Caution on 'over-hyped' market
As general manager of the Holiday Inn Golden Mile in Tsim Sha Tsui, Ted Durham has a good reason to welcome the easing of restrictions on mainland visitors to Hong Kong.
But the hotel has yet to offer special deals or new services geared to visitors from the mainland, who now account for about 12 per cent of its guests.
'Our immediate reaction is one of high optimism. We do anticipate [more arrivals from the mainland] will certainly benefit tourism and the hotels in Hong Kong,' he said. 'But it's not quite clear what kind of numbers we'll be dealing with and what kind of timeline.'
Echoing Mr Durham's caution, some economists say the growth in arrivals from the mainland may be less than anticipated - and may not even be sustainable.
'The market is over-hyped,' said Ben Simpfendorfer, of JP Morgan Chase. 'Much as I agree with the market excitement, I'm less confident about the future. I want to know where the growth will come from in 2005 and 2006.'
He noted that the most crucial policy changes regarding the entry of mainland visitors were occurring this year and next, so tourism growth could decelerate after that.
JP Morgan estimates the new measures will boost economic growth by 1 percentage point.
Denise Yam, an economist at Morgan Stanley, said inbound mainland tourism growth could rise 30 per cent a year, adding $10 billion, or 0.8 of a percentage point, to economic growth.
Still, some observers are asking whether Hong Kong can become a popular return destination for mainland visitors.
Aside from shopping for luxury goods and visiting a handful of tourist sites, Beijing and Shanghai residents may not find enough in Hong Kong to keep them coming back, warns Alan Siu Kai-fat, deputy director of the University of Hong Kong's institute of economics and business strategy.
For Mr Durham, another fundamental concern is whether mainland travellers can arrange their itineraries on their own.
