Occasional Papers | Regional and economic development | 2014-12-29

Boosting the local tourism industry by capturing high-spending visitors from diversified markets



(29 December 2014) According to statistics published by the Hong Kong Tourism Board, the number of Mainland visitor arrivals among the total arrivals to Hong Kong has increased in the past 10 years, from 54.5% in 2003 to 75% in 2013. The rapid growth in the number of visitors to Hong Kong, with a majority from Mainland, has aroused wide concerns about local capacity of receiving tourists and its influence on the livelihood of the community. In response to this significant increase, the Government has earlier proposed a 20% reduction in Mainland visitor numbers. This is proving controversial.

The Bauhinia Foundation Research Centre today released a new edition of Occasional Paper on ‘Boosting the local tourism industry by capturing high-spending visitors from diversified markets’. By analysing statistical data, the Paper attempts to estimate how different visitor mix with a reduction in Mainland day-trippers may affect the inbound tourism earnings and capacity of receiving tourists, and further suggests the optimal visitor composition for local tourism promotion.

One of the key findings is the GDP will be slightly dropped by approximately HK$2.1 billion if Mainland day-trippers are downsized by 10% (other factors remain the same). Three different scenarios of visitor mix are proposed as an attempt to compensate for the economic loss incurred:

Scenario A: Increasing overseas visitor arrivals

Scenario B: Increasing Mainland overnight visitor arrivals

Scenario C: Increasing visitor arrivals other than Mainland day-trippers

According to our analysis, a 10% reduction of Mainland day-trippers will lead to a loss of around HK$7.6 billion in tourist spending. The study of three scenarios further indicates that to compensate for this loss of income, it is estimated that an increase of around 1.54 million overnight visitor arrivals from overseas or 0.96 million overnight visitor arrivals from Mainland may offset the loss. An increment of an approximate 1.2 million visitor arrivals from different markets can achieve the same compensation.

Among all the scenarios, ‘C’ is a more desirable option for long-term interest of Hong Kong. Apart from its capability of diversifying the base of visitor arrivals, exploring high spending new markets and increasing the number of persons engaged in inbound tourism service, its demand on hotel rooms is lower.

Tourism is one of the important pillars of the Hong Kong economy. Developing a more diversified, balanced and sustainable visitor base is key to finding balance between the impact of the tourism industry and livelihood of the community. Additionally, exploring new tourist attractions, facilitating transport networks, maintaining a sufficient supply of hotel rooms, promoting tourism-related initiatives to the global markets etc. are other critical factors required to be taken into consideration.

Please refer to the Occasional Paper for details.




Appendix

Occasional Paper