HONG KONG: At the edge of an elevated basketball court in Kennedy Town, crowds press up against a battered iron fence with smartphones and cameras in hand, jockeying for the perfect shot.
The goal is to capture the seascape of Belcher Bay, framed by the surrounding buildings. The photographers are Mandarin-speaking tourists, all in their 20s and 30s. For them, taking photos and “checking in” at these iconic spots are crucial parts of their travel itinerary.
Among them is Ms Tang Xueping, a 28-year-old sports teacher from Shanghai. She’s on a seven-day trip that includes an overnight stay in Macao.
“We ‘da ka’ (take photos at picture-perfect spots) almost every day,” she said, noting that their shopping purchases are limited to necessities.
This trend of “special forces-style travel” or “tezhong bingshi luyou” in Chinese – quickly moving from one location to another at pace and on a budget – is reshaping Hong Kong’s post-pandemic tourism.
That’s especially as it gains traction among mainland Chinese travellers. Making up the bulk of visitors to the city, mainlanders have already been tightening their belts – and a younger demographic plus changing perspectives have impacted how much and what they spend their money on.
In the face of changing mainland tourist numbers and profiles, local businesses have switched up their strategies. Tour groups have pivoted to offering more in-depth tours, while retailers are placing greater emphasis on lower-priced items.
As businesses in Hong Kong bear the brunt, the government is taking steps to turn things around. It’s prioritising tourism as a key driver of service exports, with a budget of HK$1.5 billion (US$191.7 million) allocated to attract “high-value tourists”.
Still, analysts say the city has its work cut out to reel in the mainland tourist dollar. They point out other factors like stiff competition from visa-free regional destinations like Singapore and Malaysia, a strong local currency and rising costs of living.
“If things like food are expensive, the place becomes less attractive. Tourists can find better places to stay at a lower price point, you will be judged based on the overall cost,” said Mr Simon Lee, an honorary institute fellow of the Asia Pacific Institute of Business at the Chinese University of Hong Kong (CUHK).
All eyes will be on how Hong Kong tourism fares during the summer school holidays in China – typically from early July to end-August – when students and parents often travel. CNA visited the city in late July, staying in hotels, visiting tourist hotspots, and speaking to various industry stakeholders to get a first-hand look at the situation on the ground.
EXPLORING AT THEIR OWN PACE
Unlike the pre-pandemic days when tour buses and luxury shopping dominated, tourists to Hong Kong – particularly young people – increasingly favour flexibility and exploration, say analysts.
“I think young people nowadays may not like going on organised tours because you have to gather at fixed times, which is less flexible. Attractions are easily accessible online now, and young people can read about them and decide which spots are more fun to visit,” said Ms Tang.
Mainlanders are the driving force of Hong Kong’s tourism. They’ve accounted for nearly 80 per cent of yearly visitor numbers since the Individual Visit Scheme launched in 2003, allowing them to visit the city on their own.
Like many other places, the COVID-19 pandemic exacted a hefty toll on arrivals, and recovery has been slow. Last year, Hong Kong saw 34 million visitors – only 52 per cent of the 2018 total.
The Hong Kong Tourism Board (HKTB) has forecasted that the city will receive 46 million visitors this year. That would be a 35 per cent increase from last year, but still 70 per cent of 2018 levels.
Even as they continue to make up the majority, a different ilk of mainlanders has been visiting the city since the border reopened with the mainland in February 2023.
For a start, they’re largely younger. The “post-00″ generation – born after 2000 – is making up a growing share.
Data from Chinese travel platform Qunar shows that among passengers flying from mainland China to Hong Kong, those aged 23 and below accounted for 35 per cent, compared to 28 per cent recorded in 2019.
Literature PhD student Gu Yufan from Soochow University is spending three days in Hong Kong for a summer vacation with her mother and friends. Her itinerary includes visiting popular spots like Victoria Harbour and exploring the city.
“I planned my trip using social media like Xiaohongshu and also got recommendations from friends studying in Hong Kong,” the 24-year-old told CNA. “This is how I plan all my trips. it’s more relaxed, and I can rest whenever I feel tired.”
Official data shows this free-and-easy routine appeals to many youths, rather than the organised tours typically popular among the older generation.
Six out of 10 mainland visitors aged 16 to 25 years old went for a city walk around Hong Kong’s neighbourhood, according to HKTB’s latest Departing Visitor Survey. Of them, 53 per cent sought to experience the local lifestyle and culture.
MAINLAND TOURISTS SPENDING LESS
Mainland tourists to Hong Kong are also spending less.
According to an HKTB report, 53 per cent of mainland visitors are day-trippers, spending about HK$1,400 each – 42 per cent less than the HK$2400 spent in 2018. The remaining visitors, who stayed an average of 3.5 days in Hong Kong compared to three days in 2018, also spent less overall.
