Tourist Arrivals To Fall In 2009 Approximately 13.7mn tourists visited Hong Kong over H109, a decline of 3.4% year-on-year (y-o-y).

The first four months of the year actually experienced a 1.5% increase. However, the outbreak of swine flu in April-May lead to heavy falls in arrival numbers in May and June, notably from the North Asia region.

When the figures were published, Hong Kong Tourism Board (HKTB) chairman James Tien said he expected the decline in visitor numbers to persist over July and August. In the event, July arrivals were down by 12% y-o-y, at 2,378,298. It is believed that Hong Kong will likely experience a decline in visitor numbers of 5.1% in 2009. Any further diagnoses of swine flu will bring severe downside risks to this forecast. Beyond 2010, we are cautiously optimistic that the global economy will regain traction and growth in the tourism sector should then be possible.

Difficult Operating Environment For Tourism Companies The global economic slowdown is providing a challenging backdrop for companies operating in the Hong Kong tourism industry. The most recent data, from June 2009, show hotel occupancy rates dropping to 61%, 20 percentage points (pp) lower y-o-y. Flag carrier airline Cathay Pacific announced a record loss for 2008. These are clear indicators of how the global economic crisis and swine flu have both negatively affected Hong Kong’s tourism industry.

Cathay Pacific CEO Attacks Suppliers Over Pricing In September, Cathay Pacific CEO Tony Tyler hit out at aircraft manufacturers and parts suppliers such as Boeing and Airbus for continuing to raise prices during the global economic downturn. Tyler said that it was ‘absurd’ for the global aviation industry, which has been forecast by the International Air Transport Association (IATA) to lose US$9bn this year, to keep paying higher costs, AFP reported. Tyler said airlines and suppliers should work to align their interests more closely.

Tyler also criticised Boeing and Airbus for delays in delivering orders, although Cathay has not been affected by the delays for delivering aircraft such as the Airbus A380 or the Boeing 787 Dreamliner.

After posting a record loss in 2008, Cathay reported in August that its H109 revenue had fallen by 27.1% y-o-y, to US$3.96bn, following weak demand.