Hong Kong Hotels in Crisis as Protests Deter Mainland Visitors

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(Aug 15): Hong Kong’s hotel industry is struggling with a collapse in bookings after thousands of protesters shut down flights from the territory’s airport this week in an escalation of months of clashes with police.

Revenue from room sales is set to plunge as much as 50% this month, according to Yiu Si-wing, a Hong Kong lawmaker representing the tourism industry who said visits from mainland China that usually account for 80% of arrivals are down most as people fear for their safety.

The slump will deal a further blow to an economy that’s already contracting after months of unrest and fallout from the U.S.-China trade dispute. Yiu said hotel occupancy rates that averaged 90% in the first half will fall by a third or more and that arrivals from the mainland could slow to a trickle.

“The impact on tourism is huge,” he said in an interview, estimating that half of mainland visitors due in August are likely to cancel or defer their plans. Yiu cited factors such as a reported attack by protesters on a man suspected of being a security agent from the nearby city of Shenzhen. The incident was the top-trending topic on Chinese social media platform Weibo on Wednesday.

Mainland residents planning trips to Hong Kong expressed concern about the risks of traveling through the airport.

Grace Huang, a 20-year-old Wuhan University student, said she was reconsidering a one-day layover in the territory on her return from a visit to Canada. “I fear I’m going to be beaten,” she told Bloomberg by telephone.

Beijing resident Jasmine Ji, 23, said she’d delay a trip to Hong Kong to complete an application for permanent residency in a city where she previously graduated from university.

“I feel like my personal safety could be severely threatened if they find out I speak Mandarin or am a Chinese citizen,” she said. “I won’t fly to Hong Kong airport until the situation and protests are settled there.”

The protests, which have raged since June, entered a new phase this week as they shut down one of Asia’s busiest hubs, forcing the cancellation of hundreds of flights. Demonstrators who initially hit the streets to oppose a bill allowing extradition to the mainland now have a host of demands including the resignation of Hong Kong leader Carrie Lam.

Room rates in Hong Kong are falling as a result of mounting safety concerns, according to Yiu.

A standard room this weekend at the upscale Conrad Hotel, owned by Hilton Worldwide, is priced at HK$1,530 ($195) -- more than 40% cheaper than the same booking two months later, according to prices on its website. Conrad didn’t immediately respond to a request for comment.

Websites for hotels owned by Marriott International Inc. and Shangri-La Asia Ltd. showed similar discounts.

“The recent travel advisories and warnings issued by several countries have caused some cancellations from our overseas leisure, group and corporate guests,” a Shangri-La Group spokesman said. “We have also seen a decline in the number of local patrons coming to our restaurants and outlets.”

The tourism sector is one of the hardest-hit by the ongoing protests, which have caused Hong Kong’s economy to contract 0.3% from the previous quarter. Retail sales by value tumbled for a fifth straight month in June and sentiment among small and medium-sized enterprises have plummeted to record lows.

The MSCI Hong Kong index of stocks has suffered a 10-day losing streak, its worst since 1984. - Bloomberg