Changes in consumption behaviour are evident. Their spending on shopping has dropped to 49 per cent, 12 per cent lower than in 2018, while spending on hotels and restaurants has increased to 22 per cent and 20 per cent respectively, up from 15 per cent and 13 per cent in 2018.
Local retailers are feeling the pinch.
Take Tsim Sha Tsui’s Canton Road, a usually bustling thoroughfare lined with luxury shops. When CNA visited the area on a Sunday evening in late July, the area felt noticeably quiet, with the usual crowds of eager shoppers largely absent.
A clothing store employee on the street reported a 30 per cent drop in sales, while a cosmetic shop saw sales halved.
Big brands have also been hit. Sasa, Hong Kong’s largest cosmetic chain, has seen spending by mainland tourists at its 82 stores in Hong Kong and Macao dip by between 26 per cent and 45 per cent.
Once the world’s second-most expensive retail location, Canton Road has dropped in ranking, with retail rents falling 39 per cent from pre-Covid levels to an average of US$1493 per square foot in 2022, according to a survey by Cushman & Wakefield.
Experts note that the decline in tourism is influenced by several factors. In addition to changing consumer behaviour, China’s economic slowdown and the strengthening of Hong Kong’s currency – which is pegged to the US dollar – are also contributing factors.
The Hong Kong dollar is allowed to trade in a range of 7.75 to 7.85 against the greenback, which has been gaining amid still sticky inflation and strong growth – although recent developments suggest the tide could be turning.
Associate Professor Lisa C Wan at the School of Hotel and Tourism Management and the Department of Marketing at CUHK explained that China’s slower economic growth, high youth unemployment, and property bubble have impacted spending behaviour.
“Falling housing values have made people hesitant to spend, which affects tourism patterns.”
Mr Lee pointed to Hong Kong’s soaring costs of living in international rankings for the lack of attractiveness for the city.
Both experts also flagged competing regional destinations for mainland visitors, highlighting the allure of visa-free travel to Southeast Asian countries like Malaysia, Thailand, and Singapore.
“The mainland visitors need to apply for entry into Hong Kong, (but) with visa-free policy it might be simpler for them just to travel abroad,” said Mr Lee.
STRUGGLING TO SURVIVE
At Mong Kok’s Ladies Market, a 1 km stretch of open-air stalls selling accessories and clothes, the scene is quiet on a Sunday evening. Most stall owners are idly scrolling through their phones, and several deserted stalls are present.
A 56-year-old stall owner who runs a clothing store at the junction of the street told CNA that business is now 70 per cent less than its peak two decades ago, with a steady decline over the past 10 years.
“It was very easy to make a living back then, as long as you were there,” said the owner who only wanted to be known as Mr Miu.
Another stall owner Ms Chan has been selling accessories there for the past 10 years. The 40-year-old lamented that she is now earning “barely a fraction” of what she made before the pandemic.
Other businesses are adapting to the new tastes of travellers.
Prince Traveller, originally a cultural exchange centre focused on providing history and cultural education to local secondary schools, has shifted to offering in-depth tours to both local and foreign tourists.
The centre’s director Andy Lam emphasises the need to leverage Hong Kong’s strengths to remain competitive with nearby cities such as Shenzhen.
“How can we compete with them? Be more advanced? Look at what Shenzhen has become – they even stopped using cash. Create more fun? They have so many things to do there that we don’t have here,” he said.
“We can only win if we compete on nostalgia, history, and culture.”
Tourism is crucial to employment in Hong Kong, but experts note that the protests and pandemic have severely disrupted the sector and hindered its recovery.
According to HKTB, tourism accounted for 4.5 per cent of the city’s GDP in 2018 but plummeted to 0.1 per cent by 2021. Meanwhile, employment in the sector shrank by a staggering 91 per cent from 257,000 to 22,500.
Assoc Prof Wan highlighted that by the end of 2022, 32 per cent of the 78,000 airport staff from 2019 had left the industry, according to the Hong Kong Airport Authority.
“Hong Kong was slow to reopen, and our high currency has led to complaints about prices, while manpower is still recovering,” she said.
Mr Johnny Lam, chairman of the Hong Kong Federation of Trade Union (HKFTU) Tourism Committee, said that initially, there was a shortage of tour guides as many had changed occupations during the pandemic.
However, the situation has improved as fewer mainland tourists opt for guided tours.
A total of about 570 inbound mainland tour groups, or an average of 145 per day, arrived in Hong Kong during the Labour Day Golden Week holiday period in May, according to the Hong Kong Immigration Department.
But this is still much lower than the 230 to 250 groups per day seen in 2019, as reported by the Travel Industry Council.
