A premium destination, Hong Kong should aim high to revive its tourism and economy

The slow recovery of Hong Kong’s tourism, as Hongkongers themselves flock north, is a cautionary tale about reliance on easy money
While Hong Kong cannot possibly compete with mainland cities on price, it must strengthen and highlight its unique high-end attractions

Regina Ip

Published: 5:30am, 24 Sep 2023

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Chief Executive John Lee Ka-chiu and his team deserve full credit for how swiftly and effectively the government mitigated the disastrous trails left by Typhoon Saola and the record-breaking “black” rainstorm that deluged Hong Kong for more than 16 hours.

In a day or so, areas cut off from the rest of the city by flooding, landslides or fallen trees were rapidly unblocked, a feat unimaginable even in developed countries where emergency relief teams could take weeks to restore power and water, and remove debris left by the ravages of nature.

Having contended with extreme weather, the government faces a more embarrassing and endemic problem – the slow recovery of our tourism industry and our lagging behind the Greater Bay Area competition for local consumption dollars.

Since Hong Kong reopened to the mainland on February 6 and lifted the mask-wearing requirement on March 1, life has returned to normal. But even another round of consumption vouchers has failed to lift local consumption to pre-2019 levels. While weak property and stock markets are to blame, Hongkongers’ revenge travel is the main factor.

The strong Hong Kong dollar, which is pegged to the greenback, has boosted Hongkongers’ purchasing power outside the city. Japanese tourism statistics show that Hong Kong tourist spending in Japan reached 200 billion yen (US$1.35 billion) in the first half of the year, 16.4 per cent above 2019 levels. Also, after Taiwan reopened in February, 514,000 Hong Kong tourists visited the island, reaching 70 per cent of pre-pandemic levels.

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An even more worrisome trend is Hongkongers’s northbound travel fever, fed by the resumption of high-speed rail services and a new scheme, effective from July 1, that allows private cars to drive to Guangdong via the Hong Kong-Zhuhai-Macau Bridge.

Immigration Department statistics show that in August, there were 6.24 million northbound crossings (including to Macau), versus 3.43 million southbound crossings. Even during Typhoon Soala and the “black” rainstorm, there were 100,000 trips north.

Since July, northbound travel has surged on Saturdays and long weekends. Over the July 1 long weekend, as many as 330,000 northbound crossings a day were recorded. Another crest came on August 19, with 326,000 crossings.

Hongkongers are drawn to the wide variety of Chinese cuisine, slick shopping malls and much cheaper retail prices in cities like Shenzhen and Zhuhai.

Hongkongers flock to Shenzhen where their dollar takes them further

With last month’s launch of an integrated dual-currency public transport card, which can be used in more than 300 Chinese mainland cities and is likely to be extended to Macau by year end, northbound travel might just become an unstoppable trend.

In response, the government has launched a glitzy “Night Vibes Hong Kong” campaign, promising a wealth of nighttime activities along the harbour and in theme parks, including night markets, performances and special events for festive occasions.

The government cannot be faulted for not trying, but the reality is Hong Kong cannot possibly compete with mainland cities on price or opening hours. Given Hong Kong’s labour shortage and pandemic-related lifestyle changes, many small eateries have closed and restaurants tend to be deserted after 10pm.

In the past, Hong Kong benefited greatly from the buoyant Chinese economy and mainland tourists’ love of shopping, whether for luxury goods or daily necessities. Hong Kong’s tourism arrivals peaked at 65,147,555 in 2018, an incredible number for a small city. Of that, 78 per cent arrived from the mainland. Now, with a weakened Chinese economy and a devalued yuan, the trend has reversed. From January to July this year, 16,472,409 arrivals were recorded.

A view of the Wan Chai promenade on the waterfront on September 6. Photo: Warton Li

The reversal of fortune is a cautionary tale about reliance on easy money from a single source. It is a wake-up call for Hong Kong to diversify and work harder to achieve high-quality growth. The key lies in strengthening and highlighting Hong Kong’s unique advantages vis-à-vis mainland cities, and indeed other Asian cities. A closer look at Hong Kong reveals a cosmopolitan city with many unique attractions not on offer in mainland cities.

The inaugural list of the World’s Best 50 Hotels has just been announced, and two Hong Kong hotels made it to the top five. No hotel on the mainland was included in the list.

Hong Kong is also well-known for innovative cocktails and fine dining. Many Hong Kong restaurants have been included in prestigious lists of Asia’s top restaurants. Hong Kong has a solid reputation as an international food and wine capital.

And with the reopening of Hong Kong and the full resumption of Art Basel Hong Kong, the city has recaptured its status as one of the world’s leading centres for contemporary art auctions.

How Hong Kong can give the world reasons to fall back in love with it

The downturn in investment banking and other high-end professional and business services thus far this year, due to anaemic capital inflows, has dampened spending in high-end bars and restaurants. But office rental reductions are bringing tenants from new sectors, such as art galleries and exhibitions.

Hong Kong should not be daunted by the outflow of low-end consumers but should aim for the high end, by strengthening its MICE industry (meetings, incentives, conferences and exhibitions), and hosting more international sports and cultural events to lure visitors from all parts of the world. It’s high time Hong Kong woke up to the reality that the world does not owe us a living, and we will need to redouble our efforts to raise the bar.

Regina Ip Lau Suk-yee is convenor of the Executive Council, a lawmaker and chairwoman of the New People’s Party