According to the Audit Commission’s Report No. 68, the management performance of the operator of the Kai Tak Cruise Terminal and the occupancy rate of its retail facilities have continued to fall below expectations.
Back in 2012, the terminal was let by tender to a private operator for a fixed term of 10 years. Five years on, the company has done a poor job in attracting commercial tenants.
The vacancy rate of its retail and office space is about 51.9 percent.
The Audit Commission urged the Tourism Commission to turn up the heat on the current operator in order to boost the occupancy rate of the commercial facilities at the terminal.
In my opinion, both the Tourism Commission and the current operator should not be blamed entirely for the poor business performance of the Kai Tak Cruise Terminal.
There is a built-in disadvantage with the terminal: ocean liners rarely call at the terminal during the typhoon season in Hong Kong between July and October.
As a result, the terminal is basically standing idle and empty for the entire summer every year, which explains why retail and catering chains are unwilling to move into it.
In order to boost customer foot traffic even during low seasons, the government should review the entire market positioning strategy of the terminal, and turn it into an all-season attraction instead of just a parking lot for ocean liners.
That way the terminal and its tenants can have a sustainable and extensive customer source.
One way of doing so is to introduce a specific theme and local touch to the terminal. For example, the terminal operator can fully utilize its 23,000-square-meter roof park by turning it into a cultural and artistic hub.
It can organize various events with different themes throughout the year to attract not only overseas tourists but also local citizens.
Given its premium location, the Kai Tak Cruise Terminal has a lot of potential to become a major destination not only for ocean liner passengers but also for other tourists as well.
All it takes is a new business mindset and a new marketing strategy.
This article appeared in the Hong Kong Economic Journal on May 10
Translation by Alan Lee
[Chinese version 中文版]
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