Red ink in a bleeding city

Source: South China Morning Post | Published: October 26, 2019

Red ink in a bleeding city as travellers check out

After months of demonstrations a desperate tourism sector is crying out for help, but are government cash incentives and cut-price offers the best way to lure people back?

A rare tranquillity has descended on the waterfront Avenue of Stars, on the Kowloon side of Victoria Harbour, with few tourists taking in the famous skyline.

It is a Tuesday morning and the usual crowds of mainland visitors wielding selfie sticks are nowhere in sight.

Patrick Lee, whose Mei Lok Store feeds fishballs and other street snacks to the hordes usually thronging the place, says business has got worse in recent months and he has had to let go of three part-time workers. The 47-year-old now relies mainly on his wife and occasional part-time help.

“We can only operate the business on our own,” he says. “We don’t dare employ others.”

The ongoing protests, which began in June and have become increasingly violent, have taken a toll on tourism, with sharp declines in visitor arrivals affecting attractions, shops, food and drink outlets, and hotels.

About 40 foreign jurisdictions have issued warnings or alerts against travel to Hong Kong, as clashes between protesters and police become increasingly regular, and government buildings, MTR stations, shops and restaurants with mainland links are vandalised.

In August, the number of visitors plunged by nearly 40 per cent year on year to 3.59 million. By mid-October, the number had fallen by about half compared with same period last year.

Jobs have been hit too. According to labour chief Law Chi-kwong, the unemployment rate in the consumption and tourism-related segment has risen to 4.9 per cent – the highest in over two years. The jobless rate in the food and beverage sector has risen to a six-year high of 6 per cent.

Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, says more than 200 restaurants closed from June to September.

Officials are scrambling to throw the tourism industry a lifeline, with the government on Wednesday unveiling a HK$100 million cash incentive scheme.

But as the protests, damage and disruption continue, so too are the negative news headlines, which do little to entice visitors.

Paul Chan Chi-yuen, who runs walking tours, says tourism industry players have no choice but to come to terms with the situation.

“The political crisis is not going to end soon,” he says. “This is the new normal situation, and we either adapt to it or perish.”

Some major attractions are resorting to wooing locals with heavily discounted offers to make up for the loss of overseas visitors.

Ocean Park, which drew between 5.8 million and 7.6 million visitors annually over the past five years, saw tour group numbers fall by about 80 per cent and individual visitors from the mainland and overseas fall 70 per cent in September, compared with the same month last year.

“The park is facing an acute operating environment,” a spokeswoman says. “As protests escalate, we are not optimistic of any rebound in tourist arrivals in the near future.”

Summer events and promotions for students helped raise local visitor numbers by 26 per cent between July and September, but that has not made up for the overall slump. The park is now banking on Halloween packages and half-price entry promotions to keep numbers up in October.

Hong Kong Disneyland Resort is also doing more to attract locals, rolling out exclusive offers with lower prices for Halloween.

A two-day adult ticket is going for HK$688 – more than 16 per cent less than the usual HK$825 – and comes with food vouchers.

The Ngong Ping 360 cable car and traditional village attraction on Lantau Island has seen stable local visitor numbers, largely thanks to lower-priced offers and cultural events.

Sun Hung Kai Properties, one of the largest shopping centre operators, has been hit hard by the protests, now in their fifth month.

Five of its 24 malls – New Town Plaza in Sha Tin, Yoho Mall in Yuen Long, V City in Tuen Mun, V walk in West Kowloon and East Point City in Tseung Kwan O – have been targeted for protests or vandalism.

New Town Plaza has seen protesters fill its atrium, singing their anthem Glory to Hong Kong and making origami cranes in support of the movement.

Shops and restaurants at the mall, which protesters consider to be pro-government or linked to the mainland, have been trashed. Piles of cardboard have been set alight, and the atrium has been soaked with fire hoses.

