Growth of Chinese Tourists to Hong Kong, China, 2002 to Implications and Way Forward. Issue Paper Series. Knowledge Network

Transcription

1 ISSN : Knowledge Network Issue Paper Series Volume I, Issue 1 Growth of Chinese Tourists to Hong Kong, China, 2002 to 2014 Implications and Way Forward

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3 Knowledge Network Issue Paper Series Volume I, Issue 1 Growth of Chinese Tourists to Hong Kong, China, 2002 to 2014 Implications and Way Forward Collaborating authors: Bruce Prideaux, James Cook University, Australia Tony Tse, The Hong Kong Polytechnic University, Hong Kong, China

4 Copyright 2015, World Tourism Organization (UNWTO) Cover photo: copyright Yiu Tung Lee Knowledge Network Issues Paper Series, Volume I, Issue 1 Growth of Chinese Tourists to Hong Kong, China, 2002 to 2014 Implications and Way Forward ISSN (electronic version): Published by the World Tourism Organization (UNWTO). First published: 2015 All rights reserved. The designations employed and the presentation of material in this publication do not imply the expression of any opinions whatsoever on the part of the publishers concerning the legal status of any country, territory, city or area, or of its authorities or concerning the delimitation of its frontiers or boundaries. World Tourism Organization (UNWTO) Tel.: (+34) Calle Capitán Haya, 42 Fax: (+34) Madrid Website: Spain omt@unwto.org Citation: World Tourism Organization (2015), Knowledge Network Issue Paper Series: Growth of Chinese Tourists to Hong Kong, China, 2002 to 2014 Implications and Way Forward, volume I (1), UNWTO, Madrid. All UNWTO publications are protected by copyright. Therefore, and unless otherwise specified,no part of an UNWTO publication may be reproduced, stored in a retrieval system or utilized in any form or by any means, electronic or mechanical, including photocopying, microfilm,scanning, without prior permission in writing. UNWTO encourages dissemination of its work and is pleased to consider permissions, licensing, and translation requests related to UNWTO publications. Permission to photocopy this material in Spain must be obtained through: CEDRO, Centro Español de Derechos Reprográfico Tel.: (+34) Calle Monte Esquinza, 14 Fax: (+34) Madrid Website: Spain cedro@cedro.org For authorization of the reproduction of works outside of Spain, please contact one of CEDRO s partner organizations, with which bilateral agreements are in place (see: For all remaining countries as well as for other permissions, requests should be addressed directly to

5 Knowledge Network Issue Paper Series: solutions based research The Knowledge Network Issue Paper Series present research-based papers that investigate tourism issues in a practical way and provide recommendations for decision makers. The papers are a collaborative effort of two or more Knowledge Network institutions that address critical aspects in their region or area of expertise. The main purpose of the series is to provide a thorough analysis and tangible recommendations of practical subject matters that are on the forefront of policy makers and industry leaders discussions. The Knowledge Network Issue Paper Series are the main applied sciences exercise of the Knowledge Network Community and its result can take form of a publication, report, case study analysis or guidelines for decision makers. Research that matters: designed for academia and practitioners The Knowledge Network Issue Paper Series are more than academic papers, reports and case studies. There are several reasons that make a Knowledge Network Issue Paper Series a publication based on solid research with a practical focus: Research that drives change: as a unique feature, UNWTO is able to link Knowledge Network Issue Paper Series with policy makers and industry leaders including government authorities of 162 Member States, as well as more than 450 private tourism stakeholders part of UNWTO Affiliate Members, Issues that matter: topics are carefully selected by Knowledge Network based on priorities of Members States and Affiliate Members, which are then matched with the available capabilities and resources of the Knowledge Network Community, Based on research: papers require a considerable amount of research to be undertaken. Papers disseminate knowledge with relevant literature review, create knowledge through original research and invite decision makers to apply research, Multi-stakeholder collaboration: papers are a result of a joint effort of several stakeholders that work under consensus standards of Knowledge Network Working Groups, and Peer review process: to achieve academic excellence and applicable outputs, Knowledge Network Issue Paper Series are carefully reviewed by a panel of peer-reviewers including industry experts, research scholars and UNWTO officials.

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7 Table of contents Foreword 7 Acknowledgements 9 Executive summary 11 Introduction 13 Chapter 1 Tourism trends between 2002 and 2014 in Hong Kong, China Significance of tourism for Hong Kong, China Regional context Chinese outbound tourism Mainland arrivals in Hong Kong, China Introduction of the Tourism Law of China in October Analysis of major trends of the Chinese inbound market in Hong Kong, China Forecast of future growth 25 Chapter 2 Structure of the tourism sector of Hong Kong, China Private sector Travel Industry Council of Hong Kong The Federation of Hong Kong Hotel Owners Hong Kong Hotels Association Public sector Tourism Commission Economic Development Commission Hong Kong Tourism Board Hong Kong International Airport 32 Chapter 3 Methodology and findings Methodology Findings of literature review Findings of stakeholder interviews and Round Table discussions Issues that affect the private sector s ability to respond to growth Social issues arising from rapid growth Government of Hong Kong, China, related issues The role of the Chinese government 39

8 Chapter 4 Discussion and conclusions Factors assisting growth Challenges Factors that should be considered by other destinations Conclusions 44 Epigraph 2015 Postscript 45 Annexes Annex I List of consultancy studies available at the Hong Kong Tourism Commission Website 47 Annex II Literature search 49 Annex III Media reports on Chinese tourism in Hong Kong, China 51 References 53

9 T 7 Foreword The rapid economic growth registered in recent years in emerging economies, especially the BRIC (Brazil, Russia, India, China) countries, coupled with advances in travel facilitation, infrastructure development and connectivity have led to the increasing importance of emerging economies as tourism destinations and source markets. Among these emerging source markets, China takes the lead due to the exceptional growth of its outbound tourism throughout the past decades. The biggest spender in international tourism since 2012 (USD 165 billion), China has impacted significantly the world tourism map. In this regard, there is a growing number of studies aimed to better understand the Chinese outbound. Yet, not many have focused on the implication of the growing outbound tourism from China from a destination s perspective. The current report on the Growth of Chinese Tourists to Hong Kong, China, 2002 to 2014 Implications and Way Forward adds a new perspective by looking at how Hong Kong, China, the top destination for Chinese outbound travel, has responded to the growth of Chinese tourists of around 10% per year between 2002 and The report provides key recommendations on how to consolidate this important market and foster responsible tourism in Hong Kong, China, as well as in other destinations dealing with similar issues. I trust it will further enhance the capacity of destination managers to better understand and manage flows from emerging outbound markets. This report is the first of the UNWTO Knowledge Network Issue Paper Series, research studies developed by the UNWTO Knowledge Network Community that analyze current tourism issues and provide practical recommendations for decision makers. I would like to congratulate the Knowledge Network Community for this initiative and encourage other organizations to join this partnership as we work together to further bridge theory and practice in tourism. Taleb Rifai, Secretary-General, World Tourism Organization (UNWTO)

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11 T 9 Acknowledgements This report was prepared by Professor Bruce Prideaux (former Professor for Marketing and Tourism Management, James Cook University; currently Professor for Tourism, Head of Centre for Tourism and Regional Growth, Central Queensland University, Australia) and Professor Tony Tse (Program Director of Industry Partnerships, School of Hotel and Tourism Management of the Hong Kong Polytechnic University, Hong Kong, China). The authors wish to acknowledge the valuable assistance given in undertaking this research project by the members of the working group, namely Ms. Emily Mo (Tourism Commission, the Government of Hong Kong SAR), Mr. James Lu (Hong Kong Hotels Association), Mr. Kevin Shui (Hong Kong Tourism Board), Mr. Andrew Leung and Mr. Edmund Tsang (Swire Travel Ltd.) and other interviewees. The authors wish to express special thanks to Mr. Andrew Leung (Managing Director of Swire Travel Ltd.) for his vision and the leadership in supporting this project. A peer review panel, comprising Mr. John Koldowski (Head of Service Innovation & Development Unit, College of Innovation of the Thammasat University), Mr. Omar Nawaz (Research Officer of the UNWTO Regional Programme for Asia and the Pacific) and Dr. Walter Jamieson (Professor and Director of the Service Innovation Program, College of Innovation of the Thammasat University), contributed rich feedback and comments. The authors would like to recognize the institutional support given by UNWTO specially the Knowledge Network within the Affiliate Members Programme, the Regional Programme for Asia and the Pacific and the Tourism Market Trends Programme. A special recognition goes to the UNWTO Knowledge Network Team, Ms. Eunji Tae, for her coordination and support in developing this report and Mr. Jose Melenez and Mr. Ignacio Ros for their assistance during the review and editing process. The authors also thank Ms. Louisa Lee of James Cook University and Ms. Veronica Tam of the Hong Kong Polytechnic University for their support.

