Tourism bosses fear the industry will continue to struggle for the rest of the year because of the economic downturn.
Hong Kong Tourist Association spokesman Peter Randall said he was not surprised to learn yesterday the economy had shrunk 2.8 per cent in the first quarter.
'We don't think tourism will recover for the immediate future but we hope it will pick up by the end of the year,' he said.
Mr Randall said tourism had also dropped because of a distorted view of Hong Kong since the handover.
'Some tourists who have stayed away have the misconception that Hong Kong has become just another Chinese city, and we are trying to target them.' Kai Chuen-kam of the Hong Kong Taiwan Tourist Operators' Association said more Taiwanese were visiting the SAR. 'The Taiwanese keep coming to Hong Kong because it is a great place,' he said.