Hong Kong hopes high for 'long' golden week
Hong Kong retailers hope the extended "golden week" national holiday will boost sales that have stagnated in recent months.
But market analysts don't expect shoppers to spend as freely as they did a year ago due to the weak economy.
The National Day holiday this year coincides with the Mid-Autumn Festival, resulting in an eight-day break from yesterday until next Sunday.
The extra day is a business opportunity for retailers, travel agencies, restaurants and hotels in Hong Kong, a popular travel destination for mainlanders.
Chow Tai Fook, a high-end Hong Kong chain of stores selling jewellery and watches, is looking for an increase of between 30 per cent and 40 per cent in customer traffic through its shops over the week.
"A longer holiday means tourists are likely to stay longer and shop more in Hong Kong," said Chow Tai Fook executive director Peter Suen, who is in charge of Hong Kong and Macau market operations.
Cosmetics and skincare products seller Bonjour is also optimistic about the week.
"There is a longer golden week … [and] many Chinese tourists have cancelled their trips to Japan and some are likely to opt for Hong Kong instead," Alex Cheung, chief financial officer of Bonjour Holdings, said.
As a result, the cosmetics retailer expects the holiday to be even more "golden" this year, with at least a 40 per cent increase in sales compared with normal trading days.
The National Day holiday became a peak season for Hong Kong retailers after 2003 when the "individual traveller scheme" came into effect.
The programme allows people from a number of key cities to visit Hong Kong and Macau as individuals, rather than in organised tour groups. As the scheme expanded to more cities, the number of tourist arrivals routinely showed double-digit annual growth.
During the National Day golden week last October, 770,000 mainlanders arrived in the city, mostly for shopping.
However, this year's holiday may not be as prosperous as it has been in previous years.
Caroline Mak Sui-king, chairwoman of the Hong Kong Retail Management Association, said the purchasing power of mainland tourists had weakened due to a slowing of the national economy.
"Don't place high hopes on big growth in retail sales. I think the market in October will be just so-so," she said.
Retail sales growth in Hong Kong slowed to a seven-year low in the first seven months of this year. July sales' values were just 3.8 per cent up on the same month last year, with volumes up by 1.3 per cent. Lower spending by mainland visitors was a key reason.
Donna Kwok, a greater China economist with HSBC, said mainland tourists were still visiting Hong Kong but were keeping a tighter watch on their spending due to a gloomy jobs market and the negative wealth effect from falling asset prices.
"We expect the number of mainland tourists to breach the 3 million mark this October, yet the uplift that retail sales usually enjoy during the month of October will likely be capped by the cyclical challenges," she said.
On the topic of how Hong Kong might benefit from the chill that has fallen over Chinese-Japanese relations as a result of the territorial island dispute, Mak said she had heard mixed views from retailers.
"Some say it is of little help for the Hong Kong tourist market," she said.
"Mainland tourists now have plenty of options for short-haul trips. Hotels in Hong Kong have become so expensive during golden week and the prices of many branded products are not as attractive as before. Smart shoppers might wonder why they should not go somewhere else."
Early last month mainland authorities relaxed visa application procedures for non-residents in six key cities, making it easier for them to visit Hong Kong.
However, the policy was suspended at the request of Hong Kong to make preparations for the change.
In the long run, however, the policy change is expected to boost the number of mainland travellers to new highs.
HSBC estimates that the number of mainland visitors to Hong Kong could exceed 52 million by 2015 and their spending in Hong Kong may rise to US$50 billion, which is equivalent to 20 per cent of the city's economy last year.
"The bounce from this year's golden week holiday may not be quite as large as last year's uplift, but there are plenty more such holidays to come," Kwok said.