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13 T 11 Executive summary Between 2002 and 2014 Hong Kong, China, experienced a rapid increase in Chinese tourists. This report discusses how Hong Kong, China, has responded to this growth. The specific objectives of the research were to: Outline the responses by both the private sector and the government of Hong Kong, China, to the increase in tourists from China between 2002 and 2014; Outline how the community of Hong Kong, China, has responded to the rapid increase in Chinese visitation; and Identify issues that should be considered by destinations when experiencing rapid inbound tourism growth of the nature experienced by Hong Kong, China, with tourists from China. The report found that key elements in the ability of the tourism sector of Hong Kong, China, to successfully respond to average annual growth of 10.4% over the study period were: The free-market approach of Hong Kong, China, with minimal government intervention including low taxes, no subsidies and an efficient bureaucracy; The ability of the tourism sector to leverage its comparative advantages of location, efficient government, highly educated workforce and ability to respond rapidly to changing market conditions; The close, co-operative links that have emerged between the private sector and the public sector; The willingness of the government to fund strategic investments in transport infrastructure (e.g., Hong Kong International Airport and the Kai Tak Cruise Terminal), and in the attractions sector (e.g., Hong Kong Disneyland and Ocean Park), which enabled the development of a highly competitive tourism industry in the period prior to the emergence of the Chinese market growth; and Nevertheless, rapid growth has created social friction with ongoing complaints about the behavior of Chinese visitors. The report identified five key areas that destinations experiencing rapid growth in Chinese inbound tourism should consider. In summary, the following overarching factors will determine a destination s ability to maximize its potential in the Chinese outbound market: 1. Treat Chinese inbound tourism as a government-to-government diplomatic issue; 2. Monitor the responses and views of the local community. This is particularly important when there is a rapid and large increase in the number of Chinese tourists; 3. The Chinese market is large and diverse, and consumer expectations vary between regions and cities. It is essential that destinations target Chinese segments that best suit the destination s suite of experiences rather than letting the tourist flow develop without planning;

14 12 KN Issues Paper Series Volume I 4. Destinations need to formulate detailed strategies to receive Chinese tourists based on their comparative and competitive advantages. The principle question that needs to be asked: Is the destination China ready? ; and 5. Careful consideration must be given to the need for long-term strategic planning to ensure that local public and commercial infrastructure is able to meet the increase in demand generated by tourists.

15 T 13 Introduction Structure of the report This report investigates how the tourism sector of Hong Kong, China, has responded to the rapid growth in the number of tourists from China between 2002 and The report was commissioned by the UNWTO Knowledge Network in response to observations made at the High Level Leaders Meeting held in association with the First UNWTO Regional Conference on Tourism Partnerships: Future Tourism for Asia and the Pacific, Seoul, Republic of Korea, 31 May to 2 June The objectives of the report are to: Outline the responses by both the private sector and the government of Hong Kong, China, to the increase in tourists from China between 2002 and 2014; Outline how the community of Hong Kong, China, has responded to the rapid increase in Chinese visitation; and Identify issues that should be considered by destinations when experiencing rapid inbound tourism growth of the nature experienced by Hong Kong, China, with rapid growth of the Chinese inbound market. The report was developed using data from a range of sources including academic literature, government reports, media reports, in-depth semi-structured interviews and a Round Table discussion undertaken on 30 August The report commences with a brief discussion on relevant tourism theories used in the study followed by an overview of visitation patterns. Then, it briefly outlines the roles and responsibilities of key stakeholders in both the private and public sectors before outlining the research findings. The report concludes with a series of observations that may be used by other destinations experiencing rapid growth in key inbound markets including China. Economic and political relationship between Hong Kong, China, and China In 1997 the government of the United Kingdom of Great Britain and Northern Ireland returned control of Hong Kong to China and it was declared a Special Administrative Region (SAR) of China. Hong Kong, China, was allowed to retain an independent judiciary, and it currently has a high degree of autonomy in all matters except foreign relations and defense. Under the Hong Kong Basic Law, 1 Hong Kong, China, was granted the right to operate a separate political system to that 1 Hong Kong Government (2012), Basic Law Full Text, chapter IV (online), available at: ( ).

16 14 KN Issues Paper Series Volume I operating in China under the principle of one country, two systems. Under this political structure Hong Kong, China, has retained the free market economy established under British colonial rule. The government is headed by the Chief Executive who is elected by the Election Committee and then appointed by the Chinese government. The Legislative Council has 70 members, half of whom are elected by permanent residents of Hong Kong, China, and half by what is known as functional constituencies which include corporate bodies and persons from a range of stipulated functional sectors. Hong Kong, China, has a politically neutral civil service which promotes its members on meritocracy. Study context The British legacy of a free-market approach with minimal government intervention including low taxes, no subsidies and an efficient bureaucracy established a system where the tourism sector has been able to leverage its comparative advantages of location, efficient government, highly educated workforce, and ability to respond rapidly to changing market conditions. Therefore, the tourism sector was able to develop a highly competitive tourism sector in the period prior to the emergence of the Chinese market. As an aid to understanding the rapid growth of mainland tourism the report adopts the pushpull model of tourism demand to explain, in part, the attractiveness of Hong Kong, China, as a destination for tourists from China. 2 The report also draws on research that views destination competitiveness as a function of destinations comparative and competitive advantages. Briefly, the push-pull model postulates that a range of push (demand side) factors, including personal income, time availability and interest in travel encourages consumers to make positive travel decisions. 3 From the destination perspective, its key attributes, which may include iconic attractions, value for money, reputation and climate, collectively comprise its tourist pull (supply side) factors. Tourism flows between a generating region and a destination occur when a destination is able to offer a suite of pull factors at a price level that match the push factors of target consumer groups. Where push and pull factors are synchronized rapid growth of the nature seen in the Chinese inbound market to Hong Kong, China, is possible. The second aspect of a destination s ability to attract visitors is its level of competitiveness. 4 Competitiveness may be measured by comparing metrics such as profitability, visitor numbers, growth in bed nights, investment and yield as well as its comparative and competitive advantages in relation to other destinations. As part of the process of measuring competitiveness, destinations need to develop an understanding of their comparative and competitive advantages. Competitive advantage is defined as value adding activities by firms, in this case the products and experiences offered by a destination. Comparative advantage describes the destination s resources and may include location, parks, heritage, scenery infrastructure, workforce, culture between others. From a destination perspective comparative advantage describes the range of resources the destination 2 For the purposes of this report, visitors from China will be simply referred to as Chinese or originating from China. In Hong Kong, China, tourists from China are generally referred to as mainlanders. This term is occasionally used in this report. 3 Crompton, J. (1979), Motivations for pleasure vacation, Annals of Tourism Research, vol. 6 (4), pp Dwyer, L.; Forsyth, P. and Rao, P. (2000), The price competitiveness of travel and tourism: A comparison of 19 destinations, Tourism Management, vol. 21 (1), pp

