Hong Kong missed out on at least HK$2.26 billion (US$292 million) in tourism revenue over the first four days of “golden week”, according to a lawmaker’s estimate, as visitor numbers nosedived 99.8 per cent and the industry scrambled to attract local customers to compensate for lost earnings.
The annual holiday boom for the Hong Kong economy all but vanished this year as visitor arrivals plunged to just 918 between October 1 and 4, compared with 566,000 for the same period in 2019, when enthusiasm for travel to the city was already subdued by anti-government protests.
But this time, Covid-19 travel restrictions are keeping the usual crowds of mainland Chinese tourists away during what is traditionally peak season for many businesses.
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The city’s holiday period for those opening days of this month overlapped in 2020 with the Mid-Autumn Festival, while mainlanders get an eight-day National Day break that typically involves millions travelling within the country and overseas.
Tourism sector lawmaker Yiu Si-wing said visitors to Hong Kong would spend an average of at least HK$4,000 during their time in the city, as he estimated the decline in their numbers had cost the city at least HK$2.26 billion in lost revenue over the four days from Thursday, which was China’s National Day.
“This grim situation is expected, as the pandemic rules require visitors to undergo 14-day mandatory quarantine upon arrival in Hong Kong, and so most tourists wouldn’t bother to come to Hong Kong,” he said.
“For hard-hit, tourism-related sectors such as hotels, retailers and restaurants, they all rely on local consumption to make up part of their losses, by 10 to 20 per cent.”
Yiu said hotels were offering staycation or package deals at discounts of up to 30 per cent to entice locals.
“For the resort hotels, they managed to get an occupancy rate of 90 per cent these few days, as many Hongkongers who used to spend holidays abroad were forced to stay in Hong Kong,” he said.
“On average, the city’s hotels had an occupancy rate of about 50 per cent to 60 per cent, as other small hotels have doubled as quarantine hotels or short-term residences for locals.”
But the number of mainlanders coming to the city plummeted 92 per cent between January and August this year to just 2.7 million, compared with more than 34.5 million for the same period a year ago.
Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, estimated the catering sector took in about HK$1.1 billion over the past four days, a drop of more than 25 per cent from last year’s comparable figure of HK$1.5 billion.
“The catering sector has relied on local consumption, with tourist spending only accounting for about 8 per cent. The reduction in earnings over these past few days was mainly due to the social-distancing rules that limit eateries from serving customers at more than half capacity. Under these constraints, I think business turnover for the catering sector was satisfactory,” he said.
However, Sam’s Tailor suffered its worst golden week since the Tsim Sha Tsui business, which has fitted a host of celebrities, was founded in 1957.
“We have had zero business, the worst golden week in our company’s history,” said the firm’s managing director, Roshan Melwani.
“In past golden weeks, we were able to make about HK$192,000 a day. I think local residents are also fed up with shopping and they chose to go hiking or to the sea to spend their time off. We haven’t even had local customers during golden week.”
To keep afloat and retain its 11-strong workforce, the tailor firm has been forced to offer half-price discounts to attract customers.
“These are the cheapest prices we have offered since 1999. We just hope to retain our staff, not make a profit,” Melwani said.
Simon Smith, senior director of research and consultancy for Savills, a global real estate services provider, said spending from mainland tourists had been negligible given that cross-border travel restrictions meant there were essentially none in the city.
But he said given the extended weekend and slight relaxation of social-distancing restrictions, local market sentiment had improved slightly, with some visible improvements to footfall in shopping centres.
“Local demand remains relatively stable, and we have noticed some pent up demand for luxury items from local high-net-worth [individuals] as a result of international travel restrictions,” he said.
He said luxury brands were shifting their focus to cities including Guangzhou and Shenzhen, as well as Hainan Island, and would continue shifting more of their operations away from Hong Kong and to other parts of southern China.
“Both luxury retailers and some mid-range fashion brands are rationalising their business operations in Hong Kong and offloading or downsizing unprofitable stores,” he said.
Meanwhile, Sino Group said its three shopping malls – Olympian City, Citywalk in Tsuen Wan and Tuen Mun Town Plaza – recorded a 30 per cent increase in sales over the long holiday weekend, compared with August weekends in August, with promotional activities such as lucky draws listed as a key factor.
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