It used to be popular with mainland visitors, easily spotted shopping with wheeled suitcases and speaking Mandarin. They have now all but disappeared.

The whole mall was shut on October 1, National Day, after protesters threatened to take to the streets. MTR services were also stopped that day.

The mall developer’s spokeswoman says the company has offered assistance to its tenants, such as adding security and helping vandalised shops to repair damage and resume business.

Also affected is chain-store giant Sasa, which has 118 outlets across Hong Kong and Macau and is hugely popular with mainland tourists who fill their luggage with moisturising masks, cosmetics and skincare items.

But fewer mainland visitors, and protests forcing stores to operate shorter hours, have caused Hong Kong sales to drop by more than a third over the past three months.

Chairman Simon Kwok Siu-ming says the company is looking at ways to cut spending on rent, possibly by shrinking store area or relocating some shops.

High-end jewellery firm Luk Fook Holdings (International), which has about 50 outlets, says high gold prices combined with the protests have caused a sharp decline in sales in recent months. The group is negotiating with landlords for rent cuts.

Some of the worst affected shops line Park Lane Shopper’s Boulevard in Tsim Sha Tsui. The prime shopping strip near Kowloon Park is popular for clothes, shoes, jewellery and electronics, attracting locals as well as tourists.

But it has become a hotspot with protesters regularly surrounding and heckling the police station opposite, prompting officers to respond with tear gas and beanbag rounds.

Vandalism has also forced the closure of the Tsim Sha Tsui MTR station a number of times.

At fashion retailer Sugar, a saleswoman called Chan, 31, says the store’s usual daily take of about HK$20,000 has crashed since August. Her pay, including commissions, has been cut from more than HK$20,000 in a good month to HK$14,000.

“I have a kid and am also pregnant again,” she says. “Do you think it is a great pressure for me?”

She recalls a day when she closed as soon as protesters turned up, but she could not escape the sting of tear gas fired by police to disperse the crowd.

At a shop selling bags and suitcases along the same stretch, saleswoman Shirley Chan says she was not prepared for the tear gas after protesters arrived.

“It was my first time. Tears kept coming out from my eyes,” the 47-year-old says.

She used to earn about HK$10,000 a month, but her pay has been reduced by about HK$1,000 because of days that she simply cannot get to work.

But Chan says the situation is not as bad as in 2003, when Hong Kong was hit by severe acute respiratory syndrome (Sars). “There was no one then,” she recalls. “Now, we occasionally have some customers and some tourists.”

In Causeway Bay’s usually bustling restaurant scene, businesses are also suffering the drop in tourism. The area is a regular venue for violent clashes between protesters and police.

Anna Chan, manager of a cafe popular among tourists for its Cantonese cuisine, says monthly revenue has dropped by HK$400,000 to HK$500,000.

“The drop of customers during dinner hours has impacted our business most, as dinner costs more than breakfast and lunch meals,” she says.

A local cha chaan teng-style restaurant specialising in barbecued meat also lost about a fifth of its sales since July, according to an employee. She says she has caught a whiff of tear gas more than once.

“We couldn’t simply close the restaurant during the clashes, because our rent is high.”

A Cantonese restaurant in Wan Chai, also a regular scene of unrest where protesters have trashed MTR stations and set fires, has seen business halved since the end of June.

An accountant of the restaurant, calling herself Shek, says the business has lowered the prices of some dishes, but still cannot draw customers. “Most people simply lose interest in dining if there are protests nearby,” she says.

Among those hardest hit are the city’s 6,000 tour guides.

Tang Ning, 57, who has led groups of Japanese visitors for 10 years, experienced something this month he has not seen before.

“Since we entered October, there have been a few days when we haven’t had any customers.”

On October 1, the firm scrapped its harbour dinner cruise, which used to be particularly popular with mainlanders.

The HK$100 million relief measures include giving travel agents a cash incentive of HK$120 per inbound tourist staying overnight, and HK$100 per outbound tourist, up to a maximum of 500 tourists per agent. Each firm is eligible to receive up to HK$60,000 between November and March.