17 T 15 is able to offer while competitive advantage describes how those resources are used to create experiences and products that are seen by consumers as superior to its competitors. 5 The public sector has a key role in this process through the level and type of interventions it chooses to make in the tourism market. Interventions may include: regulation, with visas and industry compliance measures being common examples; industry assistance which may include financial incentives and other direct industry support such as marketing and easing of regulatory burdens; direct investment in commercial and semi commercial businesses tourism related businesses; indirect investment in infrastructure that supports tourism including operation of airports and public transport networks; and, planning which may range in scale from urban zoning schemes to destination master planning. Hong Kong, China, has continued to strengthen its competitive position vis-à-vis other destinations competing for the Chinese outbound market in the post 2002 period by offering high quality shopping opportunities, a unique city experience and ease of access through the individual visit scheme (IVS) system. 5 Dwyer, L. and Kim, C. (2003), Destination competitiveness: determinants and indicators, Current Issues in Tourism, vol. 6 (5), pp Ritchie, J. R. B. and Crouch, G. I. (2003), The competitive destination: A sustainable tourism perspective, CABI, Oxfordshire. Dwyer, L.; Forsyth, P. and Rao, P. (2000), The price competitiveness of travel and tourism: A comparison of 19 destinations, Tourism Management, vol. 21 (1), pp

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19 T 17 Chapter 1 Tourism trends between 2002 and 2014 in Hong Kong, China The purpose of this chapter is to analyze the tourism sector of Hong Kong, China, with special emphasis on the Chinese market. For this analysis, it is of particular importance to understand the trends of the increase of Chinese tourism to Hong Kong, China, and factors influencing such growth between 2002 and Special attention is also given to the introduction of the Tourism Law of China and its foreseeable impacts. 1.1 Significance of tourism for Hong Kong, China In 2012 tourism s contribution to the GDP of Hong Kong, China, was estimated to be 8.1%. In the same year tourism generated 8.3% of the city s jobs and 6.1% of all exports Regional context Between 1980 and 2012 international tourism arrivals grew from 277 million to 1.03 billion. 2 Further growth is anticipated and based on UNWTO forecasts may reach 1.8 billion international arrivals by In the Asia and the Pacific region arrivals are forecast to increase from 204 million in 2010 to 535 million by Departures during the same period are forecast to rise from million to 541 million. The majority of trips are forecast to be intra-regional (83% of arrivals and 82% of departures by 2030). The impact of this growth can be measured by the forecast increase in commercial aircraft in the region which Boeing expects will grow to 13,480 by 2030, a 306% increase from World Tourism Organization and European Travel Commission (2013), The Chinese Outbound Travel Market 2012 Update, UNWTO, Madrid. 2 World Tourism Organization (2011), Tourism Towards 2030 Global Overview, UNWTO, Madrid. 3 Ibidem. 4 Ibidem. 5 Prideaux, B. (2013), Climate change and peak oil two large-scale disruptions likely to adversely affect long-term tourism growth in the Asia Pacific, Journal of Destination Marketing & Management, vol. 2 (3), pp , DOI:

20 18 KN Issues Paper Series Volume I Chinese outbound tourism China emerged as Asia and the Pacific s leading source market in trip volume in Between 2005 and 2012 outbound travel from China experienced an average growth rate of 15% year over year with 83 million international departures in In 2012 expenditure by outbound tourists from China totaled USD 102 billion. Total outbound Chinese travel is expected to reach 100 million by 2015 based on current growth rates. 7 One of the major drivers behind the rapid growth in Chinese outbound travel has been the relaxation of Government restrictions on international travel. Other drivers include growing disposable income, increased leisure time as a result of an overhaul of the timing of public holidays and relaxation in foreign exchange controls. Hong Kong, China, and Macao, China, are consistently the top two destinations for Chinese tourists, with 34.9 million visits to Hong Kong, China, and 21.5 million visits to Macao, China, in Mainland arrivals in Hong Kong, China The total tourist arrivals in Hong Kong, China, increased from 16.6 million in 2002 to 60.8 million in 2014, an average annual growth rate of 10.4%. In the corresponding 12 years, tourist arrivals from China increased from 6.8 million to 47.2 million, which is equivalent to an average annual growth rate of 17.5%. The share of Chinese tourists grew from 41.2% in 2002 to 77.7% in 2014, making China by far the largest source market. Figure 1.1 shows Chinese overnight tourist arrivals overtaking non-chinese tourist arrivals in The key element in the rapid growth was the introduction and later amendments to the IVS by the Chinese government. Figure 1.2 highlights the impact of the IVS on China arrivals over the period 2002 to During the period 2000 to 2012 global overnight arrivals in Hong Kong, China, grew from 1.27% to 2.3% in On the other hand, the city s share of China growth has increased from 38.9% in 2000 to 40% in World Tourism Organization and European Travel Commission (2013), The Chinese Outbound Travel Market 2012 Update, UNWTO, Madrid. 7 Ibidem. 8 China National Travel Administration (2013a), China Tourism Statistics Bulletin 2012, CNTA, Beijing (online), available at: ( ).

21 Tourism trends between 2002 and 2014 in Hong Kong, China 19 Figure 1.1 Total overnight arrivals in Hong Kong, China, (million) Source: Figure Hong Kong Tourism Board (2013, 2014a). Chronology of the individual visit scheme (IVS) and major events affecting visitor arrivals, (million) Total Non-mainland Mainland 2003 SARS 10 IVS cities IVS cities IVS cities IVS cities IVS cities Financial crisis, Tsunami 2009 Pandemic (H1N1) 2009 Multiple-entry IVS for SZ Total Non-mainland Mainland Source: Hong Kong Tourism Board (2013, 2014a).

22 20 KN Issues Paper Series Volume I Growth in the Chinese market can be divided into four periods: 1. Pre IVS (prior to 2003); to 2009 (introduction of IVS); to 2013 (amended IVS); and 4. Post 2013 with a new period marked by the introduction of the Tourism Law of China in October The following discussion briefly highlights growth in arrivals in the 2003 to 2009 and 2010 to 2013 periods, followed by the events after the introduction of the Tourism Law of China on October The period between 2003 and 2009 A major factor behind the rapid increase in Chinese visitors was the implementation of the Individual visit scheme (IVS) authorized by the government of China and agreed to by the government of Hong Kong, China, in The IVS allows residents of designated mainland cities to visit Hong Kong, China, as free independent tourists and dispenses with the need for individuals to be part of a tour group (i.e. group inclusive tourist). Prior to the implementation of the IVS, mainland Chinese residents could only visit Hong Kong, China, on business permits or as members of group tours. The desire to assist the city s economic recovery from the impact of the severe acute respiratory syndrome in 2003 was a key driver in the agreement reached between the governments of Hong Kong, China, and China to introduce the IVS. The first cities authorized under the IVS in 2003 were in Guangdong Province (Dongguan, Zhongshan, Jiangmen and Foshan). The IVS has been gradually expanded and by 2012 covered 49 mainland cities, including all 21 cities in Guangdong Province as well a Shanghai, Beijing, Chongqing, Tianjin, Chengdu, Dalian, Shenyang, Jinan, Nanchang, Changsha, Nanning, Haikou, Guiyang, Kunming, Shijiazhuang, Zhengzhou, Changchun, Hefei, Wuhan and Fujian Province (Fuzhou, Xiamen, Quanzhou), Jiangsu Province (Nanjing, Suzhou, Wuxi) and Zhejiang Province (Hangzhou, Ningbo, Taizhou). IVS arrivals have increased from 35% of all mainland arrivals in 2004 to 67% in Under the IVS, around 270 million Chinese residents from 49 authorized cities with permanent household registration are eligible to apply for exit endorsement from the relevant China authorities. The endorsement is current for three months or one year and valid for either one or two visits to Hong Kong, China. The endorsement holder can stay in Hong Kong, China, for not more than seven days on each visit. 9 The global financial crisis of 2008/2009 and the outbreak of Pandemic (H1N1) 2009 precipitated a decline in tourist arrivals from all source markets in 2009, except China. The number of tourist arrivals from the Americas fell by 7.3% while European arrivals fell by 6.5%. In the same year tourist arrivals from China increased by 6.5% effectively offsetting the decline in all other source markets. The net result was that total arrivals in 2009 (29.6 million) were similar to the previous year. 9 Tourism Commission (2013), Individual Visit Scheme (online), available at: ( ).

