(Bloomberg) -- When Chinese tourists choose a family travel destination, Hong Kong Disneyland would seem like a logical choice. But it's the nearby gambling hub of Macau that has all the momentum.
Tourists are flocking to Macau, with record arrivals from China last year, and Hong Kong itself is seeing a rebound in mainland visitors, with a double-digit surge in such tourists during the Chinese New Year following a 3.9 percent increase last year. Meanwhile, the number of mainland visitors to Hong Kong Disneyland dropped for a third straight annual period, according to the theme park's results released Tuesday.
Chinese families traveling to Hong Kong are finding other distractions for entertainment besides the Disney theme park, as shopping and dining options help drive the retail market for the city. Chinese travelers may be skipping Hong Kong Disneyland as they already have a Disney park in Shanghai, which attracted 11 million visitors in its first year after opening in June 2016. Macau, about a one-hour ferry ride away, also may offer a more interesting temptation.
The world's biggest gaming hub has started to see a rebound of leisure tourists, with mass gaming revenue growth in the last quarter expanding at a faster pace than the previous three months. Macau regulators are pushing casino resorts to offer more family-friendly entertainment, posing a further challenge to Disney's park.
MGM China Holdings Ltd.'s new $3.4 billion property, with a 2,000-seat theater, is part of that effort to transform Macau's Cotai Strip into a family destination. The resort, which opened in time for the new year, should help drive the highest earnings gain for MGM China among its peers this year, according to a note from Morgan Stanley. MGM China on Tuesday reported stronger-than-expected earnings for its fourth quarter, as mass-segment revenue grew 22 percent from a year earlier.
Analysts and retailers selling everything from jewelry to cosmetics are optimistic the upward trend will continue for both Macau and Hong Kong this year. As for Disneyland, it still may get its magic back. Visitation has been improving since the second half of 2017, and October Golden Week and Lunar New Year both recorded double-digit growth, according to Apple Daily, citing Samuel Lau, chief executive officer.
To contact the reporter on this story: Daniela Wei in Hong Kong at jwei74@bloomberg.net.
To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Jeff Sutherland, Subramaniam Sharma
©2018 Bloomberg L.P.
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