Restaurants serving locals keep up sales amid drop in tourist spending

PUBLISHED : Friday, 01 August, 2014, 4:03am
UPDATED : Friday, 01 August, 2014, 5:13pm

Restaurants have fared better than high-end retailers amid a reported decline in tourists' spending, an insider in the food and beverage business says.

Strong local demand boosted the restaurant sector, saving it from the slide in sales experienced by luxury retail brands amid President Xi Jinping's anti-corruption drive on the mainland, Yeung Wai-sing, chairman of the Association for Hong Kong Catering Services Management, said yesterday.

Nevertheless, the industry was struggling with surging labour costs and sky-high rents.

"The rents are not going up further, but we are still paying the high rents committed to in three-year contracts signed earlier," Yeung said.

In the first half of this year, restaurant revenues rose 3.6 per cent despite a 0.8 per cent drop in customer flow. In comparison, retail sales dropped 1.3 per cent by value and 1.1 per cent by volume, government figures showed.

The total value of receipts in the restaurant sector in the second quarter was HK$24 billion, up 3.7 per cent over a year earlier.

Business volume fell 0.9 per cent, reflecting reduced customer flow.

Restaurants serving Chinese food did less well than those serving non-Chinese food, with their respective receipt billings rising 0.8 per cent and 5.6 per cent. Fast food outlets also did well, with receipt volumes up 5.4 per cent.

Yeung noted that Xi's curbs discouraged mainland companies from hosting expensive dinners in the city.

Many mid-range restaurants also saw fewer tourists than before, which affected their businesses as tourists could spend HK$100 more per person than locals at a dinner, Yeung said.

On retail rents, a property-sector professional expected a 5 per cent drop in rent for street-level shops in tourist districts.

The decrease would be bigger - between 5 per cent and 10 per cent - for Causeway Bay as mainlanders on day trips, whose numbers had increased over the past few years, tended to visit Kowloon instead of Hong Kong Island, Helen Mak Hoi-lun, senior director of retail services at Colliers International, said.

While the shopping boom of the last few years had pushed street-level restaurants to move to upper floors, Mak said it was too early to tell if they would be able to return to prominent positions as retail sales slow.