23 Tourism trends between 2002 and 2014 in Hong Kong, China 21 The period between 2010 and 2013 The IVS was further amended in 2010 to help boost tourism in Hong Kong, China. Under the amended scheme Shenzhen residents were granted access to year-round multiple-entry visas to Hong Kong, China. This change in the IVS allowed 4.8 million Shenzhen residents to travel to Hong Kong, China, as often as they wished. When the government of China suggested that this modification to the IVS be widened to non-shenzhen residents living in Shenzhen (mostly factory workers from other provinces), there was considerable opposition from the community of Hong Kong, China, and the proposal was dropped. One result of the 2010 extension of the IVS has been to encourage a significant increase in shopping visits to Hong Kong, China, with shopping now established as the major pull factor for same-day visits. Figure 1.2 shows the chronology of the IVS and major events affecting visitor arrivals. 1.2 Introduction of the Tourism Law of China in October 2013 To overcome complaints that have arisen in China over forced shopping on tours that charge low prices, the Chinese government introduced the Tourism Law of China at the beginning of the Golden Week holiday period in October Under the new law travel agencies are prohibited from organizing tourism activities and advertising unreasonably low prices, or receiving illegitimate gains such as rebates by arranging shopping or providing tourism services that requires additional payment. 11 The initial effect, according to reports in the South China Morning Post, 12 was a sharp rise in the price of outbound tourism from China. One example given in the report was the cost of a 5-day tour to the Republic of Korea offered by the China International Travel Service which increased in price from CNY 4,000 in 2012 to CNY 7,000 in October Statistics (see figures 1.3 and 1.4) released after enactment of the Tourism Law showed an immediate impact on group tours: a sharp decline in group tours with shopping itineraries and a corresponding increase in groups without shopping itineraries, with an overall decrease of 51% in total group tours in the first month. The impact on group tours with shopping itineraries was greatest in the first two months, but lessened over time. By February 2014, the impact has eroded away as the recorded number of group tours with shopping itineraries surpassed that of February 2013 and has continued to rise. There was emerging evidence in early 2014 that a number of travel firms circumvented the law by reducing the cost of tours through fake sponsorship and travel voucher redemption promotions. Group tours without shopping itineraries grew between October and December 2013 but then began to decline. By March 2014, tour groups with and without shopping itineraries and the total number of groups surpassed that of March China National Travel Administration (2013b), Tourism Law of the People s Republic of China, CNTA, Beijing (online), available at: ( ). 11 Idem. Article South China Morning Post (SCMP) (2013a), Hong Kong benefits from stricter tourism law, Editorial, South China Morning Post, (online), available at: ( ). Zuo, M. (2013), Law makes overseas tours costlier, South China Morning Post, (online), available at: ( ).

24 22 KN Issues Paper Series Volume I There were fluctuations in the following months, and overall, during the first year of the enactment of the Tourism Law of China, the total number of group tours was down by 11% when compared to previous year. The number of group tours with shopping itineraries was 18% down from previous year, while the number of group tours without shopping itineraries increased by 32%. This indicates that the Tourism Law of China has a small impact on tour groups, however, at the same time; we should also take into account other factors such as the anti-mainland Chinese visitors sentiment which may have deterred the Chinese visitors from visiting Hong Kong, China. Figure 1.3 Comparison of groups with shopping itineraries, October 2013 September 2014 ( 1,000) October November December January February March April May June July August September Year 2012/2013 Year 2013/2014 Source: Travel Industry Council of Hong Kong (2014). Figure 1.4 Comparison of groups without shopping itineraries, October 2013 September 2014 ( 1,000) Year 2012/2013 Year 2013/ October November December January February March April May June July August September Source: Travel Industry Council of Hong Kong (2014).

25 Tourism trends between 2002 and 2014 in Hong Kong, China Analysis of major trends of the Chinese inbound market in Hong Kong, China Same-day visits (as opposed to overnight visits) by Chinese to Hong Kong, China, have been increasing since Over the period 2003 to 2013 the proportion of same-day Chinese tourists increased from 32.8% to 58.1% (see figure 1.5). The number of same-day Chinese tourists now outnumbers that of overnight tourists. The purpose of most same-day visits is shopping, studying, working, and visiting friends and relatives. Figure 1.5 Comparison of overnight and same-day Chinese tourists, (million) 25 Same-day visits Overnight visits Source: Hong Kong Tourism Board (2013, 2014a). An analysis of the average length of stay (see figure 1.6) indicates that Chinese tourists spend the same amount of time in Hong Kong, China, as the average of the total market. In 2013 mainlanders stayed an average of 3.4 nights, down from 3.7 nights in 2012.

26 24 KN Issues Paper Series Volume I Figure 1.6 Average length of stay of Chinese tourists in Hong Kong, China, compared to that of other major markets, 2012 and 2013 The Americas Europe, Africa and Middle East Australia, New Zealand and South Pacific North Asia South and South-East Asia Taiwan Mainland China Total Source: Hong Kong Tourism Board (2014b). Total tourism expenditure generated by inbound tourists reached HKD 322 billion in Overnight and same-day Chinese tourists accounted for expenditure of HKD 152 billion and HKD 64 billion respectively. In terms of per capita spending, Chinese tourists lead in both overnight and same-day categories as illustrated in table 1.1. Table 1.1 Per capita spending of Chinese tourists, 2013 (HKD) Overnight Same-day Chinese visitors 8,937 2,721 All markets 8,123 2,378 Source: A Statistical Review of Hong Kong Tourism (2014b). While the IVS has made a significant contribution to the economic growth of Hong Kong, China, over the period of , concerns have been raised that the scheme has been exploited by some parallel traders as well as possible adverse impacts on the life-style of the community of Hong Kong, China. 13 Some tourists, particularly those who undertake same-day trips, take advantage of price differentials across the border and commute to buy goods such as imported 13 South China Morning Post (2013b), Two strikes and you re out for Shenzhen smugglers, South China Morning Post, (online), available at: ( ).

27 Tourism trends between 2002 and 2014 in Hong Kong, China 25 powdered baby milk formula, fresh and processed food, toiletry items, cosmetics, medicine, and jewelry, either for self-consumption or for on-selling for profit. Other same-day tourists include students who commute to study in Hong Kong, China, and pregnant women who visit the city for medical care services. While counted by the Hong Kong Tourism Board as international tourism arrivals they do not qualify as international tourist arrivals if UNWTO definitions are applied Forecast of future growth A recent report on Asia Pacific Visitor Forecasts released by the Pacific Asia Travel Association (PATA) 15 indicates continuing rapid growth of mainland Chinese tourism into Hong Kong, China. Figure 1.7 presents three forecast scenarios of growth until 2018, each of them present a relatively high growth rate of Chinese arrivals to Hong Kong, China. Figure 1.7 Mainland Chinese visitor arrival forecast, (million) 90 85, , , , Upper Baseline 20 16,86 Lower Forecast from 2013 onwards Source: Pacific Asia Travel Association (2014). 14 A visitor is a traveller taking a trip to a main destination outside his/her usual environment, for less than a year, for any main purpose (business, leisure or other personal purpose) other than to be employed by a resident entity in the country or place visited. A visitor (domestic, inbound or outbound) is classified as a tourist (or overnight visitor), if his/her trip includes an overnight stay, or as a same-day visitor (or excursionist) otherwise. Source: ( ). 15 Pacific Asia Travel Association (2014), Asia Pacific Visitor Forecasts , PATA, Bangkok.

