira which costs MOP9,388 per night, according to the room rates provided by MGTO.
Chan Chi Kit told Business Daily that budget accommodation provides around 1,500 rooms in Macau and that the occupancy rate is usually around 80 to 90 per cent.
But with many casino-resort projects in Cotai Strip underway and luxury hotels opening, he said even more budget accommodation options wouldn’t change the scene much.
“In those grand projects, 14,400 hotel rooms are being built, and another 11,300 are waiting for the authorities’ approval to kick off construction. In the next 10 years, Macau will see at least 25,000 new hotel rooms”, said Mr. Chan. “Hostels and budget accommodation accounts for a small slice of Macau’s market. Besides, tourists like to brag about staying at a fancy new hotel. With all the new luxury hotel openings, the competition will be fierce. The price may drop a little bit but the business will still be good for them”.

Other Alternatives

An important indicator of the 2014 Accommodation Price Index is the cost for Airbnb, where Macau ranked 5th most expensive.
Airbnb is a website for people wishing to rent out lodging, and tourists can rent accommodation from local hosts. According to Airbnb.com, it currently has over 800,000 listings in 33,000 cities and 192 countries.
Survey conductor GoEuro says, ‘In the last 10 years, the hospitality industry has evolved significantly, and an increasing number of travellers are now favouring the unique experience and personal charm of staying in shared accommodation over traditional hotels’.
The research team claimed that ‘the increasing popularity of Airbnb and continued growth of the hostel industry are now important factors for travellers considering where to spend the night’.
A former host in Macau confirmed the story.
“On a daily basis, we used to get at least 5 to 6 requests (to rent). We host at least once a week”, said the host. “Tourists that come to Macau use Airbnb first of all because hotel prices are ridiculously expensive. And secondly, some of them are travelling with friends and families, sometimes with kids, so they want to stay together in a more comfortable, local scenario to feel like home”.
The host preferred to remain anonymous because “Airbnb is a sensitive topic now due to tax, security, legal liability issues” – but the host said they’ve welcomed guests from Canada, the US, Italy, Thailand, Hong Kong and many other places from around the world. They have two to three rooms available and they charge MOP600 for a couple to stay in one room per night.
The reasons for renting are on the one hand financial because “rent in Macau is crazy and extra income helps”, while on the other hand it affords the opportunity for cultural exchange and the unique experience of hosting and interacting with people from different places around the world.
Compared to Couchsuring.com which is a volunteer-based network with members who offer free accommodation to travellers, the Airbnb host said the website is more secure with users registering with their credit card and detailed personal information with previous host rating, etc.
The Macau host also admitted that he acknowledged the legal grey area. “Everyone that does it understands that the current law is not clear. But I don’t feel like I’m doing anything wrong,” said the host. “I admit that someone may take advantage of the legal loophole and use it purely for financial reasons. I wouldn’t agree with that . . . Also, not everyone understands the concept yet.” The host stopped renting via Airbnb because some neighbours had become uncomfortable.

Copyright@Macau Business Daily