Can Hong Kong bounce back as a global travel hub?

Tough Covid-19 restrictions continue to put pressure on Hong Kong’s attractiveness as an Asian travel hub and destination for business travel, and could contribute to further travel agency closures, according to a number of industry experts.

Their views come at a time when Hong Kong is considering lifting its tough restrictions — due to end on 20 April, a month earlier than planned, with the government hinting this week that it could ease flight bans, class suspensions and quarantine periods for travellers as early as next week.

Slow and steady may not win this race

“Hong Kong was one of the first markets to feel the effect of the pandemic, and it is one of the last regions to be experiencing recovery, so it’s entirely possible that we may see further closures or consolidations,” said Todd Arthur, vice president, Asia Pacific, Travel Solutions Agency at Sabre. “Remaining agencies need to ensure they are prepared now to capture future recovery.”

The knock-on effect of restrictions contributed to the recent closure of Morning Star Travel Services, one of Hong Kong’s best-known travel agencies, which ceased trading in January, while cruise operator Genting Hong Kong filed an application, also in January, to wind down the business.

Karen Cheng, managing director, Hong Kong at BCD M&E says that corporate travellers are looking to other destinations within Asia as a travel hub over Hong Kong, such as Singapore, Thailand and Vietnam.

“[Hong Kong’s] low recovery when compared with other APAC markets for both inbound and outbound tourism is owing to the very strict quarantine policy,” she said. “Besides, many tourist-related business segments have temporarily or completely closed down.”

Cheng said the restrictions and ongoing Covid-19 situation is having further adverse effects on the MICE industry, such as limits imposed on travel budgets and labour shortages.

Todd Arthur, vice president, Asia Pacific, Travel Solutions Agency at Sabre, urges Hong Kong travel agencies to prepare to capture recovery demand.

The show can't go on

Olinto Oliveira, general manager at MCI Hong Kong & Macau, said the tendency for corporates to gravitate towards countries with more relaxed measures is expected.

“But particularly within the APAC region we still observe a great deal of caution with many companies still opting to maintain virtual experiences and programmes for the time being,” he said. “At this stage we all understand that a ‘return’ to normal will not be happening but we need to look at the natural progression of where things are headed and how we can keep doing meaningful work which has an impact and which resonates with the audiences we engage with."

UFI, the Global Association of the Exhibition Industry, recently published its latest Global Barometer, which assesses the development and outlook of the global exhibition industry and includes profiles for 29 markets and regions. Kai Hatterndorf, managing director and CEO of UFI said Hong Kong’s ‘Covid-zero’ strategy could contribute to a huge loss in business events for 2022.

Sabre’s Arthur added that while Hong Kong borders remain closed, or long quarantines remain in place, corporate travel events in Hong Kong remain domestically-focused, or are combining in-person and virtual to allow international participants to join.

There's still a glimmer of hope

“However, the Hong Kong market is showing signs of optimism, “ Arthur says. “The Hong Kong Tourism Board, for example, has recently announced that Hong Kong has been chosen as the host city for four international MICE events across the travel, medical and sports sectors, so it’s clear that there is a lot of interest in Hong Kong, and that corporate travellers want to and are expecting to be able to travel to Hong Kong in the later half of this year.”

He added that Sabre booking data shows a huge pent-up demand for travel of all kinds and that as soon as borders open, there will be an influx of bookings.

“We’ve just seen Australia open its international borders for the first time in almost two years,” he said. “As soon as the date was set for those borders to open, we saw a strong, rapid bookings recovery from key sources around the world. The pent-up demand was there and just needed a clear direction from the Australian authorities to be realised.

"We expect to see the same strong bookings data as soon as we get a clear direction from the authorities in Hong Kong.”