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29 T 27 Chapter 2 Structure of the tourism sector of Hong Kong, China 2.1 Private sector While Hong Kong, China, operates a free market economy there are significant formal and informal links between the private and public sectors. These links have been important in facilitating relatively smooth growth in the inbound markets of all countries since It is apparent that the close cooperation that is a feature of the relationship between the public and private sectors includes the government s willingness to support the tourism industry with investments in key infrastructure. Examples include traditional government funding infrastructure such as airports and subways as well as more commercially oriented investments such as Ocean Park 1 and Hong Kong Disneyland 2. These investments have been crucial in broadening the city s appeal in all of its markets, including China, over the past decade. The following discussion outlines the roles and responsibilities of key organizations in both the private and public sectors. It also highlights formal and informal structures of cooperation between key stakeholders in the private and public sectors. The willingness of both the private and public sectors to cooperate using the organizational structures that have emerged over recent decades has been fundamental in enabling Hong Kong, China, to successfully meet the challenges posed by rapid growth in the past decade. The private sector is the engine room of the success of Hong Kong, China, as an international destination. By skillfully building on its comparative advantages of location, a skilled workforce and efficient government administration the city has developed an internationally strong competitive tourism industry. Prior to the rapid growth in Chinese tourism the city had developed an international reputation as a shopping and leisure destination, in part a result of the efforts of a range of private sector bodies that included the predecessor of the current Hong Kong Tourism Board. The success of the city s tourism industry is underpinned by the ability of the sector to cooperate as well as compete with other firms in the private sector and to work with the government through a number of membership based organizations. 1 Hong Kong Ocean Park was established in 1977 as a statutory non-profit-making body with a mandate to provide a balanced mix of recreation, education and conservation facilities to the public on a self-financing basis. To enhance Ocean Park s overall appeal and capacity the Ocean Park Corporation has received approval to develop a second gate waterpark scheduled for completion in The Commissioner for Tourism is a member of the board of directors at the Hong Kong International Theme Park Limited, which owns and operates the Hong Kong Disneyland Resort.

30 28 KN Issues Paper Series Volume I Travel Industry Council of Hong Kong The Travel Industry Council of Hong Kong (TIC) is an industry self-regulatory organization registered as a company limited by guarantee. The TIC is entrusted with responsibility for regulating outbound and inbound travel agents under the Travel Agents (Amendment) Ordinance, with the mission to maintain a high standard of professionalism within the industry and to protect the interests of both the trade and tourists. Membership of the TIC is compulsory for all licensed travel agencies. To assist its activities the TIC has the power to fine members found to be breaching relevant regulations. In mid-2010, a spate of incidents concerning the receiving arrangements for mainland inbound tours and suspected coerced shopping not only tarnished the reputation of the tourism sector of Hong Kong, China, but also aroused public concern over the effectiveness of the TIC s regulatory regime in ensuring proper conduct within tourism trade. The public also questioned the fairness and possibility for conflict of interest of the TIC having the power to regulate tourist guides. Responding to this criticism, the government of Hong Kong, China, conducted a review into the operation and regulatory framework of the entire tourism sector. 3 After consultation with the tourism sector and the public, the government of Hong Kong, China, proposed to establish an independent statutory body, tentatively named the Travel Industry Authority (TIA), with non-trade members constituting the majority of its Board. The TIA will undertake the current regulatory and licensing functions of the TIC, raise the minimum capital requirement for travel agencies, introduce a statutory licensing system for tourist guides and tour escorts, and establish an independent appeal mechanism against the decisions of the TIA. 4 After the changes are implemented by 2016, the TIC will continue to function as an industry organization without its current regulatory and licensing functions The Federation of Hong Kong Hotel Owners The Federation of Hong Kong Hotel Owners is an industry organization formed with the objectives of safeguarding the interests of hotel owners and providing service to and advising members on industry-wide issues. The Federation provides hotel managers and operators with guidelines governing the hotel industry, and negotiates with the government on issues relevant to the hotel industry. In addition, the Federation promotes and supports education and training of hotel industry workers. The Federation supports the development of the tourism industry through coordination with other trade associations, political bodies and hospitality and tourism organizations. 3 Commerce and Economic Development Bureau (2011), Review of the Operation and Regulatory Framework of the Tourism Sector in Hong Kong (Consultation Paper) (online), available at: ( ). 4 Commerce and Economic Development Bureau (2013b), Legislative Council Panel on Economic Development Latest Progress in Taking Forward the Reform of the New Regulatory Regime for the Tourism Sector in Hong Kong (online), available at: ( ).

31 Structure of the tourism sector of Hong Kong, China Hong Kong Hotels Association 2.2 Public sector The Hong Kong Hotels Association (HKHA) draws its membership from hotel general managers and was established to promote greater industry unity and co-operation among its members. By providing useful information and data to members on related industry matters, it also ensures greater professionalism in the industry. As the official voice of hoteliers in Hong Kong, China, the HKHA represents the collective views of the industry on all matters affecting hotel operation. It also performs a consultative role in proposed legislation arising from new government policies and measures. A key objective of the HKHA is to ensure and uphold consistency in service and quality standards, as well as to promote greater internationalism of the hotel industry through the introduction of new technology and management techniques. The public sector has a significant level of involvement in the tourism sector through regulation, direct and indirect investment, and industry assistance and to a lesser extent through planning. In essence the government has established a framework that allows the private sector to selfregulate (although this is beginning to change with the establishment of the Travel Industry Authority), respond rapidly to new market opportunities and undertaking long-term investment. The current framework also allows the government to undertake direct investment in strategic tourism activities (e.g., Ocean Park and Hong Kong Disneyland) and key tourism infrastructure including the Hong Kong International Airport and the Kai Tak Cruise Terminal. The government also provides extensive marketing support through the marketing activities undertaken by the Hong Kong Tourism Board. Current direct government involvement occurs through the Tourism Commission, the Economic Development Commission and the Hong Kong Tourism Board. By 2016 the newly launched Travel Industry Authority will take over a number of regulatory powers from the Travel Industry Council of Hong Kong. While the tourism sector is well represented in the bureaucracy of Hong Kong, China, at the Commissioner level it is not represented at the senior Secretary (minister) level within the government of Hong Kong, China. To date the government has not developed a long-term tourism strategy for the tourism sector of Hong Kong, China. Nevertheless, the Tourism Commission is heavily involved in policy making and the future direction of the tourism industry through planning such as that undertaken by the government owned Hong Kong Airport Authority and the Kai Tak Cruise Terminal. 5 The relationship between the governments of Hong Kong, China and China in tourism related issues is a key consideration. Changes to policy by the government of China can have a rapid impact on Hong Kong, China, as demonstrated by the impacts of changes made by the introduction of the IVS in 2003, its modification in 2010 and the introduction of the Tourism Law of China in October There remains considerable scope for further interventions by the central government through its ability to extend the IVS to other cities. 5 The Kai Tak Cruise Terminal was constructed by the government of Hong Kong, China, and leased to a private consortium. The consortium is required to pay a fix rent to the government as well as a percentage of the consortium s gross receipts.

