— Cameron Sperance
China may lead the world in its economic recovery from the pandemic, but big cities like Hong Kong still face a long road to recovery.
Hong Kong-based Cathay Pacific flies only 10% of its schedule. The so-called travel bubble, promising connectivity to other countries, has yet to materialize.
All of this is happening as mainland China continues to return to pre-pandemic travel demand levels as early as next year due to its strong domestic tourist base.
“From a hotel industry perspective, while borders remain closed, we cannot enjoy domestic tourism from other countries,” Jennifer Cronin, president of Hong Kong-based Wharf Hotels, told the Skift Asia Forum on Thursday. “We have a population of seven million and we cannot survive on domestic tourism alone.”
Hong Kong experienced a tourism downturn months before the coronavirus pandemic ravaged the global travel industry. The city fell into recession in late 2019 as protests evaporated retail sales and tourism, with deadly consequences.
Despite early reports that Hong Kong’s economy would be one of the hardest hit by the pandemic, the Hong Kong Tourism Board initially viewed the pandemic as a way to finally develop a cohesive vision to to boost the city’s struggling tourism economy.
The outlook has dimmed again this summer, given uncertainty over Hong Kong’s autonomy from mainland China. But Cronin took issue with media reports of how dire the business situation in Hong Kong is.
“We’re no different than other cities around the world, whether it’s Paris, Istanbul, or what we’ve seen this year in the U.S., despite the protests, business continues,” she said.
However, the pandemic has drained what was left of the city’s tourism engine. Hotels in the market are heavily reliant on foreign tourists, but currently there are none at all due to border closures. Cathay Pacific carries 1,500 passengers a day, compared with a normal 100,000.
“It’s pretty bleak right now,” said Edward Bell, Cathay Pacific’s general manager of brand, insights and marketing. “Thankfully, our freight business is having its best year ever as everyone is ordering online from home…but the passenger business is still a long way from where we want it to be.”
Hong Kong tourism still has some tailwinds, such as the Golden Week holiday earlier this month. Driven by stay-at-home holidays while foreign travel is largely banned, Marriott even sold out its Hong Kong hotels over the weekend.
But even Hong Kong’s Golden Week was not as strong as in mainland China, with Cronin saying revenue from Wharf Hotels’ Niccolo portfolio was up 50% from 2019.
“While we’re very grateful for the stay-at-home presence in the local market, it’s definitely not enough to make up for our highest demand weeks of the year,” she added. “It’s pretty much a patchwork of results from different cities on the mainland as well as from Hong Kong.”
Hong Kong’s historic appeal to foreign businesses and tourists stems from its role as a global gateway to China without the strict government oversight of mainland Chinese cities. With these identities at stake, the city’s ability to bounce back is also at risk.
But there are still potential avenues for some recovery in the short term.
Cathay Pacific joins the likes of United Airlines and American Express Global Business Travel in backing CommonPass, a digital health passport that enables cross-border travel during the pandemic. United and Cathay Pacific plan to test the program with volunteers on flights between Hong Kong, London, Singapore and New York City.
CommonPass may not be the cure for tourism like a coronavirus vaccine, but it is a vital stopgap measure for struggling cities like Hong Kong.
“As we now know, we will not have a situation where countries are 100% infected or 100% safe,” Bell said. “COVID-19 is here to stay, and we need to develop technologies and procedures to manage it and get on with our lives.”