- Tourism arrivals plunged 40% in August
- Major exhibitions have remained, while some smaller incentives and meetings have relocated
- Hong Kong’s political situation is unique and tourism recovery is unpredictable
The political storm in Hong Kong is not showing signs of abating since some of its citizens took to the streets in June to march against a controversial extradition bill that was finally axed by chief executive Carrie Lam in August.
The once-peaceful demonstrations have since escalated into wildcat strikes, massive street protests and violent clashes with the police, during which dozens of MTR stations were vandalised.
Despite acceding to one of the five demands listed out by the protestors, Lam’s decision was seen as being too little, too late by the angered protestors who have maintained their fight for democracy.
Hong Kong’s tourism has emerged a casualty, with arrivals plunging 40 per cent in the whole of August.
While MICE arrival numbers for the period after June 2019 have not been published, public activities such as the annual National Day fireworks and month-long Matilda the Musical were scrapped, and several business events were either moved out of Hong Kong or postponed.
For instance, The Global Wellness Summit has moved to Singapore where it will be held from October 15-17, while the HSMAI Hotel Revenue Optimization Conference 2019 has chosen to skip its 2019 gathering in November and work on its 2020 edition in a new location.
As well, two mega lifestyle events – Hong Kong Cyclothon and Wine & Dine Festival – set to take place in Hong Kong later this month have been cancelled. A total of three major events called off in the city since protests started in June over the now-shelved extradition bill.
Varying degrees of impact
Negative news attract the most attention, so the Hong Kong Exhibition & Convention Industry Association (HKECIA) has made sure to emphasise business continuity at the destination and the city’s two main venues, the Hong Kong Convention and Exhibition Centre (HKCEC) and AsiaWorld-Expo.
HKECIA reported on August 28 that major exhibitions and conferences were “running without incident or interruption” despite demonstrations.
HKECIA chairman, Stuart Bailey, said: “Only one exhibition has chosen to cancel – the Seafood Expo Asia – which is a relatively small event occupying less than 8,000m2 at the HKCEC. All other events have gone ahead without disruption.
“We have seen that protestors are not targeting exhibitions for disruption. The important point for international participants coming to Hong Kong is to understand that the city is safe, secure, and remains a great place to come and do business. The protests are well publicised in advanced and generally do not take place during the weekdays. People can go about their day-to-day business, so be smart, be informed, and be in Hong Kong!”
HKCEC has also reported that business is on as usual since July 1. As of September 16, all events scheduled for FY2019/20 will carry on as planned, with the exception of one international exhibition. The venue will continue to welcome some mega events during the remaining months of 2019, some of which will take up all available exhibition spaces in the HKCEC.
International Congress and Convention Association (ICCA), which focuses the business of association meetings, has not heard of any cancellation of such gatherings in Hong Kong.
On the corporate incentives front, Pacific World shared that some programmes in Hong Kong this year were cancelled or postponed, with clients requesting for a change in destinations.
Business development manager, Dwirt J Ang, said: “Given clients’ concerns about the developing situation in Hong Kong, we will work closely together to postpone or re-route events to destinations such as Macau, Shenzhen, Guangzhou, Sanya, Taiwan and Japan if needed.”
Bailey said different events would react differently to Hong Kong’s situation, suggesting that corporate incentive trips and conferences taking place in chain hotels were more likely to move.
He explained that corporate incentive trips tend to be more sensitive to destination risks while conferences planned in hotels could easily switch to another city as logistics were less of an issue.
“It’s more about getting the right people together in one place,” he remarked.
Risk and corporate travel
In its eighth destination risk update published on September 20, Steve Vickers and Associates, a specialist risk mitigation and security consulting company, stated that fear is rising among expatriate workers and that Moody’s has scaled down its outlook for Hong Kong.
“Businesses caught in the crossfire have suffered disproportionately. Cathay Pacific has lost senior executives, and had to cut some flights owing to lack of demand,” wrote the Number 8 – Hong Kong Protests – Threat Assessment report.
Naturally, the volatile situation in Hong Kong has hurt corporate travel too.
A CEO with a Hong Kong-based TMC who declined to be named, told TTGmice: “Corporate travellers in and out of Hong Kong are very concerned about the situation, especially since the protests have been continuing for months and the chaos has severely impacted the Hong Kong International Airport.
“Corporate travellers are now more hesitant about planning their trips. We’ve had requests to either cancel or issue tickets just days to a flight. At the same time, clients are investing in alternative land transportation as a backup. Global companies with overseas headquarters are also requesting for Hong Kong staff to fly out for meetings, instead of hosting meetings in Hong Kong.”
Some Hong Kong companies, whose business have been dented by the riots, have also “cut their travel budget and become more conservative in their spending”, he added. “This is reflected in our transactions, which have dropped about 16 to 17 per cent monthly.”
Retaining a glimmer of hope though, the CEO said July and August are low-season months due to the summer holidays, so he will “continue to observe the situation”.
International coverage of Hong Kong’s prolonged riots has also shaped corporate travellers’ perception of the destination, which industry players say will take time to correct.
Gaurav Sundaram, president of ProKonsul, a business travel intelligence company, and the immediate-past regional director of GBTA India, commented: “The Indian market is looking at the developments in Hong Kong with concern. It is unlikely that this perception will change in the immediate short-term given the intensity of the disturbances.”
Through a quick poll conducted with 300 Indian corporate travel buyers, ProKonsul found that “developments in Hong Kong’s political landscape and related issues with Cathay Pacific” have had a “significant negative impact on travel to/through Hong Kong”.
Sundaram added: “We have many queries for guidance or direction to support the enterprise buyer community in India. We have been actively involved in constructing interim strategies and travel policy modifications to support emergency travel during this period with a large section of the Indian business travel community.
“In the last few months, our Indian corporates have ceased all travel on Cathay Pacific, while non-essential trips to Hong Kong have been stopped. Only extremely business-critical meetings that cannot be rescheduled or relocated have been allowed.”
At the same time, ProKonsul’s enterprise buyer community has also avoided Hong Kong as a transit point, leading to “major inconvenience and significantly higher costs due to cancellation, rescheduling and rebooking of flights”.
Routing passengers through alternative South-east Asian transit points have also resulted in higher ticket costs, he added.
The CEO of the Hong Kong-based TMC, too, believes that Hong Kong’s tourism will have a long road to recovery, as the people’s move against the government is expected to be a long-lasting one.
No point of reference
Political upheavals in Asia that has hurt inbound tourism are not rare. Bangkok witnessed its own riots in 2010 and 2013/2014, most of them held in Bangkok. Mumbai was seized in a four-day series of coordinated shooting and bombing attacks in November 2008, by terrorists who targeted hotels and public facilities.
When asked if Hong Kong’s speed of tourism recovery could be predicted based on past cases in other lands, industry stakeholders were mixed in their responses.
ProKonsul’s Sundaram drew some similarities in Bangkok and Hong Kong but said “a lot will depend on the responses of Hong Kong and the Chinese government to the situation”.
The CEO of the Hong Kong-based TMC begged to differ, pointing to the vastly different state of government in Thailand and Hong Kong – the former is under the rule of a military organisation, while the latter is a democratic society with its own administrative systems although it is a part of China.
A HKCEC spokesperson agreed, refusing to make comparisons. She did tell TTGmice that “Hong Kong is a remarkably resilient city which has a very unique proposition for event organisers”.
She opined that the city’s “excellent transport and logistics, combined with a dynamic and easily accessible business environment, has made Hong Kong the successful event destination we see today. I have no doubt that events and exhibitions will continue to use Hong Kong as a base once the situation stabilises and normal business gathers pace once again”.