32 30 KN Issues Paper Series Volume I Tourism Commission Established in 1999 the Tourism Commission is responsible for mapping and implementing the government s tourism development policy and strategy, and providing a focal point for liaison with the tourism sector. It also coordinates the work of other government bureaus and departments on policies and initiatives which have an impact on tourism development. The Commission has had a major role in positioning Hong Kong, China, to take advantage of the rapid growth in mainland tourism. Other functions include: formulating inbound and outbound tourism policy; liaising with tourism organizations in Hong Kong, China, and mainland authorities on initiatives in tourism promotion and development (e.g., IVS); overseeing major tourism development projects and events (e.g., Ocean Park, Hong Kong Disneyland, Kai Tak Cruise Terminal); promoting service quality in the tourism sector; and handling emergencies. The Tourism Commission is headed by a senior Administrative Officer (The Commissioner for Tourism) who also sits on a number of tourism related boards including the HKTB, TIC, Ocean Park, Hong Kong Disneyland and the Airport Authority. As part of its operation the Commission seeks consultation with industry and other interested parties on an issue-by-issue basis. The Tourism Commission worked closely with a number of stakeholders to develop the cruise market for residents of Hong Kong, China, as well as mainlanders. Activities included the planning and funding of a cruise terminal as well as providing market research. The Commissioner for Tourism chairs the Advisory Committee on Cruise Industry which is tasked with providing input on issues relating to the cruise industry from other sectors of the government plus the private sector. Other duties undertaken by the Commissioner for Tourism include chairing the Tourism Strategy Group which draws its members from the tourism industry as well as from academia. The aim of the Tourism Strategy Group is to consider and make recommendations to the government in respect of tourism development from a strategic perspective. The Tourism Commission is currently overseeing the review of the operation and regulatory framework of the tourism sector in Hong Kong, China, which involves the restructuring of the Travel Industry Council of Hong Kong discussed earlier in this report. A list of consultancy reports published by the Commission is outlined in annex I Economic Development Commission In early 2013, the government of Hong Kong, China, formed the Economic Development Commission led by the Chief Executive. Four Working Groups were established under the Commission, one of which has responsibility for the convention and exhibition sectors as well as tourism. 6 The aim of the Working Group is to explore opportunities to capitalize on tourism resources of Hong Kong, China, and its geographic position to take advantage of the opportunities offered by mainland China to create high-quality job opportunities for long-term economic development. The initial position of the Working Group is that Hong Kong, China, cannot close its doors to visitors: Hong Kong, China, is an open economy and an open city and it should adopt more proactive marketing 6 Hong Kong Government (2013), Press Release: Economic Commission established to maintain Hong Kong s long-term competitiveness (online), available at: ( ).

33 Structure of the tourism sector of Hong Kong, China 31 to attract high spenders into the city, but it could not ban people on lower incomes from visiting. The Working Group stated that more tourists translate into more business opportunities, and to take advantage of this opportunity, it is necessary to increase the city s hardware including hotel rooms and tourist attractions. The Working Group projects that the number of tourists could reach 100 million by 2023, and the city should double its supply of hotel rooms in the next ten years to accommodate the rapidly growing number of tourist arrivals. 7 In a 2013 report, the Legislative Council on Economic Development assessed the capacity of Hong Kong, China, to receive additional tourists. 8 The report examined key sectors including immigration points, tourist attractions, hotels, public transport and the community. The overall finding was that Hong Kong, China, has the capacity to absorb predicted increases in the medium-term (i.e. 2017) but will need to enhance the handing capacity of control points and Immigration processing as well as expand the capacity of Ocean Park and Hong Kong Disneyland with additional attractions. Increased investment will also be required in hotel accommodation, supported by the government through introducing hotel only sites and approving the building of hotels within existing theme parks. In addition, the frequency of public buses will need to be increased and additional investment made in the railway network. The potential for future development in Lantau, particularly North Lantau, was flagged as an area for further investigation. Furthermore, the report identified the need to divert visitors from popular tourist areas to other areas of the city as a strategy for reducing congestion. The report also noted that issues related to tensions between mainland visitors and local residents require ongoing attention Hong Kong Tourism Board The Hong Kong Tourism Board (HKTB) is a government-subvented body tasked with marketing Hong Kong, China, as an international travel destination and also with enhancing the visitor experience once visitors arrive. The HKTB was established in 2001 when it took over the functions of the Hong Kong Tourist Association (HKTA). The HKTB s objectives are to: 9 Endeavor to increase the contribution of tourism to Hong Kong, China; Promote Hong Kong, China, globally; Promote the improvement of facilities for visitors; Support the Government in promoting to the community the importance of tourism; Support, as appropriate, the activities of persons providing services for visitors to Hong Kong, China; and Make recommendations to and advise the Chief Executive about aspects of tourism. In fulfilling its objectives, the HKTB works in partnership with relevant government departments and organizations, travel-related businesses, and other entities directly or indirectly related to tourism. Cooperation includes regular consultation with stakeholders and participation in a number of strategy groups and forums. The HKTB works closely with the Tourism Commission, Travel Industry Council, Hong Kong Hotels Association, Federation of Hong Kong Hotel Owners, 7 South China Morning Post (2013c), City s doors must remain open to tourists, South China Morning Post, (online), available at: ( ). 8 Legislative Council Panel on Economic Development (2013), Latest Progress in Taking Forward the Reform of the New Regulatory Regime for the Tourism Sector in Hong Kong (online), available at: ( ). 9 Hong Kong Tourist Board (2014c), Corporate Information (online), available at: ( ).

34 32 KN Issues Paper Series Volume I and tourism businesses to undertake jointly funded marketing of Hong Kong, China, in target source markets. The HKTB also conducts extensive research of visitor profiles and preferences to support its marketing activities Hong Kong International Airport The Hong Kong International Airport is a key element of the city s tourism sector and is operated by a statutory body, the Airport Authority Hong Kong (AAHK). Since its opening in 1998 passenger numbers have grown from 28.6 million to 56 million in The AAHK has a continuing 20 year planning process and every five years issues a revised 20 year master plan. The most recent Master Plan 10 estimated that passenger numbers will grow to between 89 and 105 million passengers by The Master Plan acknowledges the tourism sector as one of its largest markets. The Plan also recognizes that the Hong Kong International Airport is now one of five major airports in the Pearl River delta region 11 and will face increased competition for aviation services over coming decades. The need for a third runway has been identified but has been resisted by local residents and environmentalists. Delayed construction of the third runway has the potential to limit tourism growth in the future. 10 Airport Authority Hong Kong (2013), Hong Kong International Airport Master Plan 2030, Airport Authority of Hong Kong, Hong Kong. 11 The other international airports in the region are located in Macao, China; Zhuhai; Shenzhen and Guangzhou.

35 T 33 Chapter 3 Methodology and findings 3.1 Methodology The aim of this research was to investigate how the tourism sector of Hong Kong, China, including both private and public sectors, has responded to the rapid growth in the number of Chinese tourists between 2002 and The following discussion begins with a brief outline on the methodology adopted in this study. A three stage research methodology was adopted commencing with stage one that entailed a review of relevant literature. Stage two employed semi-structured interviews with a number of key industry and government stakeholders to identify major issues concerning the response of the tourism industry of Hong Kong, China, to the growth of Chinese tourism. Key industry stakeholders included representatives of the major membership based organizations in the tourism sector. In stage three, a-half-day Round Table with key private and public sector representatives was held to discuss the findings of the two previous stages and confirm their accuracy. During stages two and three the authors took extensive notes that were later content-analyzed for key issues. As part of the data collection strategy, Chatham House Rule 1 was used, where discussions can be quoted but the identity of speakers remains confidential. 3.2 Findings of literature review The review of literature included publically released government reports (see annex I), academic papers (see annex II) and print media in Hong Kong, China. A search of the academic literature found 21 articles that have examined issues related to mainland tourism in Hong Kong, China. The major themes of the research included motivations, demand, shopping, 2 the role of guides, culture, and resident s perceptions towards Chinese tourists. 3 A large number of articles were also identified in the media, most dealing with alleged misbehaviour by Chinese tourists. This was a very useful source and enabled the authors to gain an understanding of the concern that has been growing in some parts of the society of Hong Kong, China, on the city s social carrying capacity. 1 The Royal Institute of International Affairs (2014), Chatham House Rule (online), available at: ( ). 2 Kin, I. and Wong, A. (2013), Mainlander Chinese shopping preferences and service perceptions in the Asian gaming destination of Macau, Journal of Vacation Marketing, vol. 19 (3), pp Choi, T.; Liu, S.; Pang, K. and Chow, P.-S. (2008), Shopping behavior of individual tourists from the Chinese Mainland to Hong Kong, Tourism Management, vol. 29 (4), pp Sui, G.; Lee, L. and Leung, D. (2013), Residents perceptions towards the Chinese tourists wave in Hong Kong: An exploratory study, Asia Pacific Journal of Tourism Research, vol. 18 (5), pp

