19 September 2019
Many mainland visitors choose other places over Hong Kong because of the latter's costly hotels. Photo: Bloomberg
Many mainland visitors choose other places over Hong Kong because of the latter's costly hotels. Photo: Bloomberg

Why Hong Kong is not attracting big spenders

We’ve seen many headlines about a slowdown in inbound travel to Hong Kong where tourism authorities have just wound up an HK$80 million (US$10.32 million) campaign to attract short-haul holiday makers.

Despite the campaign, inbound traffic has fallen 6 percent, more hotels have announced job cuts and a number of travel agencies have closed.

Hong Kong has been a shopper’s paradise for a long time but that’s not its only attraction.

It offers four key advantages — convenient travel, easy visa, good communication and convenient transport.

In short, Hong Kong won’t be easily beaten by other tourist destinations such as Japan or South Korea.

The strong Hong Kong dollar is a temporary phenomenon.

It has limited impact on deep-pocketed travelers but it may have held back some mainland visitors.

Some analysts said a contraction in jewelry retail sales is a sign the purchasing power of mainland travelers has hit the wall.

However, most of these travelers buy gold jewelry as a hedge against inflation and mainland citizens have had more investment options in recent years.

They’re more confident in their own currency despite short-term depreciation pressure. There’s no sign they have lost buying power.

Some suggest that the government should woo more high-spending foreign tourists.

In fact, the local tourism industry has been trying its best to attract new markets.

Hong Kong offers limited attractions for high-spending tourists because it lacks luxury resorts.

We do have the Big Buddha, a mini version of Disneyland and a 3D museum which may not be that appealing to foreigners.

Several years ago, Hong Kong thought there would be huge demand for mid-range to four-star hotels in light of surging mainland travelers.

For that reason, we’ve seen a construction boom of these hotels since 2012.

The average room rate was HK$1,165 per night in 2010 and tourists usually stayed 3.6 nights. They spent about HK$6,728.

Of this amount, hotel accommodation was HK$4,194, or 60 percent of their total spending.

Hotel room rates have been rising in recent years as a result of the red-hot property market.

Many mainland visitors choose other places over Hong Kong because of the latter’s costly hotels.

Many prefer budget hotels or unlicensed hostels in which to deposit their things and have a place to sleep because they would be out during the day.

In this case, Hong Kong should change the long-time assumption that travelers spend 60 percent of their budget on accommodation.

The Hong Kong Tourism Board has been criticized for making inaccurate estimates of visitor numbers.

The fact is travelers’ changing behavior is affecting the tourism industry as a whole but mid-range hotels are the hardest hit.

It seems tourism officials are missing the core issue.

It’s likely they’re getting their information from subordinates, not from frontline staff.

Also, outside consultants are little help because they have limited knowledge of the industry.

Given sluggish demand, an aggressive domestic approach to Hong Kong’s tourism woes does not make sense.

Instead, our tourism ambassadors should promote Hong Kong in different cities worldwide, joining local tourist boards in cross-marketing initiatives.

They should help save our resources for the future when Hong Kong has more tourist attractions to offer.

WY Jimmy wrote this article which appeared in the Hong Kong Economic Journal on Sept. 4.

Translation by Julie Zhu

[Chinese version中文版]

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Young Accountants Association of Hong Kong