At the end of October, Hong Thai Travel Services, one of Hong Kong‘s oldest and biggest travel agencies, shut its doors citing plummeting profitability. Since the pandemic began three years ago, nearly 100 of the city‘s 1,600 tour companies have quietly folded, according to the Hong Kong Tourism Association. As Covid-related travel restrictions and border closures continue to affect the tourism sector, recovery is forecast to be arduous and long-drawn.
The numbers speak for themselves. In 2018, the tourism industry was a pillar of Hong Kong‘s economy, contributing around 4.5% of our GDP and employing almost 7% of the workforce. Add to that related industries such as retail and F&B, and the contribution was a very significant 17% of GDP.
Hong Kong welcomed 65.1 million visitors in 2018, of which nearly four in five were from the Mainland. In 2021, international visitor arrivals fell to about 91,400. This year, from 26 September – when “0+3“ was introduced – up to 25 October, over 225,000 travellers entered Hong Kong, up by 35% compared to the same period the month before. However, fewer than a third came from overseas.
Risk Vs. Recovery
In a concession to tour groups, the Government recently announced it would relax some restrictions and permit those with the amber code in the LeaveHomeSafe app to visit sites requiring masks and to dine in designated premises. In a further relaxation of quarantine rules, visitors will only need to undergo nucleic acid tests on the first and third day after arriving, while group tour visitors staying in Hong Kong for fewer than four days will only need one test.
Kevin Yeung, Secretary for Culture, Sports and Tourism, said as the pandemic gradually stabilizes, the Government will continue to adjust measures to strike a balance between epidemic risks and the need for economic development.
“We acknowledge that the ‘0+3‘ arrangement has only been a limited boost to the tourism industry, as inbound tourism remained restricted,“ Yeung said.
“Nonetheless, as long as the epidemic situation remains under control and relevant restrictions are relaxed further, socio-economic activities should be able to return to normal gradually.“
To alleviate some of the burden, the Government has promised a funding commitment of over HK$3.88 billion, providing financial support through the Anti-epidemic Fund and incentives for over 1,600 travel agents and around 21,000 practitioners, including travel agents, guides, tour escorts, and tour coach drivers. Also included are 2,000 hotels and guesthouses, as well as the cruise industry. According to Yeung, initiatives to attract tourists include a 10-year development blueprint for arts and cultural facilities, plus new experiences at key tourist attractions like Hong Kong Disneyland Resort‘s Castle of Magical Dreams and Ocean Park‘s all-weather Water World. Also on the agenda is the Sai Kung Hoi Arts Festival 2022, as well as a collaboration with the cultural industry for an annual pop culture festival beginning next year.
The “0+3“ Effect
Despite the “0+3“ relaxation, measures need to be more attractive to garner interest from international markets, stated Nikki Ng, Chairman of the Chamber‘s Retail and Tourism Committee. “For the sector to bounce back, it is important to attract overseas visitors, who are significant contributors to Hong Kong‘s economy – in 2018, per capita spending by overnight visitors was HK$6,614. Collectively, these visitors spent a total of HK$331.7 billion.“
Bazak Denizci Guillet, Professor of Revenue Management, School of Hotel and Tourism Management, Hong Kong Polytechnic University, said “0+3“ has not had much positive impact. “The average length of stay in Hong Kong is two or three days,“ she noted. “If travellers to Hong Kong are not able to use many services and facilities during the first three days of their stay, they might not find it worthwhile to choose Hong Kong as their travel destination, especially when other destinations under their choice set do not have any Covid-19 related restrictions.“
Paul Chan, Co-founder and CEO of local tour operator Walk in Hong Kong, said his firm had not registered a significant rise in bookings since “0+3“ was introduced. “This partial relaxation only brings minimal help to the industry – in the first three days, tourists are restricted from eating out or visiting many attractions,“ he pointed out. “Such a challenging time for the industry has never been seen since Walk in Hong Kong was launched in 2013. Many local travel agents have been forced to shut down. We also suffered from the harrowing impact in early 2020 as the number of physical tours dropped over 95%.“
