Chinese group tours to Hong Kong fell 40 percent in the first two weeks of July from a year earlier.
About 300 daily tours involving groups of mainlanders were recorded during the period, down from 450 in 2014, SkyPost reports, citing Michael Wu, chairman of the Travel Industry Council of Hong Kong.
He blamed the fall on competition from neighboring regions, volatile exchange rates and easier travel to a growing number of tourist destinations.
Hong Kong hotels and retail shops are the hardest hit by the slowdown.
James Lu, executive director of the Hong Kong Hotels Association, said occupancy rates are 83 percent, just above the psychological barrier of 80 percent.
A manager of a four-star hotel in Wan Chai said occupancy rate was 65 percent in July, with a room costing HK$1,100, both down 30 percent year on year.
He expects the weakness to continue until August but said the hotel has no plan to cut prices.
Instead, it is planning to offer room upgrades and free breakfast, he said.
Joseph Chu, a director of Prince Jewellery & Watch Co., said sales were down 20-30 percent in July from the previous year.
Fashion clothing retailer Bauhaus slashed prices by up to 30 percent, chairman George Wong said.
A sales clerk in a Mong Kok pharmacy said sales are down 70 percent this year, adding it might move to a new location as it struggles to meet rent.
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