36 34 KN Issues Paper Series Volume I As figure 3.1 illustrates, concerns raised in the press of Hong Kong, China, range from vehicular congestion created by tourist coaches, shortages created by increased demand for a range of consumer goods by Chinese visitors, overcrowding on public transport and in major shopping areas, and perceived price hikes as a result of Chinese shopping practices. Figure 3.1 Concerns raised by the press of Hong Kong, China Tuen Mun and Sheung Shui prices are claimed to be the most Mainland tour group occupying Tokwawan in the New expensive because of individual visitor parallel trade expressing Territories expressing concern of vehicular congestion created concern of price hikes as a result of Chinese shopping practices. by tourists and tourist coaches. Source: Apple Daily ( ). Source: Oriental Daily ( ). While it is apparent that the rapid increase in visitation has created numerous jobs and provided a large number of opportunities for investors, concerns have been raised in the press of Hong Kong, China, about aspects of the large number of Chinese tourists now visiting Hong Kong, China. Annex III illustrates some of the concerns and frustrations raised. The prominence that is given to issues surrounding the alleged misbehaviour of a small number of Chinese tourists by blogs and media in Hong Kong, China, appears to have created a negative image of this aspect of the city s tourism sector in the mind of some residents of Hong Kong, China. 3.3 Findings of stakeholder interviews and Round Table discussions In-depth interviews were held with key private and public sector stakeholders. The interviews were content-analyzed and major issues identified. These were then presented to a Round Table meeting held in August Participants at the Round Table represented major government and private sector bodies involved in tourism in Hong Kong, China. Participants were asked to discuss the results of the early interviews, reflect on the growth in the preceding ten years and comment on issues that had impeded growth as well as factors that had facilitated growth. They were also asked to identify key issues that may affect future growth and what issues should be considered by other destinations experiencing rapid growth in Chinese tourism.

37 Methodology and findings 35 The outcomes of this process are presented in the following discussion. It should be noted that there were a number of cross-overs between issues relating to the government of Hong Kong, China, and responses by the private sector. It should also be noted that the meeting was held prior to the introduction of the China Tourism Law of 2013 which as figures 1.3 and 1.4 indicate had an immediate impact on shopping patterns and the total number of groups. It may be some time before the impact of the law becomes clear but it is already apparent that some members of the Chinese travel trade are attempting to circumvent the law Issues that affect the private sector s ability to respond to growth The current position in relation to Chinese tourism of one country, two cultures has created a range of opportunities as well as problems for the private sector. For example respondents stated that China is a very reliable and consistent market which has added certainty to private sector investors. However, China is not a homogenous market thus tourists from larger cities such as Beijing have different expectations than people from some of the recently opened inland cities. From an industry perspective this issue has implications for investment and requires long-range forecasting to enable the private sector to build investment cases with financial institutions. In the past the private sector has not always had sufficient access to timely research about these issues and this was flagged as a major issue that the industry has had to cope with in the last ten years. Additional government funded market research, building on existing market analysis, was seen as one way of overcoming this problem. The open nature of the economy of Hong Kong, China, has generated opportunities as well as problems for the private sector. For example, in the hotel sector the demand for cheap to midpriced accommodation has been able to be met rapidly by the construction of a large number of guest houses and small mid-priced 100 room hotels. However, a parallel network of illegal accommodation houses has also emerged which has resulted in licensed hotels losing revenue and possibly having an adverse impact on the image as a destination. Another example is the degree of vertical integration of companies servicing the mainlander market has increased resulting in a reduction of competition. Research was flagged as an issue that needs ongoing attention. In the past, considerable effort has been placed on developing indicators of tourism activity such as visitor numbers, spending patterns, and length of stay, between others; however, additional research is required on patterns of consumption, how preferences are changing and what experiences and products may be required in the future. Timely accurate information of this nature is required for the industry to identify changes in push factors so they can adjust their supply (pull factors) of services and experiences. Shopping was identified by participants as a major pull factor for Chinese tourists and, while creating opportunities for local businesses, as an issue that needs careful management both on how consumption patterns of mainlanders change and how mainlander shopping practices are perceived by residents of Hong Kong, China. 4 One shopping related issue identified was the targeted nature of Chinese shopping. For example, gold is purchased because Hong Kong, China, 4 Choi, T.; Liu, S.; Pang, K. and Chow, P.-S. (2008), Shopping behavior of individual tourists from the Chinese Mainland to Hong Kong, Tourism Management, vol. 29 (4), pp

38 36 KN Issues Paper Series Volume I has a lower tax regime than mainland China. The popularity of food items such as powdered baby milk reflect concerns that mainland tourists continue to have over the standard of many Chinese processed foods. However, the purchasing behaviors that have emerged have attracted adverse reactions from residents of Hong Kong, China, who have complained of overcrowding, price increases and unsocial behavior. This pattern of demand also appears to have inflated arrival figures because there is a small group of Chinese tourists who make multiple daily trips to purchase goods in Hong Kong, China, for resale in China. Other shopping related impacts of growth have been an increase in the cost of some consumer items preferred by Chinese tourists and a decline in service standards in Hong Kong, China, because as one respondent stated many mainlanders don t know what good service is and don t demand it thus overall level has fallen. Chinese tourists make rapid shopping decisions whereas residents of Hong Kong, China, are picky often taking much longer to make a decision. If salespersons are on commission they have a preference for mainlanders. An unfortunate effect from this may be a reduction in overall image of Hong Kong, China, as a shopping destination, particularly in non-chinese markets. Several other warnings were raised in relation to shopping. Strong cross border shopping may be a passing phenomenon. For example, In North America cross border shopping has alternated between the United States of America and Canada depending on relativities of currencies. The current situation in Hong Kong, China, could change fairly quickly if there are further changes in currency relativities, Chinese tourists gain confidence in the standards of domestic consumer goods and as mainland food safety standards improve. Currently, Chinese tourists have very targeted spending patterns focusing mainly on consumer goods such as cosmetics as well as iconic brands of clothing and other fashion accessories. From a destination perspective it is apparent that the shopping sector must ensure that care is taken not to become over reliant on the Chinese market; efforts to attract other outbound markets should continue. There is an opportunity to encourage Chinese tourists to spend money on services other than shopping. There was strong support for additional and ongoing research into the shopping behaviors of Chinese both when on holiday and in day-to-day settings. Early warning of changes in domestic shopping patterns will enable the shopping sector of Hong Kong, China, to respond in a proactive rather than reactive manner. There is also a need to ensure that non-chinese markets continue to be nurtured. As the proportion of non-chinese tourists falls, there is concern that these markets may be neglected or that their unique push needs may not be identified. To ensure this does not occur, specific marketing and research resources need to be allocated to service these outbound markets. Appreciation of the CNY against the HKD has been a positive factor in recent growth however this may not always be the case as was demonstrated in 2013 when a sharp decline in the JPY resulted in a drop in the volume of Japanese tourists. Authenticity was also identified as an important issue; many Chinese tourists are interested in interacting with local communities and participating in destination experiences. For example, one of the reasons mainlanders visit Hong Kong, China, is to see how the city organizes issues such as a service oriented workforce, polite police, quality shopping and high health standards.

