Despite efforts to revive tourism in Hong Kong, the city continues to face significant challenges that impact its ability to attract visitors. It is clear that there are larger issues at play beyond simply asking service workers to be more courteous and smile. The high prices in Hong Kong and the competition from the rapidly ascending city of Shenzhen are major obstacles that need to be addressed.
Price Disparity and Competition
One of the key issues that experts point out is the high cost of living and visiting Hong Kong. Allan Zeman, the chairman of Lan Kwai Fong Group, highlights that Hong Kong’s peg to the U.S. dollar makes it an expensive destination compared to other Asian economies. This has become even more pronounced with the current situation of high interest rates and a strong U.S. dollar, driving tourists to seek cheaper alternatives in places like Shenzhen and Japan.
Zeman also notes that mainland Chinese travelers, who form a significant portion of the tourist demographic in Hong Kong, are turning towards Shenzhen for its affordability and wide range of offerings. Mainlanders tend to spend less, have shorter stays, and tighter budgets compared to other nationalities, posing a challenge for local businesses that rely on tourism revenue.
The decline in tourist spending directly affects local businesses, particularly those in popular tourist spots like Lan Kwai Fong (LKF). During the pandemic, many businesses in LKF were severely impacted by the closure of borders and the subsequent drop in visitor numbers. While some of these businesses have managed to recover, there are still unutilized spaces in the area, indicating the ongoing struggle for tourism-related establishments.
Aside from the challenge posed by Shenzhen, Hong Kong also faces competition from this neighboring city, as economist Simon Lee Siu-Po points out. Shenzhen’s development as a top-tier Chinese city, coupled with improved transportation infrastructure, has made it a desirable destination for both residents and mainland Chinese visitors. The affordability and variety of offerings in Shenzhen have drawn crowds away from Hong Kong, leaving noticeable gaps in the city’s previously bustling establishments.
The shift of residents to Shenzhen for holidays and shopping has had a tangible impact on Hong Kong’s economy. Data shows a significant increase in departures from Hong Kong to Shenzhen, with a notable decline in visitor numbers entering the city. This trend has translated into diminishing retail sales, rapid rates of restaurant closures, and negative business performance for small and medium-sized enterprises in Hong Kong.
Campaigns like “Let’s Go The Extra Mile” and citywide events funded by the Hong Kong government are attempts to counteract the downward trend in tourism and spending. However, these initiatives may not be sufficient to address the root causes of Hong Kong’s struggle to bring back tourists. The allure of Shenzhen’s affordability and diverse offerings continues to draw visitors away from Hong Kong, presenting a substantial challenge for the city’s tourism industry.
Hong Kong’s efforts to revive tourism face complex obstacles that go beyond surface-level solutions. While promoting hospitality and courtesy among service workers is important, addressing the fundamental issues of high prices, competition from Shenzhen, and the changing preferences of tourists is crucial for the city’s long-term sustainability as a tourism destination. Without targeted strategies to tackle these challenges, Hong Kong may continue to struggle in its quest to win back tourists and revitalize its tourism industry. It is evident that a comprehensive approach that considers the economic factors at play is essential for Hong Kong to reclaim its status as a premier tourism destination in the region.
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