change take
— Matthew Parsons
Travel managers have warned that airfares will continue to soar in the coming weeks following Hong Kong’s decision this week to ease travel restrictions.
From September 26, international travelers arriving in Hong Kong are exempt from mandatory hotel quarantine. Hotel prices have also risen sharply and could rise by as much as 40 per cent in the coming months as the financial hub begins to compete again with rival Singapore for international business travelers.
Singapore, which lifted most travel restrictions in March, has seen a strong recovery in convention business, partly due to the ongoing closure of Hong Kong.
Business travel agency CWT said inbound and outbound bookings in Singapore were about five times higher than at the start of the year, but now also in Hong Kong, with transactions now tripling what they were at the start of the year.
Akshay Kapoor, head of sales for CWT Asia Pacific, said: “Following the announcement, we have seen a surge in calls from our Hong Kong travel advisors, which we expect will likely translate into a significant increase in bookings in the coming weeks.”
He added: “We’ve had a lot of inquiries from travelers who previously planned trips with multiple destinations but now want to split those trips up into separate trips because they don’t have to quarantine when they return.”
BCD Travel also saw an “immediate” rise in inquiries following the Hong Kong announcement, especially for pending bookings as travelers waited for further details.
“Activity continued to pick up this week,” said Jonathan Kao, managing director, Greater China. “Travelers are timing their travel to avoid being quarantined when they return to Hong Kong.”
Most customers were surprised by the new policy, which came into effect within three days of its announcement, he added. “The guess at the time was that it would go live around mid-to-late October, in preparation for the Hong Kong Sevens and the Global Finance Leaders Investment Summit organized by the Hong Kong Monetary Authority and scheduled for November this year,” he said.
price shock
The message now is that travel managers should be prepared.
“It’s important to communicate their forecasts with their travel agencies and other suppliers like airlines and hotels so we can be better prepared to support the return of travel,” Gao said.
According to CWT, hotel prices in Hong Kong are expected to rise 40% and 14% year-on-year in 2022 and 2023, respectively, while Singapore could rise 25% and 7% next year.
“I don’t think the demand pressure on pricing will abate anytime soon,” CWT’s Kapoor said. “Instead, I expect a sharp rise in demand once China eases border restrictions and lifts quarantine requirements for international travel.”
While airfares are falling in most markets in 2020 and 2021, CWT has the opposite view for these two financial giants. Airfares to Hong Kong rose 13%, then 5%, and Singapore airfares rose 10% in 2020 and a further 25.8% in 2021.
Looking ahead, airfares in Hong Kong are expected to rise 24% this year and 4% next year. For Singapore, they expect growth of 15% in 2022 and then 9% in 2023.
The island’s hotel sector is also on track for a “spectacular” second half of 2022, with room rates rising rapidly to pre-pandemic levels and average length of stay nearly doubling from 2019, said Singaporean multinational bank DBS .
“Passengers are forced to compromise on travel class due to limited inventory, such as flying economy class instead of business class,” said Andrew Yeo, managing director of BCD Singapore and Australia. And be prepared for last-minute changes to your itinerary.”
Business class pricing is also more unpredictable, sometimes jumping from -15% to +15% in a matter of weeks, making it difficult for travel managers to confidently plan ahead using historical data, according to Skytra, an Airbus-owned ticket data company.
“Prices in the Asia-Pacific region have also been stubbornly high since China loosened its strict controls on domestic travel in late June and countries such as Thailand reopened to international tourists,” chief executive Elise Weber said.
All roads lead to China
With limited direct flights into China, business travelers have been using Hong Kong as a major transit point into the country since April, when the city shortened quarantine requirements to seven days.
Corporate traffic can now be further increased.
“We’ve seen a lot of first bookings to Hong Kong over the past few days,” said Hugh Batley, co-founder of Singapore-based business travel agency TruTrip. Those bookings include many micro-events such as training and events . “Singapore, Malaysia, China, all these routes will see significant growth,” he added.
As far as BCD is concerned, the Hong Kong to mainland China route has been sold out for the past six months and is likely to continue until the end of the year, with most flights sold out as soon as inventory becomes available.
Once China does reopen, experts warn that demand will outstrip supply as airlines try to ramp up reduced capacity. Getting a seat to your desired destination can also be difficult, and airport and ground staff can be another issue.
However, the Asia-Pacific region is likely to avoid the chaos Europe and the United States have seen as those regions reopened.
“Policy changes in China may be more gradual, and the government may adopt a phased approach to reopening,” Gao noted.
“If you look at the U.S., they had a boom. In Asia Pacific, there was a little bit of a delay in reopening, so we’re still in a boom. The boom might not be as big because of the recession, and we’re in a few months Not going to see it in our industry,” Bartley added.
China is also likely to keep an eye on Hong Kong. “I suspect Hong Kong is a test bed to see what happens when international players move into a region,” Bartley added.
But BCD’s Kao said the Chinese government has been planning for reopening.
“Hong Kong certainly played a role in their strategy. However, while insights and information can be gained from Hong Kong’s reopening, it will not be a yardstick for China due to differences
In terms of size and complexity,” he said.
Also in the region, Japan plans to lift Covid restrictions and ease border controls from October 11, on par with the US, while Taiwan will end its quarantine of arrivals from October 13.
Update: This article has been updated based on Skytra’s comments. An earlier version said Andrew Yeo was managing director of CWT Singapore and Australia.
Photo credit: International travelers to Hong Kong are no longer subject to mandatory hotel quarantine.
