Hong Kong demonstrations may have deterred short-haul arrivals, but strong growth means first half arrivals are still up on last year

New research has shown how much of an impact the recent wave of demonstrations against the controversial extradition bill in Hong Kong have had on air bookings to the territory, and the answer it appears is limited, for now, at least.


Summary:

  • The ongoing demonstrations against the controversial extradition bill in Hong Kong have influenced short-haul demand into the territory from across Asia;
  • Insight from ForwardKeys shows a -5.4% decline on air bookings from Asian markets for the four-week period from 16-Jun-2019 to 13-Jul-2019;
  • Away from the booking data and it is clear Hong Kong is beginning to feel the economic cost of the ongoing protests against the government’s extradition bill.

A report from market intelligence specialist ForwardKeys, which analyses over 17 million flight bookings a day, has revealed that in the four-week period from 16-Jun-2019 to 13-Jul-2019 air bookings to Hong Kong from Asian markets fell by -5.4% on the equivalent period last year. In the first fortnight (16-Jun-2019 to 29-Jun-2019), bookings fell -9.0% and in the second (30-Jun-2019 to 13-Jul-2019), but a much reduced -2.2%.

This analysis period coincides with the two million strong demonstration accompanied by a general strike and riots in Hong Kong on 16-Jun-2019, the siege of police headquarters on 21-Jun-2019, the storming of the Legislative Council building on 01-Jul-2019 and riot police charging a group of protesters with batons on 07-Jul-2019.

While, the impact may have  been limited, it is clearly against the year to date trend and would probably have been more profound had the Hong Kong market performed so strongly during the first six-and-a-half months of the year, when according to ForwardKeys data, bookings were up +6.6% on the same period in 2018.

The analysis clearly suggests only a limited and likely short-term impact, but this data set is not exhaustive. ForwardKeys acknowledges that the bookings data excludes the major markets of China and Taiwan, because a fall in bookings from those destinations in the latter part of Jun-2019 could also be explained by the timing of the Dragon Boat Festival, which fell 11 days earlier this year than it did in 2018.

“Whilst the numbers do not look good, things are not all bad for Hong Kong’s visitor economy,” says Jameson Wong, director of business development, APAC for ForwardKeys. He highlights that the adverse media coverage of the demonstrations is so far “not causing an overall decline” in long-haul bookings to Hong Kong and the number of Asian bookings made in 2019 “is still ahead of those made during the same time period in 2018,” albeit growth has obviously slowed substantially since the start of the protests in mid-June.

The ForwardKeys Asian booking data suggests the lowest point during the demonstrations occurred prior to the storming of the Legislative Council. However, there have been further demonstrations since the data sample was collected so further falls could influence future arrivals.

Away from the booking data and it is clear Hong Kong is beginning to feel the economic cost of the ongoing protests against the government’s extradition bill. The Hong Kong Retail Management Association revealed this week that “most members” reported a single-to-double-digit drop in average sales revenue between June and the first week of July. The industry is worried that these events will “damage Hong Kong’s international image as a safe city, a culinary capital, and a shopping heaven,” the association said in a statement.

CHART – China is the largest outbound market for visitors into Hong Kong and accounted for over 78% of arrivals in 2018Source: CAPA – Centre for Aviation and Hong Kong Tourist Board

What started as a protest against an extradition bill has ultimately morphed into a fundamental challenge to the way Hong Kong is governed and the role of the Chinese government in the city’s affairs. To properly understand the impact this is having on travel into Hong Kong you need to also be able to see flows from mainland China and Taiwan, which accounted for four in five tourism arrivals last year.

Analysis of weekly OAG flight schedules shows that China accounts for just over one fifth (21.4%) of the seats into Hong Kong, ahead of Japan (12.5% share), Taiwan (11.2% share), Thailand (7.4% share), United States of America (5.1% share) and South Korea (5.0% share).