“In the past, a tour guide might be able to take four to five tours per month, covering about 20 days, but now, they have to take six to seven tours just to match the income they had before the pandemic,” said Mr Johnny Lam.
RETAILERS FINDING NEW SELLING POINTS
In retail, Sasa is adjusting to new shopping trends by prominently displaying lower-priced items at storefronts and featuring niche brands to pique interest.
“Mainland Chinese consumers are increasingly open to trying lesser-known niche brands. This enables the Group’s beauty consultants to be more effective in introducing the Group’s portfolio of exclusive brands that enjoy higher gross margins,” according to a Sasa spokesperson.
History and culture tour provider Prince Traveller is also exploring new avenues.
“We are thinking of organising an overnight stay at the floating fish raft,” said Mr Andy Lam during a tour in Central, hinting at possible additions like a folk song singer to enrich the experience.
While the company has logged a 50 per cent boost in business since COVID restrictions eased, he highlights the need for a shift in strategy.
“You must pivot your business model to survive,” Mr Andy Lam stated, adding that Hong Kong’s past focus on luxury goods like handbags no longer suffices.
The local tour industry has faced notable challenges. According to the Travel Industry Council of Hong Kong, there were about 1,660 travel agencies pre-pandemic, but over 300 closed in 2022 as COVID-19 raged on. The tally was at about 1,400 in mid-August.
Walk in Hong Kong, a tour operator that targets English-speaking tourists, has also adapted. An early adopter of virtual tours, it avoided staff layoffs by focusing on high-spending clients who value quality experiences.
The company’s co-founder and CEO Paul Chi-yuen Chan noted the sector’s “tough time” but assured they’ve managed to “survive”.
Mr Johnny Lam is optimistic about tourism recovery, noting a rise in mainland tour groups to 6,450 in July – a 10 per cent increase from last year. “Development in tourism will be visible; the city will be more vibrant, boosting overall confidence,” he said.
“Hong Kong has the resources,” he concluded. “We need to unleash our strengths and offer a diverse range of products tailored to changing tourist tastes.”
Mr Andy Lam echoes this sentiment. “‘Poor tourism’ is just a gimmick term. These new tourists might actually spend even more than we do.”
HOW TOURISM SECTOR CAN IMPROVE
As mainland spending slows and becomes more targeted, attractions in Hong Kong are taking steps to grab a slice of the pie.
Outside the former Yau Ma Tei Police Station, crowds flock to photograph the iconic sign, many mimicking gun poses, reflecting the site’s fame as a filming location. However, after snapping their photos, visitors often leave quickly.
Mr Johnny Lam from the HKFTU Tourism Committee pointed out that while the area includes historical sites like old theatres and markets, people only spend 10 minutes outside the police station.
He has proposed enhancing the site with museums and themed merchandise, like police teddy bears, to attract more visitors and cater to their spending habits.
The Hong Kong Police previously tested this idea with a pop-up store offering similar merchandise from last December to May. Mr Johnny Lam also suggests setting up a booth selling freshly cut fruit from the nearby wholesale market – so tourists have the option of both souvenirs and sustenance.
Mr Johnny Lam noted that effective revitalisation requires coordination among various authorities, saying: “You need different players to come together to consolidate things and revitalise the entire area.”
This summer, the Hong Kong government’s efforts to draw the tourist dollar have been visible.
“Summer Chill” booths at airports, hotels and malls offer triple discount coupons for transport, dining, and shopping. They’re part of the “Summer Chill Hong Kong” campaign, featuring 500,000 reward sets worth over HK$100 million in deals.
Tourism authorities announced in May that pyrotechnic and drone shows would be organised regularly, in line with festivals and mega-events. The first displays took place early that month, coinciding with China’s Labour Day Golden Week holiday period.
HKTB has also forged closer cooperation with Xiaohongshu to attract mainland tourists, with various joint initiatives set to be rolled out next year.
Heavily used by young mainland Chinese, Xiaohongshu has spurred business at some Hong Kong eateries and shops due to these venues being featured in users’ posts.
Restaurant chain Red Tea is one of them. Aleady popular with mainlanders before the pandemic, it is seeing an influx of these customers at its Yau Ma Tei branch.
While cheaper hotel rates nearby are a factor, posts on Xiaohongshu have kindled interest, shared Red Tea representative Hugo Chan, He added that post-pandemic, the demographic has shifted to younger visitors with a noticeable increase in spending.
“Before the pandemic, Yau Ma Tei and Mong Kok outlets saw a 50-50 split between mainland tourists and locals, but this shifted to 90 per cent locals during the pandemic and is now back to 60 per cent mainland tourists,” he noted.
