Tourism Industry

Tourism had been one of the fastest-growing sectors of the economy, and was forecasted to grow more than 8 per cent in 2003. The sector accounted for 5.7 per cent of Hong Kong's GDP in 2001 and employed 10.7 per cent of the total workforce. Asian visitors account for about 80 per cent of Hong Kong tourists' arrivals. With SARS inducing fear and travel "ban" to and from many Asian countries, the tourism industry was battered worst amongst all industries¹ .

According to Immigration Department, daily total arrivals and departures at the airport fell from 61,400 on 14 March 2003 to 32,500 on 2 April 2003. These figures dropped further as the World Health Organisation (WHO) issued its travel advisory on 2 April. The figures also showed that arrivals at the airport had fallen faster than departures.

In 2001, total number of arrivals was a record number of 13.7 million visitors with total tourism receipts amounted to HK$ 64.3 billion. A 10 per cent decrease in the number of visitors to Hong Kong in the last two weeks of March had cost the tourism industry an estimated HK$300 million.

In April both inbound and outbound traffic dropped 90 per cent compared with same period last year, incurred an average monthly loss of HK$ 6 billion in the industry.

The mainland's decision to scale back this year's Labour Day holidays came as yet another blow. Last year, an estimated 173,000 visitors came to Hong Kong from mainland China. The authorities had originally estimated that about 400,000 visitors would travel to Hong Kong during the week-long holiday, but the impact of SARS, the travel advisory and the cutback so this so-called "Golden Week" have written off the potential tourists businesses.

SARS' Impact on Tourism Industry

1. The reaction to SARS from companies, big and small, had been immediate and severe. As soon as the World Health Organisation (WHO) issued the travel advisory, inbound tourism practically grounded to a halt. If the situation lasts for the rest of the year, the loss in tourism revenue could cut Hong Kong's GDP by HK$11.5 billion or 0.9 per cent.
2. Based on the industry's estimate that each mainland tourist spend about HK$5,000 during their stay in Hong Kong, the "Golden Week" cut back was a damaging HK$2 billion loss to the industry, this equals to 0.16 per cent of GDP.
3. Under this climate, at least 40 per cent of the 20,000 employees working in the travel industry have already been affected somehow, from accepting salary reduction through unpaid leave to being laid-off. The Travel Industry Council warned that about 300 travel agents in Hong Kong would be closed if the SARS outbreak persisted. Of all travel agents, inbound tour operators and ticketing agents were the worst hit.
4. According to Trade Development Council, February and March saw tourist visits achieved year on year increase of 26 per cent to 1.41 million visitors and 4 per cent to 1.35 million visitors respectively. April 2003 recorded only 490,000 inbound tourists, a 65 per cent drop compare with April last year. Assuming each visitors will spend HK$5,000 during their stay, April's loss in inbound tourism would be HK$4.55 billion.
5. The outbound market did not bring any good news either. Outgoing bookings had plummeted by 80 to 90 per cent after some countries began taking precautionary measures against travellers from Hong Kong.
6. Superstar Leo, the flagship of Hong Kong's luxury cruise liners, had withdrawn from local waters and was relocated to Australia. It is not clear when the cruise liner will be back to Hong Kong waters.
   

Positive Outcome of the SARS Crisis

Some industry leaders have suggested that the devastating outbreak may be a catalyst for positive developments:

1. The outbreak may indirectly trigger positive changes in the tourism industry, such as promoting a more outward-looking, regional approach. According to Hong Kong Association of Travel Agents (HATA), the crisis had speed up their plan to diversify and to develop new target markets e.g., India, Russia and the UK.
2. Hong Kong could also focus on promoting the professional medical services and research capabilities as a new attraction.
3. Hong Kong has been trading on its past for a while and the crisis served as wake-up call to operators to develop more innovative approaches and new ideas such as eco-tourism or medical tourism to bring visitors back.
4. According to Chairman of HATA, the travel industry operators have paid more attention to customer service quality, courtesy because they learned to value each and every customer. Many operators have made use of their unpaid leave to research on the culture, history and points of interests of different destinations to equip themselves. This will have a long term positive impact on the whole industry as tour operators become more professional.
   

Actions

1. 1. Encouraged by the positive response from Hong Kong market to the discounted outbound tour packages, inbound tour operator have planned a "soft launch" in June 2003 by offering promotional package to their loyal customers overseas to test the reaction.
2. HATA continues to send Hong Kong's updated situation and facts to overseas counterparts. New tourists spots in Hong Kong were proposed to the Government.
3. The Government is working closely with the industry and especially inbound tour operators to ensure a positive and consistent image is projected to overseas counterparts.
4. Since the WHO has already lifted the travel advisory on Hong Kong, the Government is working toward the removal of quarantine requirements imposed by some countries on travellers from Hong Kong.
5. To restore visitors' confidence, it is imperative for the Hong Kong Airport Authorities and Hong Kong airlines to continue to maintain a high standard of hygiene level even after the WHO travel advisory is lifted.
6. It was crucial that Guangdong's travel advisory was also lifted because a large proportion of tourists from the mainland originated from Guangdong. This was no doubt a piece of good news to the retail industry. Business in the tourism and retail sectors was forecasted to return by next January to 80 per cent to 90 per cent levels before the SARS outbreak.

Last Modified Date : Tuesday, January 27, 2004 5:07:16 PM

Sources of information:

1. Interview with Mr. Michael Wu, Chairman, Hong Kong Association of Travel Agents, 16 May 2003.
2. South China Morning Post
3. Hong Kong Tourism Board
4. Hong Kong Trade Development Council

1. In this article, tourism industry includes travel agents, tour operators, tourism retailers and other related supporting service sectors.