As world tourism starts to recover, where does that leave Hong Kong?

Global tourist bookings have surged, particularly across Europe and the US, but war, oil prices, Covid-19 variants and China’s ‘dynamic zero’ policy remain dark clouds
For Hong Kong, the sooner leaders recognise the mortal danger of its continued isolation and reopen the economy, the better

David Dodwell

Published: 8:45am, 30 Apr 2022

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The mood at the World Travel and Tourism Council (WTTC) global summit last week in Manila seemed almost celebratory. Bookings have surged in the first quarter of this year – best of all in Europe, where a 350 per cent year-on-year jump in international arrivals brought tourism close to the halcyon days before Covid-19.

Council president Julia Simpson was virtually breathless: “2022 is poised for a strong recovery if governments continue to open up and remove restrictions to travel. Our sector could recover more than 58 million jobs and generate US$8.6 trillion which would boost economic recovery around the world.”

Almost as an afterthought, she added: “This does depend of course on China reopening.” As the world’s primary cheerleader for the tourism industry, she can perhaps be forgiven for making light of just how big a “depend” that might be.

For summer bookings, WTTC’s data partner ForwardKeys expects international arrivals for six of the world’s top 10 travel destinations to surpass pre-pandemic levels, surely a cause for celebration.

The pandemic has savaged the travel and tourism sector, halving its contribution to the world economy by around US$4.8 trillion in 2020, with tens of millions of jobs lost. If Simpson’s optimism proves well founded, there might at last be light at the end of the tunnel.

But of the top 20 summer destinations identified by ForwardKeys, most will still see bookings at 10-27 per cent below 2019 levels. Many do not expect to recover to pre-pandemic levels until 2023.

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Asia-Pacific countries – none of which made the top 20 – have seen first-quarter arrivals surge by 275 per cent year on year. But after two years of extraordinary falls, they still lag far behind Europe and America, where the decision to “live with Covid” has enabled an earlier recovery.

For us in Hong Kong, where zero-Covid regulations mean we are hapless spectators to this much-needed recovery, the zombie state of our hotels, retailers, restaurants, travel agencies and airlines makes it harder to be optimistic.

The plunge in airport passengers from 5.89 million in February 2019 to just 86,000 in February this year reveals the excruciating economic pain for an industry that in 2019 accounted for 257,000 jobs and 4.5 per cent of the economy.

International Air Transport Association director general Willie Walsh recently noted that Hong Kong had fallen “off the map” as an aviation hub, and will find it difficult to restore its global importance – even as an expensive new third runway prepares to open.

Even buoyed by Simpson’s enthusiasm, it is difficult to ignore troublesome clouds on the horizon that make the council’s upbeat forecasts seem deeply vulnerable. First is Russia’s untimely assault on Ukraine, which sent shock waves over Europe and made a mess of airline and air traffic movements across the continent.

The sharp jump in oil prices has led to a rise in airlines’ fuel prices – which account for around a quarter of their total costs and will undoubtedly make travel significantly more expensive.

It has also lifted economic costs more generally, triggering a sharp downturn in many economies, and fuelling an inflationary surge unseen since the 1970s – all of which jeopardises the livelihoods of millions of households, and the affordability of travel plans.

There are also widespread fears of new Covid-19 variants and a sixth pandemic wave, making even those living with Covid-19 nervous about any exuberant resumption of international travel.

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Perhaps the greatest source of scepticism about the WTTC’s flamboyant optimism sits with China, which has provided most of the impetus for tourism growth in recent years. It seems difficult to believe that growth can be restored without China’s travellers returning to the skies.

China’s outbound travellers fell from a peak of 154 million in 2019, making up 7 per cent of global travellers, to just 20 million in 2020, according to World Bank data. The government estimates that this recovered to just 25.6 million last year. Even domestic travel has faltered in recent months with Covid-19 outbreaks in Shanghai, Beijing and smaller cities.

A China Tourism Academy poll last November found that almost 83 per cent would only consider travel abroad if the destination was Covid-19-free, and that 82 per cent preferred domestic travel.

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A McKinsey report on China tourism agreed that Chinese tourists would not resume international travel until they were sure overseas destinations were safe and the quarantine policy on those returning was suspended. The Asian Development Bank concluded in a report last month that the loss of outbound Chinese travellers had been “a major hit” for the Asia-Pacific.

So, whether the WTTC’s exuberance about recovery in the tourism sector is justified is unclear. For sure, millions worldwide are, after two years of claustrophobic lockdowns, craving to resume travel.

But no meaningful recovery can be possible without international agreement on how to live with Covid-19. Which means that as long as Beijing sticks in stubborn isolation with its “dynamic zero” strategy, we lack any plausible force to bring life back to our tourism economies.

Meanwhile, here in Hong Kong, the very lifeblood of our economy is being sucked out. The 2022 Travel Readiness Index by The Economist Intelligence Unit puts Hong Kong last in an assessment of 28 travel-reliant economies worldwide, saying that it “will suffer as it loses connectivity to the world”.

No crisis over the past seven decades has got the better of Hong Kong. But how we recover, and how fast, are issues of grave and immediate concern. The sooner our chief executive recognises the mortal danger and reopens the economy, the better. A long slog lies ahead.

David Dodwell researches and writes about global, regional and Hong Kong challenges from a Hong Kong point of view