Hong Kong tourism suffers worst month since SARS
Drop is one of the clearest signs antigovernment protests are decimating parts of the local economy
HONG KONG— The number of tourists visiting the city suffered one of the biggest drops on record in August, one of the clearest indications that months of antigovernment protests are decimating parts of the local economy.
Tourist arrivals in Hong Kong fell 40% last month from a year ago, according to city financial secretary Paul Chan, the worst decline since May 2003 when the city was grappling with the SARS virus that killed hundreds of people. In July, tourist arrivals had fallen 5% from a year ago.
Visitors and shoppers are getting caught up in the clashes, which have sometimes turned violent, quickly move between districts and have shut subway stations for hours at a time. Bystanders are being exposed to tear gas and fire bombs.
Months of protests combined with the U.S.-China trade dispute and slowing Chinese growth are threatening to tip Hong Kong’s economy into recession, officials have warned.
This past weekend’s demonstrations signal that recent moves by the government—including withdrawing a bill that would have allowed the extradition of criminal suspects to mainland China for trial—have failed to quell the city’s protest movement. On Monday, hundreds of students formed human chains throughout Hong Kong before school started in a show of solidarity with the protesters.
“The social events of the past few months—especially the continuous violent activities, blockage of airport and roads— have severely damaged Hong Kong’s image as a safe city, and a trade, aviation and financial hub,” said Mr. Chan, the financial secretary, in a blog post published Sunday. “It has also hit the local economy, with impact on the travel, retail and hospitality sectors being the most severe.”
Mr. Chan added, “The most worrying thing is that the outlook is not likely to turn around in the near future.”
Tourism, retail and hotel bookings have directly suffered, he said, and several meetings and business trips have either been postponed or moved to other locations. In some districts, hotel occupancy rates dropped by more than half, while prices have fallen by as much as 70%, he said.
For instance, Ecco, a Danish shoe maker and retailer, was previously scheduled to have a companywide training course in Hong Kong in November, according to a person familiar with the matter. The company has since moved the course to Thailand, the person said. A company spokeswoman didn’t immediately respond to a request for comment.
The tourism industry is a pillar of Hong Kong’s economy, contributing around 5% of Hong Kong’s gross domestic product in 2016 and employing more than 250,000 people.
Hong Kong’s airport authority issued a newspaper advertisement on Friday, urging protesters to “spare our passengers further disruption.” Protesters had stormed the airport the weekend before, paralyzing traffic around the aviation hub and forcing scores of travelers to walk to terminals. “We again strongly urge protesters not to disrupt the journey of tens of thousands of travelers who use our airport every day,” the halfpage ad read.
Hong Kong’s flagship carrier, Cathay Pacific Airways Ltd., said last month that it was bracing for a significant impact to August revenue because inbound traffic to the city had weakened substantially.
Mike Johnson, a 30-year-old consultant based in New York, planned to visit Hong Kong in August with his girlfriend. But reports of violent clashes between police and demonstrators made him cancel their trip.
“We decided it was too great a risk,” he said. “We wanted a peaceful getaway, not tear gas and water cannons.”
Mr. Johnson went to middle school in Hong Kong and said he was eager to show his girlfriend the city that shaped him.
“I keep telling her, ‘This is not the Hong Kong that I remember.’ The images I see today make me sad.”
The protests have rippled through the economy in various ways. Retail sales and consumer spending have fallen. Long lines outside restaurants frequented by tourists have recently disappeared.
Housing prices have dropped and the stock market has declined. Fitch Ratings downgraded Hong Kong’s credit rating on Friday, saying the unrest has tested the city’s relationship with mainland China and hurt its reputation.
A survey of private businesses published last week by IHS Markit showed purchasing activity in Hong Kong fell to the lowest level in the 21-year history of the series. Events have suffered too. A spokesman for the Hong Kong Watch and Clock Fair, an annual industry gathering that bills itself as the world’s largest watch fair, said there were 18,000 attendees at last week’s trade show, a seven-year low and down about15% from a year ago.
William Shum, founder and chief executive of Memorigin, a nine-year-old local luxury watch brand, said his sales in Hong Kong have dropped by about 50% during the protests. He attributed the decline to fewer tourists, particularly those from mainland China who typically account for a large percentage of sales for his high-end watches.
Mr. Shum said this has been the worst slowdown in Hong Kong sales he has seen. The drop has prompted him to consider more opportunities overseas—including Japan, where he has recently seen a pickup in demand.
“Hong Kong has played an important role for international trading for a long time, but with the protests, foreign clients have stopped coming,” Mr. Shum said.