The Newton Hotel in North Point “suddenly” closed last week.
Many saw this as “the first drop of blood” shed as a result of the recent slowdown in tourism in Hong Kong.
So does the closing of the hotel signify another economic recession in our city?
The answer is yes and no.
No, because Henderson Land Development Co. Ltd. (00012.HK) didn’t shut down one of its three Newton Hotels in Hong Kong in haste, entirely out of concern about the deteriorating business environment.
Rather, it was a carefully planned retreat.
In fact, more than a month ago, the hotel’s staff were notified of the closure and had stopped reserving rooms for guests since then.
At the same time, Henderson has already tabled its application to the Town Planning Board to rebuild the hotel into a 25-story office building.
But the answer is also yes, because despite the fact that the recent sharp decline in the number of tourists is not the direct “cause of death” of the Newton Hotel, it is undeniable that the tourism industry in Hong Kong is facing a tough time.
Occupancy and room rates of hotels across the city slumped dramatically in the first half of the year.
Multiple factors led to the tourism slowdown, such as the movement against visitors from the mainland, restrictions on multiple-entry permits for mainlanders, the depreciation of the renminbi and the financial turmoil around the world.
The situation might get even worse later this year.
To make matters worse, not only is tourism, one of the four main pillars of our economy, plagued by a slowdown; the other three pillars are also in trouble.
For example, the mainland’s slowdown in economic growth and the depreciation of the Chinese currency have dealt a heavy blow to our trade and logistics industry and our professional services industry, not to mention our financial sector, which has been badly hit by the recent stock market crash.
With all four pillars of our economy in disarray, the city’s economic prospects are anything but good.
With a worsening economic slowdown looming large on the horizon, it is time for us to hope for the best and prepare for the worst.
This article first appeared in the Hong Kong Economic Journal on Aug 28.
Translation by Alan Lee
[Chinese version 中文版]
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