Protests, then a pandemic: Can Hong Kong tourism hang on?

Why We Wrote This

How do you support people during a pandemic? Hong Kong’s approach to propping up the economy has many facets, but a perhaps surprisingly simple centerpiece: $10,000 (Hong Kong; about U.S.$1,300) for every adult resident. Part 4 of “One pandemic, many safety nets: A global series.

Courtesy of Denny Chan
Hong Kong fishponds are seen with the mainland Chinese city of Shenzhen in the background. The COVID-19 crisis and a year of protests have taken a hit on the financial hub's economy.

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First came Hong Kong’s protests. Then, the coronavirus pandemic. Now, Denny Chan’s small, student-oriented travel business has been devastated by the double whammy, with tourism falling to a trickle.

But with creativity, and a boost from the government’s $120 billion (Hong Kong; U.S.$15.4 billion) stimulus package, he is working to keep his 17-year-old enterprise afloat. For example, travel agents receive a cash incentive for each Hong Kong resident for whom they arrange a so-called green lifestyle tour to the territory’s wetlands, beaches, islands, and country parks, and Mr. Chan is exploring new streams – sometimes literally. 

Hong Kong has long had a laissez-faire market system, in which economic growth took priority over welfare. Yet amid a deepening recession caused by the pandemic and social unrest, the government announced its stimulus package, including a $10,000 cash handout for adult residents – despite its first budget deficit in 15 years.

Now, Mr. Chan is hopeful that the handouts will generate customers, as he introduces Hong Kongers to new green spots, creating work not only for his employees, but also for local coach drivers, restaurants, and tour guides.

Hong Kong travel agent Denny Chan hikes through lush wetlands near the territory’s border with mainland China, snapping photos as he scouts out a possible “green tourism” venue that might attract local residents to his excursions.

Mr. Chan is exploring new streams – both for sightseeing and income – as he works to keep his 17-year-old enterprise and its five employees afloat. His small, student-oriented travel business, Hong Kong Youth Cultural Exchange International Ltd., has been devastated by the double-whammy of Hong Kong’s protest movement followed by coronavirus restrictions.

“All my clients from overseas and mainland China stopped coming” after mass protests erupted in June 2019, he says. Then came coronavirus, and travel came to a standstill.

Visitor arrivals in Hong Kong, which surged in 2018 and early 2019, fell to a trickle of 4,100 in April – a year-on-year drop of almost 100%, as a result of stringent immigration control and quarantine measures in Hong Kong and around the world, according to the Hong Kong Tourism Board. The tourism industry is a major economic pillar in the Asian financial hub of 7 million people, contributing 4% of gross domestic product and employing about 257,000 people in 2017.

But Hong Kong’s government has moved to rescue the embattled industry, catching firms like Mr. Chan’s in a safety net that combines payments to companies, wage subsidies, and green tourism incentives. The industry is also benefitting from a new cash handout of $10,000 (Hong Kong; U.S.$1,290) for all permanent residents, to be distributed beginning in July.

Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.

The rescue is unusual for Hong Kong, which has long had a laissez-faire market system in which economic growth has taken priority over welfare. Yet amid a deepening recession caused by the pandemic and social unrest, in February, the government announced a $120 billion stimulus package. This broke with a pattern of fiscal conservatism, causing the first budget deficit in 15 years. The relief package includes slashed taxes on income and profits, and – the centerpiece – the $10,000 cash handout for all residents who are 18 and older.

Together with Mr. Chan’s resourcefulness, this support has so far allowed him to make ends meet.

Courtesy of Denny Chan
Hong Kong travel agent Denny Chan photographs fish ponds along Hong Kong's border with mainland China, with the Chinese city of Shenzhen in the background. Mr. Chan was scouting out potential locations for 'green tourism' as part of an initiative to generate business during the pandemic.

“I think our business may start again next year, so we still keep our staff at the moment,” says Mr. Chan. Indeed, many Hong Kong employers – even in hard-hit industries such as tourism, food, and retail, where unemployment rose to 10.6% this spring – are taking advantage of government incentives to retain workers.

Overall unemployment in Hong Kong has increased from 5.2% earlier this year to 5.9% in May, the highest in 15 years, according to government data. Still, it is unlikely to reach the 8% high of the 2003 SARS epidemic, says Simon Lee, senior lecturer in the School of Accountancy at the Chinese University of Hong Kong.

“Many companies learned the lesson [during SARS]. If they fire staff, it’s hard to get them back,” says Mr. Lee. “So they may ask the employee to take leave without pay, or to work only one or two days a week.”

Mr. Chan has been able to retain his staff, thanks in part to two government lump-sum payments to travel agencies – the first for $80,000 and the second for $20,000-200,000, depending on the size of the firm. And beginning in June, the government began paying 50% of the salaries of each of his employees for six months.

Hong Kong’s $10,000 cash handout to residents also helps his employees, Mr. Chan says.  While less significant for Hong Kong’s middle class – the territory’s median income is $18,000 a month – the payment is badly needed by the more than 1 million people in Hong Kong considered poor in 2018, or 15% of the population, says the senior lecturer, Mr. Lee. He favors a handout of $20,000 or $30,000, to add greater economic stimulus.

Summer solutions

Indeed, Mr. Chan and others working across Hong Kong’s large tourism sector, which includes about 300 hotels, are hopeful the handout will bring more spending by residents. For example, large hotels such as the five-star Hyatt Regency Hong Kong in Sha Tin, located in the vast suburban and rural northern swath of Hong Kong known as the New Territories, are offering “staycations” for families stranded in Hong Kong during the summer holidays.

Overlooking Tolo Harbor and surrounded by mountains, country parks, and hiking and bicycle trails, the Hyatt is offering creative packages such as “suite staycations” for families, says Wilson Lee, the hotel’s general manager.

“Most Hong Kong kids are city kids,” says Mr. Lee. To re-create a camping environment, the hotel is putting up tents inside the rooms, complete with a picnic basket of healthy snacks, so “the children can squeeze into the tent in the suite and enjoy the experience.”

The Hyatt is also preparing to roll out a “summer academy” offering “edutainment” classes ranging from fencing and taekwondo to computer coding and the pear-shaped Chinese lute, or pipa.

The Hyatt must no longer ask employees to take unpaid leave, says Mr. Lee. “Occupancy in every hotel is not high, but we are keeping our people. It’s not just the people working here, but the families they have to look after,” he says. “We have the duty to keep it going.”

For his part, Mr. Chan is also hopeful that the handout will generate customers for his innovative “green” tours, creating work not only for his employees but also for local coach drivers, restaurants, and tour guides.

“We have a subsidy, so we can make the tour price very low,” says Mr. Chan, speaking by phone as he pauses among tall reeds in the marshy wetlands of Ma Tso Lung near the China border.

Travel agents receive a government cash incentive of $200 for each resident for whom they arrange a “green lifestyle” tour to a local “green spot” such as the territory’s wetlands, beaches, outlying islands, and country parks, with a guide, meal, and transportation.

Mr. Chan hopes to arrange 20 bus tours for 50 people each – the maximum number allowed to gather, under COVID-19 restrictions – to max-out the government’s cap on subsidies of 1,000 tours per travel agent. It’s not much, and he’s only promoting the tours by word of mouth. Still, given these extraordinary times, he says, “it’s quite attractive.”

Editor’s note: As a public service, all our coronavirus coverage is free. No paywall.

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