Address root cause of visitor decline to boost HK's tourism
Updated: 2017-03-20 08:32
By Eddy Li(HK Edition)
Financial Secretary Paul Chan Mo-po used quite a few passages - more than 700 words - to emphasize the importance of tourism for Hong Kong in his inaugural budget speech on Feb 22.
Since he had taken on this role just one month before delivering the budget, measures proposed to support the tourism industry were along the lines of those from previous years.
Tourism's importance is beyond question. The industry comprises just 5 percent of Hong Kong's GDP but is closely related to retail, hotel, catering and other industries; what's more, it employs about 270,000 people, being crucial to the lives of many.
Despite the government calling the industry downturn "a period of consolidation", tourism is actually facing quite a challenging situation.
Total visitor arrivals fell 4.5 percent last year as the number of mainland visitors dropped significantly. The Hong Kong Tourism Board recently predicted the number would drop a further 2.2 percent to about 55.3 million this year.
Not long ago, Hong Kong Disneyland also reported a net loss of HK$171 million for the 2015-16 fiscal year. Its competitor in the city, Ocean Park, recorded a deficit of HK$241 million - the first since the SARS (severe acute respiratory syndrome) outbreak in 2003 and the largest deficit ever since it began to operate independently in 1987. These numbers have highlighted the woes of the industry and worried insiders.
The current government is taking some helpful measures. Travel agencies, hotels and guesthouses, restaurants and hawkers welcome the license fee waivers. Promotional activities subsidized by the government are gradually improving the image of Hong Kong in the eyes of tourists. These measures are gradually steering the industry out of difficulties.
Yet I think the government should find out the ultimate reasons for the downturn and consider some other ways which are more cost-efficient and effective.
The ultimate reason for the gloomy situation is the decline in mainland visitors. There are two key reasons for this fall. A stronger Hong Kong dollar has made shopping less attractive, and hostility by localists toward mainland visitors has seriously damaged the reputation of Hong Kong as a tourist attraction. As a result, it is understandable that some mainland visitors have removed Hong Kong from their to-visit lists.
Support measures should target these fundamental causes appropriately and accordingly.
As the Hong Kong dollar is pegged to the US dollar, there is little Hong Kong can do to fight the recent upward trend of the local currency against the yuan. Price is a significant factor but not the only variable in visitors' desire to spend - good service and high quality are still strong points in Hong Kong.
This is especially true for long-distance visitors, who tend to pursue a delightful experience overall. So it is definitely right for the government to "emphasize diversification and attract high-yield overnight visitors", as suggested in the 2017-18 Budget.
I suggest the government should take one step further in this direction - seek to expand the Individual Visit Scheme (IVS) to more mainland cities. At present, the IVS, which started in July 2003, has covered just 49 cities (mainly in Guangdong province) over the past 13 years.
However, cities that have ridden the upward trend of the country's rapid economic growth over the past few years have not yet been included in the IVS, which means many wealthy people in these cities cannot travel to Hong Kong unless they join a tour group. The Hong Kong government should, therefore, discuss with central authorities the feasibility of adding more economically emerging cities to the IVS list.
Hostility to mainlanders has brought devastating consequences to Hong Kong. Several high-profile cases of mainland visitors being insulted have greatly damaged the reputation Hong Kong has built up and carefully maintained for decades.
The city's tourism image cannot bear even one more similar case. So I suggest the government consider tough and unyielding punishment for these troublemakers, to show the determination of most Hong Kong people to create a friendly and enjoyable environment for tourists.
(HK Edition 03/20/2017 page1)