Prolonged economic uncertainties, technological tensions and rising geopolitical challenges dented global investment and economic growth. Worse still, the outbreak of the COVID-19 virus in December 2019 and which aggravated since January 2020 resulted in a damaging impact globally. Assuming that the pandemic would fade in the second half of 2020, the global economy might grow by 5.8% in 2021 when economic activities normalised.
With mounting travel restrictions and growing spread of the virus worldwide since early 2020, international tourism was expected to decline by 60-80% over the whole year. The global impact of the pandemic worsened with cancellations of trips, hotel bookings and events, and has put more than 50 million jobs in the global travel and tourism sector at risk. Leisure travel would be expected to recover quicker if signs of recovery could realise in the final quarter of 2020.
The Hong Kong economy saw an abrupt deterioration in the third quarter of 2019, contracting by 2.9% year-on-year. The local social incidents which started in June 2019 took a heavy toll on inbound tourism and consumption-related activities. Resulting from the severe global economic impact of the pandemic, local economic activities were disrupted and the real GDP growth forecasted for 2020 was revised to -4% to -7%.
The upward trend of total visitor arrivals reversed in the second half of 2019 recording a drop of almost 40% in visitor arrivals. As at August 2019, over 20 countries released outbound travel alerts with the level of “high degree of caution” to Hong Kong due to social unrest. Outbound travelling plans for the 2019 year-end festive season were slow. Other than significant cancellations and postponement of mega and sports events, organisers of the Meetings, Incentives, Conferences and Exhibitions (MICE) businesses who chose Hong Kong as their prime location had considered to relocate the events elsewhere.
While the tourism industry was still trying to find measures to recover from the damaging legacy from social incidents, the aggravation of the industry’s plight by the coronavirus since January 2020 further strained international arrivals to Hong Kong. The number of visitors to Hong Kong from January to March 2020 recorded a year-on-year decrease of 98.6% (from 3 207 802 to 82 285). The downturn of the industry has adversely affected related sectors including hotel, catering and retail. The tourism industry is facing unprecedented severe hardship.
Scores of airlines including the major local based airlines have cancelled services, extended salary cuts and laid off staff. Weak travel demand globally would likely to continue into the summer peak season and last till late 2020. From September 2019 to early April 2020, the Airport Authority Hong Kong (AA) has introduced four rounds of relief measures totalling HK$4.6 billion for the airport community.
Travel Agents and Airline Ticket Agents
By end 2019, more travel agents had to reduce cost by laying off staff, scaling down the business, extending unpaid leave etc. Worse still, the outbreak of the virus has led to cancellations of incoming arrivals and outbound travelling plans, which severely crunched the already weakened industry. Licensed industry practitioners got zero job level. The Government has been extending relief measures in phases to the sector since late 2019 including cash incentives and business subsidies.
In 2019, the overall numbers of overnight MICE arrivals dropped 14.2%. The industry was hard hit by the negative impact of the social unrest, with many events cancelled, postponed, downscaled or relocated elsewhere. Due to the outbreak of the pandemic, no events were organised since February 2020. A Government subsidy of over HK$1,020 million would be injected to subsidise exhibition and convention organisers and participants. The HKTB is ready to step up its efforts to promote MICE tourism, finance the industry for such activities to come to Hong Kong.
Industry personnel noted that travelling sentiments still exist. Travelling should gradually recover when normalities resume. With varied tourism, business and infrastructural related development initiatives in place, Hong Kong’s strategic role in attracting leisure and business travel to the region is still present. Plans to reinvigorate Hong Kong tourism would be rolled out depending on the development of the pandemic.
Competition for business and leisure arrivals will regain momentum when the pandemic ceases and global economy starts to revive in the longer run. A consistent supply of manpower equipped with robust industry knowledge, emerging skills and customer-centric mindset will be required to support the digital era and the changing scene of the industry.