To adapt to the situation, Chan said they began offering virtual walking tours for people in Hong Kong and overseas who were eager to travel but were stranded. “By joining our interactive virtual tours, they were able to explore Hong Kong right from the comfort of their own homes,“ said Chan. “We also took the opportunity to rediscover our city. Leveraging on the rise of local tours in recent years, we offer intriguing experiential tours that focus on Hong Kong‘s history and culture.“
Impact on the Labour Force
One significant fallout of the pandemic has been the reshaping of the sector‘s labour market. Airlines, hotels and tour agencies have gone through an “ice age“ in business. CK Lee, Chairman of the Chamber‘s Manpower Committee, said: “Most companies had to have massive staff redundancies to contain the regular cost of operations,“ Lee explained. “Along with a similar situation of the related food and beverages and retail businesses, it will take a year or two for the labour market at large to fully absorb the redundant manpower as the pandemic eases and businesses gradually recover.“
He also said that talent in the tourism sector, especially those on the frontlines or in middle management who have joined other businesses, will have a discounted interest or confidence to return to the sector. “There will be quite a gap of talent replenishment in the sector‘s road to recovery,“ he added.
Like other local tour agencies, Walk in Hong Kong is facing a manpower shortage too. “A lot of young guides of quality have decided to leave Hong Kong for various reasons, while the more experienced ones are retiring or decided to quit due to the pandemic,“ said Chan. “It is challenging to hire high-quality guides who speak fluent English – even worse when it comes to other languages like Spanish, French, etc.“
Between June and August 2022, the number of workers in the retail, accommodation and food service trades was 516,300, 18% lower than the same period in 2018. “The manpower challenge that the hotel and aviation industries face is just the tip of the iceberg. Unless unfettered travel resumes, this will continue to hamper industry recovery, which would in turn affect the overall economy,“ said Ng.
According to Denizci Guillet, many employees left the hospitality industry and moved into other service industries when they were laid off due to the pandemic two or three years ago. “Their new jobs offered more stability, better income and work-life balance, which are hard to come by in the hospitality and tourism industry,“ she said. “Those employees are unlikely to return to the hospitality industry due to its risky nature.“
With the industry already facing a difficult comeback over the long term, Denizci Guillet said one of the biggest concerns when the demand for hospitality and tourism services returns will be recruiting qualified employees. “Hospitality and tourism industry leaders in Hong Kong should look for ways to bring people back to these industries,“ she said. At this point in time, however, she doesn‘t believe the exodus of talent has had an adverse effect on the tourism industry in Hong Kong, due to lack of demand and the shift of business to the local market. “But the effect will be more pronounced once the restrictions are lifted and demand from international markets and the Mainland picks up,“ she added.
One positive development, she noted, is that the past few years have given the industry the opportunity to optimize and automate traditional workflows. “An important development is the switch from silo mentality to a collaborative working environment, where different departments such as sales, marketing and revenue management work together through holistic corporate strategies towards a unified goal,“ she said.
The Best Way Forward
Although there has been a gradual roll-back of pandemic-related curbs, more needs to be done to raise visitor confidence, said Ng. “That means removing restrictions that limit visitor choice on where to dine, requiring three-day surveillance, and being subjected to numerous tests before being allowed to move freely. In short, a complete lifting of existing quarantine measures is necessary if Hong Kong‘s tourism industry can genuinely rebound.“
Pointing to the fact that almost all cities in Asia have dropped tough travel-related Covid-19 rules, Chan said “0+3“ is not attractive enough to bring back overseas visitors.
“Travelling in Hong Kong is not as convenient as it was before the pandemic,“ he said. “We believe that a full relaxation of travel restrictions will be the ultimate solution. If tourists can choose, they will always opt to visit cities or regions that are free of restrictions.“