Will Hong Kong’s Travel Economy Ever Catch a Break?

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SKIFT FORUM ASIA  |  OCTOBER 15  |  ONLINE CONFERENCE  |  THE DECADE AHEAD: SAFEGUARDING TRAVEL’S FUTURE

China may lead the world in a pandemic economic recovery, but megacities like Hong Kong still face a long road to a complete rebound.

Hong Kong-based airline Cathay Pacific is flying 10 percent of its schedule. So-called travel bubbles, promising connectivity to other countries, have yet to materialize.

All of this happens while Mainland China continues to charge back toward pre-pandemic travel demand levels as early as next year due to its strong domestic traveler base.

“From the point of view of the hotel business, while borders are still closed, we can’t enjoy what other countries have with domestic travel,” said Jennifer Cronin, president of Hong Kong-based Wharf Hotels, Thursday at Skift Forum Asia. “With a population of 7 million people, we can’t survive on domestic tourism alone.”

Hong Kong endured a travel downturn months before the coronavirus pandemic gripped the world’s travel industry. The city was in a recession in late 2019, triggered by evaporated retail sales and tourism during protests that turned lethal.

Despite early reports Hong Kong’s economy would be among the worst hit from the pandemic, the Hong Kong Tourism Board initially viewed the pandemic as a way to finally craft a cohesive vision to revive the city’s struggling travel economy.

The outlook turned bleak once again this summer in light of the uncertainty surrounding Hong Kong’s autonomy relative to Mainland China. But Cronin disputed media accounts of how bad things got in Hong Kong’s business community.

“We were no different to other cities of the world, whether it be a Paris or Istanbul or what you’ve even seen in the U.S. this year where you had protests but business still went on,” she said.

The pandemic, however, has drained the city of whatever was left in its tourism engine. Hotels in the market rely heavily on foreign travelers, which simply don’t exist at the moment due to closed borders. Cathay Pacific is flying 1,500 passengers a day compared to its normal 100,000.

“Things are pretty bleak right now,” said Edward Bell, general manager of brands, insights, and marketing at Cathay Pacific. “Thankfully, our cargo operations are having their best year ever because everyone is home ordering online … But the passenger business is a long way from where we want it to be.”

 

There are still some travel industry tailwinds in Hong Kong, like the Golden Week national holiday that fell earlier this month. Marriott even sells out hotels in Hong Kong on weekends, driven by staycations while foreign travel is largely prohibited.

But even Golden Week in Hong Kong wasn’t as strong as in Mainland China, where Cronin said Wharf Hotels’ Niccolo Hotels portfolio was up 50 percent in revenue from 2019 levels.

“While we’re very grateful for the local market coming out for staycations, it’s definitely not enough to make up for what would have been our highest-demand weeks of the year,” she added. “It’s almost a patchwork of results in different cities in the Mainland as well as here in Hong Kong.”

Hong Kong’s historic appeal to foreign businesses and travelers stems from being a global gateway to China without some of the tough government oversight of Mainland Chinese cities. With those identities at risk, the city’s ability to rebound is in jeopardy.

But there are still potential pathways for some degree of near-term recovery.

Cathay along with companies like United Airlines and American Express Global Business Travel back CommonPass, a type of digital health passport to enable cross-border travel during the pandemic. United and Cathay plan to test the program with volunteers on flights between Hong Kong, London, Singapore, and New York City.

CommonPass may not be as much of a travel industry cure as a coronavirus vaccine, but it stands to be a vital stopgap measure for a city struggling like Hong Kong.

“As we know now, we’re not going to have a situation where countries are 100 percent infected or 100 percent safe,” Bell said. “Covid is here to stay, and we need to develop techniques and procedures to manage it and get on with our lives.”

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