Hotel Occupancy Rate in a Gambling Destination: A Longitudinal Study of the Macao Hotel Industry 2004–2007

Abstract

With the liberalisation of the gambling industry by 2002, the gambling revenue of Macao has increased tremendously, and even outstripped that of Las Vegas by 2006. This has resulted in floods of foreign investment and rocked the market of Macau. This study aimed to investigate the market condition where fierce competition was brought in by overseas investors. Longitudinal analyses on the monthly occupancy rate, average room rate and total available rooms of all 3- to 5-star Macao hotels with casino facilities over a 48-month period were carried out. Seasonality has no significant effect on occupancy rate. Tourist arrival numbers and total available rooms demonstrate positive correlation, while both average room rate and casino facility have shown a negative correlation with hotel occupancy. The negative correlation between a casino facility and occupancy rate sorts out the market potential of a casino hotel and a commercial hotel in the city of Macao. An econometric model, comprising five micro- and macro-economic factors is described. The current study is the first to examine the market condition of the Macao hotel industry. It not only explains business implications for the Macao hotel industry, but also contributes to the field of hospitality literature.