Tang says it is better than nothing, but the money might not go to tour guides like him.

While the number of mainland visitors has declined sharply, some still travel to Hong Kong, including those on business.

A Beijing businessman, calling himself Jing Yu, 35, says he would not have come this weekif it was not for work. He says he is worried by messages painted on walls in Mong Kok attacking the government and Communist Party, and he has entirely avoided nightlife district Lan Kwai Fong in Central.

“I was afraid some radical people might attack me,” he says.

The anti-mainland sentiment is running high among protesters, who have vandalised the premises of businesses linked to the mainland, such as state-owned banks and smartphone makers Huawei and Xiaomi.

Visiting Filipino businessman Alan Alvan, 42, says he is less concerned about the unrest – his only regret is that the protests stopped him bringing his mum along.

Paul Chan Chi-yuen, co-founder of Walk in Hong Kong – which takes small groups on visits to city neighbourhoods – says business has been hit only slightly since June because half his customers are from foreign countries and the rest are locals.

Chan says the protests actually gave visitors a new experience of Hong Kong, taking in Lennon Walls with colourful posters and notes with anti-government and pro-democracy messages. Some are even keen to see the protesters’ human chains and demonstrations.

“Some tourists view the current situation as an interesting time to visit Hong Kong. Despite all the confrontation, they come to know something very different about Hong Kong,” he says.

Hotels are bearing the brunt of the missing visitors. Statistics from STR – a global hotel data analytics company – show that in September the occupancy of the city’s hotels fell by 26.1 per cent year on year, and revenue per available room dropped by 44.2 per cent.

Ovolo Hotels Group – which runs four hotels in the city – has seen occupancy fall by about 20 to 30 per cent over the past three months compared with the same period last year, with their average daily rate dropping by around 20 per cent, according to Girish Jhunjhnuwala, group founder and chief executive officer.

He says his hotels have done better on weekdays, with most guests leaving before the weekend, when protests usually occur.

“Across the hotel industry as a whole, we are seeing historically low occupancy levels and average daily rates,” says Jhunjhnuwala, whose group also runs six hotels in Australia.

He urges the government to introduce more tourism stimulus measures, including help for hotels to pull through this period.

“Tourism has been a key pillar of the Hong Kong economy for many years, so it is imperative that government organisations step in to provide help to businesses that are struggling in order to safeguard our city’s future as a tourism destination,” he says.

Tourism lawmaker Yiu Si-wing says cheap air tickets and low hotel rates could attract tourists, but for the industry to recover, stability needs to be restored so that the safety concerns of travellers are addressed.

People already planning to visit might still come because prices are down, but Yiu, chairman of China Travel Service (HK), says there will be “great difficulty” attracting new visitors.

Brian King, associate dean of Polytechnic University’s School of Hotel and Tourism Management, says a mix of tactics is needed to draw visitors because no one knows how long things will drag on. He suggests businesses do more to stimulate the local market while providing value-added incentives in their packages.

Despite the anti-mainland sentiment, he feels tourism businesses could do more to attract visitors from Guangdong, given the proximity and connections by high-speed railway and the Hong Kong-Zhuhai-Macau bridge.

“We often think that in tourism, we want to get a lot more long-haul visitors,” he says. “But when you are trying to overcome crisis conditions, looking a bit closer to home is important.”

He says once the protests die down, the government and industry could do road shows in different markets such as the United States and Europe, to encourage tour operators to put Hong Kong into their programmes.

King says industry sources have told him the outlook for Christmas, usually tourism’s high season, was looking down.

But he believes the crisis presents an opportunity for tourism officials to look again at their strategies, including engaging residents of neighbourhoods that have begun attracting tourists.

When the city received a record 65.1 million visitors last year, residents of some districts were furious that their daily lives were disrupted by the influx.

“The reset is really to win the community back,” King says.