“Some younger customers will order many dishes, even if there are just four pax, they will order eight dishes, of course, I guess it is for ‘da ka’ (photo taking).
“Sometimes, a family of four will pass by, come in to put down their luggage, eat a pineapple bun with butter and a cup of milk tea, and leave, and they charge their phones.”
Instead of making use of its popularity on social media to do promotional stunts, Red Tea is taking netizen comments as feedback to improve on service quality.
“We actually didn’t do any of such actions (promotions), we only reflected on how we can improve our services based on their comments, how do we treat them, service them and in the long run, provide a better dining experience for the mainland visitors.”
At the same time, the city has warmly welcomed Beijing’s expansion of a solo traveller scheme. Starting from May 27, residents from eight mainland cities have been able to apply for the Individual Visit Scheme to travel to Hong Kong.
Assoc Prof Wan sees mega-events as key to attracting international tourists. The government has allocated HK$100 million for 2023-24 and 2024-25 to boost high-profile events, following the resumption of normal travel in February 2023.
Officials have said major events this year are set to increase from 150 to over 210, potentially drawing 1.7 million tourists. The 34th Hong Kong Book Fair, held on Jul 17, attracted 990,000 visitors and boosted per capita spending by 4.6 per cent to HK$912.
Mr Lee from CUHK argues that courtesy and price competitiveness are key to revitalising Hong Kong’s tourism industry. Complaints about poor service from restaurant waiters to taxi drivers are widespread on Xiaohongshu, hurting the city’s image.
In response, the Information Services Department has allocated HK$179.2 million to enhance Hong Kong’s profile. HKTB has released videos featuring stars like Louis Koo and Jessica Hester Hsuan, reviving the slogan “such attitudes in service are not enough these days.”
Despite this, Mr Lee believes the campaign is overdue. “(The campaign launch) is quite late. It’s very different from Shenzhen, where waiters serve you at your table,” he noted.
He also emphasised the need to tackle high accommodation costs, which he attributed to government taxation. Mr Lee proposed offering short-term rebates or tax exemptions to encourage longer stays.
“If a tourist spends HK$5,000 and receives a HK$1,000 rebate, it will make Hong Kong more competitive,” he said.
“It doesn’t have to be year-round. It could be for half the year or during peak seasons. Let tourists know about these reimbursements or tax rebates. While the impact might be modest, it serves as an incentive and helps bridge the gap with our competitors.”
MONEY “GOING UP NORTH”
Even as the evolving profiles of inbound tourists hog the limelight, the travel trends of Hong Kong residents are also raising eyebrows as they turn to mainland China.
Weekends often see an exodus of Hongkongers taking the 15-minute high-speed rail to Shenzhen for hotpot, massages, and shopping at warehouse supermarkets.
In 2023, Hong Kong residents made 53.34 million trips “heading north,” according to immigration data.
A quarter of them spent an average of 1,000 yuan or more per day during their mainland visits, revealed a February survey by the Hong Kong Research Association.
Observers note that this has impacted local Hong Kong businesses, particularly F&B.
Mr Simon Wong Ka-wo, president of the Hong Kong Federation of Restaurants and Related Trades, told local media that around 300 eateries are closing in Hong Kong each month while fewer than 200 are opening.
He attributed this to Hongkongers “spending up north” in mainland China.
Mr Lee from CUHK is among the Hongkongers who cross the border to Shenzhen at least once a week. He noted that food there is priced at half of what it costs in Hong Kong, with better services.
He added that tourist spending has been affected by visitors opting for cheaper hotel options in Shenzhen and commuting to Hong Kong for day trips.
“The government has made significant efforts to attract tourists, but many visitors to the Greater Bay Area prefer low-cost day trips, opting to stay overnight in Shenzhen,” he said.
Assoc Prof Wan pointed out that Hong Kong’s smaller space compared to other Greater Bay Area cities might put it at a disadvantage for indoor facilities during the hotter and typhoon-prone months from May to November.
“We need to think of other solutions for activities that aren’t affected by outdoor weather. In Shenzhen and Zhuhai, they have fewer problems due to their larger spaces … such as building theme parks. It’s harder for Hong Kong, but there are ways to make it work.”
In addition to Shenzhen, Hainan, a southern island province often dubbed “China’s Hawaii”, has eroded Hong Kong’s once-exclusive shopping allure.
In the first quarter of 2024, Hainan’s service trade grew by 29.62 per cent on-year, reaching US$2.03 billion, according to provincial government data.
To bolster Hong Kong’s appeal for duty-free shopping, the central government raised the duty-free threshold for mainland residents aged 18 and older from 5,000 yuan to 12,000 yuan per trip, effective from Jul 1.
Additionally, the limit may increase to 15,000 yuan for purchases made at duty-free stores at border crossings.
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