Hong Kong Tourism Report Q2 2008

Strong Year For Tourism In 2007 Final figures for 2007 show that some 28.17mn tourists visited Hong Kong over the course of 2007, representing an increase of 11.6% y-o-y. The territory saw steady increases from all of its key source markets (North America, Europe, Australasia and SE Asia). However, mainland China was still the most important market for inbound tourists, providing some 15.4mn visitors (up 13.9% y-o-y). Tourism revenues for the year stood at HKD138bn (US$17.73bn).

The HKTB attributed these strong figures to a number of major tourist attractions that have opened in recent years, including the Hong Kong Wetland Park, the Ngong Ping 360 and, of course, Hong Kong Disneyland. The major global marketing campaign 'Hong Kong: Live it, Love it' was also deemed a success.

This strong performance was just ahead of BMI's own predictions for the year and we believe that 2008 should prove another positive year for Hong Kong tourism, with arrivals expected to break through the 30mn mark for the first time. We forecast a 10% increase in tourist arrivals and tourism revenue figures for this year, with risks to the upside. In particular, Beijing's hosting of the Olympic Games should see an increase in two-centre holidays to the area, taking in both Beijing and Hong Kong.

HK Hotel Construction Boom Continues At the present time, Hong Kong is in the midst of a hotel construction boom, as it seeks to catch up on regional rivals such as Beijing, Singapore and Macau, which have increased supply and lower rates for their own hotel rooms. Research from the HKTB shows that, while visitor arrival numbers increased by 70% over the 2002-07 period, the number of hotel rooms available only increased by 30%.

To remedy this shortfall, the authorities have approved a great number of new hotel projects. 2008 will mark the high water mark for new builds over our forecast period, with an expected increase of 11.4% in new room supply.

Oil Prices A Worry For Airlines Oil prices have once again been making record highs in 2008, with the price of oil in the US hitting over US$100/b. BMI's economic analysts believe that oil prices will remain in elevated territory well into 2008, which will see fuel costs once more becoming a headache for international airlines.

To that end, it is clear that Hong Kong-based airlines may now have to consider ways that they will be able to offset this higher cost of jet fuel over the years ahead. Options include levying a fuel surcharge on all passengers or looking at other areas where costs can be cut to help ease the burden of fuel charges on their bottom line. Already, several leading US airlines have started to increase their fuel levies, and it is to be expected that other airlines around the world will follow suit.