Hong Kong has been grappling with a decrease in tourist numbers, even with efforts to encourage frontline staff and the public to be more courteous and welcoming. Despite the “Let’s Go the Extra Mile” campaign launched by the government, visitor arrivals are still at only 60% of pre-pandemic levels in the first four months of this year. While Chief Executive John Lee urged residents to smile more and promote Hong Kong’s hospitality, experts believe that there are larger issues at play here.
Allan Zeman, chairman of Lan Kwai Fong Group, points out that one of the major obstacles for Hong Kong is its high cost of living. The city’s currency is pegged to the U.S. dollar, making it expensive compared to other Asian economies. The strong U.S. dollar and high interest rates further exacerbate the issue, making destinations like Shenzhen and Japan more affordable for tourists. Mainland Chinese travelers, in particular, find Hong Kong pricey due to the depreciation of the Chinese yuan against the U.S. and Hong Kong dollars.
Economist Simon Lee Siu-Po highlights the growing competition from Shenzhen, a neighboring mainland city that offers a wide range of food, entertainment, and shopping options at significantly cheaper prices. With the development of high-speed rails and a cross-sea bridge, Shenzhen has become a convenient alternative for Hong Kong residents looking for leisure options. The city’s proximity and affordability have drawn thousands of Hong Kongers away during holidays, leaving local businesses struggling to attract customers.
The Culture, Sports, and Tourism Bureau project an increase in tourist numbers this year. However, per capita expenditure by overnight visitors is expected to drop to 5,800 Hong Kong dollars, down from last year’s 6,939 HKD. This decline in spending can be attributed to the shift in tourist demographics towards mainland Chinese travelers, who tend to have shorter stays and tighter budgets. Local businesses, including popular destinations like Lan Kwai Fong, have felt the impact of decreased tourist spending and travel preferences.
The exodus of Hong Kong residents to Shenzhen during holidays has led to a decline in retail sales and business performance for local small and medium-sized firms. Reports of rapid rates of restaurant closures and unused spaces in popular areas like Lan Kwai Fong have raised concerns about the long-term viability of Hong Kong’s tourism sector. The city’s businesses are facing significant challenges in attracting customers and competing with more affordable options in neighboring cities like Shenzhen.
In addition to campaigns like “Let’s Go The Extra Mile,” the Hong Kong government has allocated HK$1.09 billion for citywide events and initiatives to boost tourism and spending. Despite these efforts, the city continues to face stiff competition from destinations like Shenzhen, which offer cheaper alternatives for travelers. Hong Kong’s tourism sector must address the root causes of declining visitor numbers, such as high prices and changing tourist preferences, to ensure long-term sustainability and growth.
Overall, while gestures of courtesy and hospitality are important, they alone cannot overcome the challenges posed by rising competition and high prices in the tourism industry. Hong Kong must adapt to the changing landscape of travel preferences and economic conditions to remain a vibrant and appealing destination for visitors from around the world.