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SCMP Reporter

Six months ago, the  Kangaroo Pub, an iconic Australian bar in Tsim Sha Tsui, closed its doors. A combination of inflexible rents, high fixed-labour costs and sagging sales made it impossible to stay in business. Score another victim  of Sars.

The happy Aussie oasis was one of many restaurants and bars that fell victim to the savage depredation of the disease-induced tourism downturn.

Just around the corner at the Hyatt Regency Hotel, the popular Chin Chin Bar, a feature of the area for a quarter of a century and daytime gathering spot for businessmen with offices nearby, decided to delay daily opening until 5pm.

Along Lockhart Road, in the heart of the Wan Chai Suzie Wong strip, the shutters of many bars remained down and locked for weeks.

Times have changed. Juke boxes are now playing again in bars throughout Hong Kong and cash registers are tinkling merrily.

Between May and September, government figures show, there were 261 applications for new liquor licenses. Total liquor licences dropped from 4,271 in January 2003 - before Sars -  to 4,242 in June. Numerically, this is  not significant, but many bars and  restaurants simply shut their doors and stopped trading without cancelling  licences.

Most have since reopened. And there are a lot more new establishments starting up. Professionals in the drinks industry  say that adding the new licences to establishments that reopened after shutting without letting licences lapse means there are about 400 more bars and restaurants doing business now than in May and June.

At the same time, many drinks outlets in hotels and clubs  that were closed during Sars because of lack of business are now thriving again.

In Lockhart Road, Jurgen Thorwirth stands on the footpath outside his new 160-seat Wan Chai Bier Keller. One of his suppliers is Patricio de la Fuente, managing director of  wine, beer and spirits supplier Links Concept.

'Business has gone crazy,' said Mr de la Fuente, toting up sales in all  sectors.

Suddenly there is a new  optimism among the catering industry in Hong Kong. Fears about Sars, which crippled the industry in the spring of 2003, have faded. Places like Jurgen Thorwirth's new outlet are opening doors, hiring staff and welcoming new customers. New food and beverage outlets are springing up in every area of the city.

How come? Sars torpedoed greedy Hong Kong landlords. At the depths of the disease scare, many establishments, some of them famous for decades, closed their doors. Landlords  refused to budge on rents and, with no customers, businessmen had to fold their tents.

But Sars gave landlords a scare. Newly agreed rents for food and beverage outlets are now generally lower than they have been for the past decade. Labour rates have also come down and devaluation means all other costs have  dropped or remained stable.

Jurgen Thorwirth said investors and operators could now afford to open new premises.

A government survey backs up with facts what everyone wandering the streets can see: restaurants and hotels are experiencing a major improvement in business output, employment and prices.

The sector has recorded a 25 per cent rise in optimism, according to complex figures supplied by the Census and Statistics Department, which measure what people think about business trends.

The catering trade was among the worst hit by Sars, with some restaurants and bars reporting second-quarter income as low as 10 per cent of normal trade. Businesses closed, restaurants shut their doors, staff were sacked or laid off and suppliers like Mr de la Fuente had virtually no  income.

Hong Kong Tourism Board figures show that hotel occupancy rates rose to 82 per cent in September, reaching similar levels to a year ago. And with an average room rate of US$88 - the highest since April - yields are slowly edging up towards more profitable levels. During Sars, with few occupants in  Hong Kong's 35,000 hotel rooms, there  was only a trickle of customers in many hotel bars and restaurants.

Back in April, I walked into the enormous marbled splendour of the InterContinental  Hotel lobby only to find I was the only customer. Last week, I couldn't get a seat and well-heeled business travellers were gurgling the house white wine - Les Jamelles  from Languedoc  at $65 per glass - as though they had just crossed the Gobi Desert without water.

The government survey shows most restaurant operators expect prices of food and services to rise.

Veteran wine merchant Annette Pocklington of Kedington Wine noted that Sars had a strange effect on demand and managers were insisting on cheaper labels.

'You'd think if people were worrying about dying, they would whoop it up and buy the best,' she said. 'But instead of that they wanted cheaper brands.'

The blip is now over and there is more of a demand for quality.

At the 807-room Renaissance Harbour View Hotel, resident manager Javier Albar said: 'Fine dining has been going fantastic. Business is booming, restaurants are full. I see new restaurants and bars opening all over town.'

Respected wine merchant Adrian Sank, of Omtis Ltd, said he was encouraged by present business trends. 'I have noticed new restaurants opening, but more so, there have been more promotions going on,' he said.

'People aren't spending at the same level as they did in the boom era, but the trade had prepared itself. There has been too much doom and gloom lately, and people are eager to take advantage of splendid deals around. It truly is a consumer's market out there.'

Thorwirth  estimates that rents have gone down in Wan Chai about 30 per cent compared with the pre-Sars rates. 'Rent has definitely gone down in Wan Chai. I would estimate about 20 to 30 per cent. I am not sure about prices at this very moment, but we are renting 5,300sqft for $105,000 which was the rate in June. Last December, it was $137,000.

'People these days are going out more,' he said. 'You can only lock up people for so long. Especially here in Hong Kong, seeing that they have small flats. People want to go out, have a good time. We can see that all over Hong Kong.'

Mr de la Fuente said that fine wine had been a particularly strong seller, especially with the newly wealthy mainland Chinese who now find it much easier to travel to Hong Kong.

'My clients from Southern China like fine things,' he said. 'They have been buying out my Rothschild Chateau Lafite, mostly because it's easy to pronounce.'

He has seen swanky new restaurants, wine bars and sports bars opening, many in expensive locations around Central. The city's elected legislator who represents the catering industry, Tommy Cheung Yu-yan,  described the post-Sars rebound as  remarkable.

'The restaurant business is still cut-throat,' he noted. 'But we've bottomed out, and are on the rise.' Mr Cheung said it was not only tourists who were responsible for the wave of new bars.

'There are dozens of sports bars opening, although they don't call themselves that. They are mainly in heavily residential areas.'



Profits flow into Sars recovery