Hotels and retailers doing brisk business four months after Hong Kong reopening

[HONG KONG] Hong Kong was the world’s last major metropolis to fully reopen its borders following the Covid-19 pandemic. It did so in early February, as the city finally reopened all its border checkpoints without any restrictions.

In the four months or so since, tourists from mainland China and the rest of the world have returned in droves, giving a much-needed boost to Hong Kong’s economy and driving up domestic consumption.

These visitors are diverse. They range from low-budget Chinese tour groups to affluent jet-setters who spend lavishly in luxury hotels and malls, and even adventurous types who camp on the beaches of the offshore Lantau Island.

Hong Kong’s tourism and hospitality sectors are undergoing a revival and are thriving, if the latest numbers are any indication.

The city received 2.89 million visitors in April. This is an 18 per cent increase from the previous month, and about 58 per cent of the average monthly figure of the pre-pandemic years from 2017 to 2019, according to data announced by the Hong Kong Tourism Board (HKTB) on May 15.

The year-on-year rise was even more stark in March, when the city received 2.5 million visitors. The figure stood at just 1,800 in March 2022, when borders were still mostly shut.

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HKTB said that most of the visitors in April came from mainland China and South-east Asia. The board provides specific data for only two categories – mainland and non-mainland visitors – with no further breakdown of the countries or regions where travellers come from. 

Mainland visitors accounted for 80 per cent of April’s total – up slightly from the preceding three months’ ratio of 77 per cent.

During the five-day “Golden Week” Labour Day holiday that took place from Apr 29 to May 3, Hong Kong’s immigration checkpoints logged 1.7 million visitors. Around 625,000 arrived from mainland China, or 62.7 per cent of the 2019 level.

Kathy Lee, the head of research at Colliers Hong Kong, said: “The driving force of economic growth and recovery has been in tourism and retail sales. Since the announcement of the Hong Kong-mainland border reopening in February, the number of tourists visiting Hong Kong has continued to increase monthly.”

Hong Kong’s hotel occupancy rates in March reached 84 per cent – back to the levels seen in the second half of 2019, just months before the Covid-19 pandemic struck. The average revenue per available room in March stood at HK$1,170 (S$202).

The five-star Fullerton Hotel, just a hop and a skip away from the popular Water World in Ocean Park, is among the many hotels that are doing brisk business.

Designed and constructed during the pandemic, the hotel opened in July 2022. It has already welcomed streams of international visitors and hosted high-profile events in conjunction with the Rugby Sevens and the Miss Hong Kong 2022 pageant, among others.

Lee said that five- and six-star hotels have experienced the strongest revival in Hong Kong, a reflection of the recovery of business activity. She added that room prices may increase in the near future, as supply growth is curtailed.

On the economic front, the return of tourists has been a boon for Hong Kong. The 2.7 per cent year-on-year growth in real gross domestic product (GDP) in the first three months of 2023 ended a run of four straight quarters of contraction.

The government forecasts that GDP growth for this year is on track to come in at 3.5 per cent to 5.5 per cent, boosted by government-funded consumption vouchers to encourage spending by locals.

The influx of mainland tourists has propelled local retail sales, thanks partly to their affection for – or addiction to – alcoholic drinks and tobacco. Other items popular with tourists, such as jewellery, clothing and footwear, all recorded triple-digit growth, said DBS economist Samuel Tse.

He said the city’s economy is currently in a “Goldilocks scenario”, pointing to private consumption – which accounts for 60 per cent of Hong Kong’s GDP – as the major growth driver.

Private consumption accelerated from 1.7 per cent year on year in the last quarter of 2022 to 12.5 per cent in the first quarter. Since all social-distancing measures were removed on Mar 1, domestic consumption has largely returned to normal.

Timothy Chui, executive director of the Hong Kong Tourism Association, told local media this month that with the summer peak period approaching and the National Day holiday in October, Hong Kong is poised to see even more travellers come its way, including from the mainland.

“Hong Kong’s economy reported notable improvement for the three months since the reopening with the mainland. The (International Monetary Fund) also said that it will upgrade (the) economic growth forecast if the influx of arrivals sustains,” he was quoted as saying in a May 8 report by the Global Times.

“As Hong Kong regains stability, mainland companies will be willing to seek financing in Hong Kong and foreign enterprises will establish headquarters in the city,” said Chui, who is also director of the Travel Industry Council of Hong Kong.