The tiny, former Portuguese-ruled enclave of about half a million people registered more than 27 million arrivals in 2007, up 22.7 percent from the previous year, according to government statistics.

Hong Kong registered more than 28 million visitor arrivals, an increase of more than 10 percent on 2006 and a record. If growth rates are maintained, Macau will take the lead this year.

The sharp rise in the number of travelers stopping in Macau highlights the radical transition the once-sleepy territory has made in the years since it was returned to Chinese rule in 1999.

Macau's leap ahead of Hong Kong in total visitor numbers would not necessarily be bad for the former British colony, said Andrew Chan, an assistant professor at the School of Hotel and Tourism Management and Hong Kong Polytechnic University.

Home to some 7 million people, Hong Kong remains the leader as a shopping destination and its airport is an unrivalled hub. Tourism contributes somewhere between 20 and 30 percent of Hong Kong's retail sales, economists estimate, and in 2007, it contributed an estimated 6-8 percent of GDP.

"Basically, I do not see it as competition. Rather, it strengthens the position of Hong Kong," Chan said, adding that the authorities should come up with ways to make it easier to travel between Hong Kong and Macau. "It will feed the market for us."

Ferries run regularly between Hong Kong and Macau, taking about an hour. By helicopter, the trip is about 15 minutes.

The Macau economy has boomed since a decades-long casino monopoly was dissolved and Beijing loosened travel restrictions on Chinese tourists from dozens of cities.