Hong Kong hopes free air tickets revive tourism as fiscal deficit soars

With a huge bill racked up in its efforts to contain the COVID-19 pandemic, Hong Kong is under pressure to revive its struggling economy and restore investor confidence.

Hong Kong hopes free air tickets revive tourism as fiscal deficit soars
People take photos of the Hong Kong Film Awards statue, along the Avenue of Stars in Tsim Sha Tsui’s waterfront in Kowloon, Hong Kong.

HONG KONG: Since the border between China and Hong Kong reopened last month, tourism is creeping back to life, and the city has rolled out an aggressive campaign to attract visitors to stimulate its economy.

In January this year, nearly 500,000 people visited the city, three times higher than in December 2022.

Despite the jump in visitor numbers, arrivals are still only at 10 per cent of pre-pandemic levels, marking a sluggish start to its reopening.

The city has also spent more than US$76 billion on pandemic measures, including economic relief for businesses and residents.

With a huge bill racked up over the last three years, Hong Kong is under pressure to revive its sluggish economy and restore investor confidence.

Experts are projecting a deficit of close to US$20 billion this fiscal year, ahead of the city’s budget announcement on Wednesday.

FREE AIR TICKETS

As part of its efforts to kickstart the economy and rejuvenate the hospitality sector, Hong Kong has launched a US$12.7 million tourism campaign to draw tourists back, including giving away 500,000 free air tickets.

“If it can attract 1.5 million visitors as planned, the economic contributions can reach up to HK$2.7 billion (US$344 million),” said Dr Aries Wong, a senior lecturer from Hong Kong Baptist University’s School of Business.

“It will surely benefit those tourism related sectors such as accommodation, retail and services. Of course the effect of the campaign also depends on how well it is managed.”

Industry players expect the campaign to receive a favourable response among travellers and operators are now rushing to scale up manpower to meet an expected increase in arrivals.

Ocean Park Hong Kong, for instance, is looking to hire 350 full-time employees so that it can extend the opening of its venue to seven days, from its current five days.

“We need to increase our manpower (to extend our opening days) and attract more tourists to the park,” said Ms Rosalind Siu, executive director of sales, marketing and entertainment at the theme park.

She added that the attraction will intensify promotional events with travel partners overseas and in mainland China to attract more visitors to its venue.

INDUSTRY STRUGGLING TO CATCH UP

However, some in the industry are not quite ready for the sudden influx of visitors – manpower issues continue to plague companies in the sector.

Some tour buses for cross-border travel and domestic trips have been sitting idle for the last three years since tours were suspended due to the pandemic.

There is a lack of drivers and technicians to operate and maintain the buses as many have left the industry during the period the sector was shut down. Many of these tour buses have fallen into disrepair.

In one instance, a 3,000-member business delegation from the mainland changed their overnight trip to a day trip, as there were not enough night coaches available.

“The tourism industry has lost more than half to 70 per cent of its operating capacity compared to 2019,” said Mr Timothy Chui, executive director of the Hong Kong Tourism Association.

“If the government can provide loans or financial assistance for the operators to repair the buses as soon as possible, then they could cater to the demand of the tour groups.”

CAN THE GOVERNMENT DO MORE?

To ensure that the tourism campaign can generate the revenue it needs, audit firm KPMG has called on the government to disburse a further round of consumption vouchers.

This time, authorities should restrict part of the amount to food catering and tourism to spur their recovery, said industry players.

However, given the expected huge deficit, it is unclear if the government will dip further into its coffers.

Hong Kong’s reserves have depleted to around US$100 billion, half of the levels from three years ago. Gross domestic product (GDP) fell by 3.5 per cent last year.

“The consumption vouchers did cushion the negative demand shock during the pandemic,” said Dr Wong.

“Hong Kong is now returning to normal – we removed most pandemic control measures, and so to me, it sounds more reasonable to gradually remove those ad hoc relief measures, including the consumption voucher scheme.”

Hong Kong’s Financial Secretary Paul Chan has said he expects a stronger recovery from the second quarter of this year.

Source: CNA/dn(ja)