39 Methodology and findings 37 It is apparent that considerable scope exists for the Chinese outbound market to continue to expand rapidly in the future. Increases of this magnitude will be possible once the capacity of the airport of Hong Kong, China, is increased, the road bridge across the Pearl Delta is completed, and the city is connected to China s high-speed rail network. However, future growth will place pressure on tourism specific infrastructure such as shops, hotels and attractions and general infrastructure including water supply, transport and energy. While it was agreed that Hong Kong, China, had been successful in responding to increases in the past, concerns were raised that the city may have difficulty coping with continuing tourism growth in the future particularly if growth forecasts of the nature illustrated in figure 1.7 occur. The need for some form of long-term strategic planning was suggested as a strategy for dealing with this issue. The issue of planning is discussed in greater detail in the next section of this report Social issues arising from rapid growth One of the problems participants noted was that there has been some push back from residents of Hong Kong, China, in relation to the rapid growth of mainland tourists. This raises issues related to social carrying capacity. Stories of the type illustrated in figure 3.1 often appear in the press. Protests against Chinese tourists have increased during 2013 and 2014 and are becoming a socio-political issue that has created divisions in the society of Hong Kong, China. Recent issues have included crowding at shopping areas and in major attractions and shortages of some consumer goods such as powdered baby milk formula. If left unchecked, reports of this nature may be picked up in the Chinese press and create negative images of Hong Kong, China, that may ultimately affect demand. Strategies are needed to help Chinese tourists understand the culture of Hong Kong, China, and thus reduce the cultural gap that appears to exist at present. Recent research found that while residents of Hong Kong, China, acknowledge that the growth in Chinese tourism has generated significant benefits they were also concerned about the socialcultural and environmental costs. 5 This need may be in part addressed by the introduction of the China Tourism Law in 2013, which states in article 13 that tourists shall observe public order and respect social morality in tourism activities, respect local customs, cultural traditions and religious beliefs, care for tourism resources, protect the ecological environment, and abide by the norms of civilized tourist behaviors. 6 Conversely, there is also a need to encourage residents of Hong Kong, China, to exercise greater tolerance to Chinese tourists and for both the public and private sectors to give more attention to visitor management strategies. This is particularly important in areas where there are high concentrations of visitors such as shopping centres. 5 Sui, G.; Lee, L. and Leung, D. (2013), Residents perceptions towards the Chinese tourists wave in Hong Kong: An exploratory study, Asia Pacific Journal of Tourism Research, vol. 18 (5), pp China National Tourism Administration (2013b), Tourism Law of the People s Republic of China, CNTA, Beijing (online), available at: ( ).

40 38 KN Issues Paper Series Volume I Government of Hong Kong, China, related issues The government of Hong Kong, China, is an important stakeholder in the city s tourism sector. Major issues raised by interviewees include: lacking sector representation at senior government levels, planning, upgrading existing infrastructure, building new infrastructure, education, and managing the impact of large number of mainland tourists on the society. While there is a Commissioner for Tourism, there is no Secretary for Tourism within the government of Hong Kong, China. Given the contribution that the tourism industry makes to the economy, participants felt that it would be beneficial to have senior political representation for the tourism sector in the government. While previous growth has occurred without a formal long-term strategic tourism plan, increasing congestion in parts of Hong Kong, China, and the need to build new infrastructure to cope with projected growth in the next two decades indicates that the question of the need for a long-term strategic tourism plan should be revisited. One advantage of a long-term strategic tourism plan is that it will facilitate a whole-of-government approach to issues such as transport, social carrying capacity, visitor management and designation of areas for tourism related purposes possibly through special tourism zoning. Private sector respondents indicated that the tourism industries would prefer some form of government-developed master plan or blueprint to act as the basis for its investment and marketing decisions in the near future. There is, for example, an opportunity for the government of Hong Kong, China, to develop special shopping zones possibly on Lantau Island. A high-level government committee is currently looking at the needs of the tourism sector over the next ten years and may address this issue. Other issues related to planning include social carrying capacity and the related issue of overcrowding at tourist hotspots including shopping centers and long-term sustainability. While the city has managed rapid growth in the past, continuing growth is expected to place considerable pressure on social and physical infrastructure. The great volume of same-day tourists, particularly in shopping precincts, has created concerns and at times conflicts with the host community. Of particular concern is the potential for disruption of harmonious ties between Hong Kong, China, and China and disrupting normal trade. 7 Aside from possible impacts of high tourist volumes on the local community, there is also a need to consider the impact of large tourist numbers on the quality of the visitor experience. One strategy that was suggested was research into the need to place an upper cap on total tourist numbers. Another suggested strategy was the development of new shopping centers in Lok Ma Chau and Lantau Island to relieve pressure on current shopping hot-spots. This issue is currently under consideration by the government of Hong Kong, China. Illegal activity associated with recent growth may tarnish aspects of the image of Hong Kong, China, in non-chinese markets. One result of the loosening of visa restrictions under the IVS has been the growth in the numbers of Chinese working illegally in the massage industry and 7 China Daily (2013), Regulate parallel trading by interception and diversion, China Daily (online), available at: ( ).

41 Methodology and findings 39 as home careers. 8 The large increase in Chinese tourists has also created a market for low cost accommodation that has resulted in the emergence of a large number of illegal guest houses estimated by one informed participant to be about 5,000 establishments offering 30,000 rooms. The illegal nature of these establishments raises concerns about health and safety standards as well as unfair competition. Some participants felt there has been an overreaction by the government of Hong Kong, China, to complaints of residents about the behavior of Chinese tourists leading to excessive regulation (i.e. limiting the quantity of powdered baby milk formula that can be taken out of Hong Kong, China, by individual tourists). Issues related to business equity were also raised. For example, mainlanders can register a travel company in Hong Kong, China, but residents of Hong Kong, China, face some restrictions if they establish a travel company in China. Selling outbound travel is restricted to travel agencies that have been established for at least two years 9 and that have not been found to have infringed on the legal rights and interests of tourists. This has placed many travel companies of Hong Kong, China, at a disadvantage in developing businesses in the Chinese market. While not identified as a major issue, the definition of tourists was also raised by interviewees. The large number of day tourists distorts the true picture of arrivals and there is an opportunity to adopt strategic policies similar to those used by Macao, China, and the Republic of Singapore that do not include same-day visitors as tourists in their official statistics The role of the Chinese government Participants noted that China has shown a great deal of willingness to address the concerns of the tourism sector of Hong Kong, China, and has used schemes such as the IVS to assist the destination. However, Chinese policy has also to address other national issues which may not be in line with the interests of the tourism sector. For example recent measures to curb lavish spending by bureaucrats on hospitality as part of a nationwide campaign against corruption has caused a fall in revenue for hotels and other tourism related businesses. The willingness of the Chinese government to use tourism as a policy tool also needs to be better understood by the tourism sector of Hong Kong, China. For example the China National Tourist Administration (CNTA) can open new markets by modifying its regulations similarly to the IVS scheme. This is an issue of particular attention by destinations seeking to build their Chinese inbound market. In a recent initiative the Chinese government has begun promoting the concept of a Happy China as an element of its strategy to promote social harmony. This initiative builds on a more widespread desire by Chinese citizens for a happy life. Support for tourism, including overseas travel, is a key element of the government s support for this initiative. 8 South China Morning Post (2013d), Police bust vice racket behind city s biggest porn website sex, South Morning Post, (online), available at: ( ). 9 China Blawg (2013), Opening a travel agency in China (online), available at: ( ).

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43 T 41 Chapter 4 Discussion and conclusions The purpose of this report is to investigate how the tourism sector of Hong, Kong, China, including its private and public elements has responded to the rapid growth in the number of Chinese tourists since The following discussion identifies the factors that have assisted rapid growth, the problems that have arisen and the factors that should be considered by other destinations experiencing rapid inbound tourism growth either from China or elsewhere. 4.1 Factors assisting growth It is apparent that despite a number of problems Hong Kong, China, has been able to cope with the increased level of Chinese tourism since Key factors, some unique to Hong Kong, China, that have supported growth are: The ability of Hong Kong, China, to leverage its comparative advantages of location, an open economy and efficient government administration to develop a strong competitive presence in the Chinese market as well as other markets; The ongoing policy and investment support given to the tourism sector by the government of Hong Kong, China, through its various agencies including the Tourism Commission and the HKTB; The willingness of the government to actively assist the tourism sector through strategic investments in Hong Kong Disneyland, Ocean Park and the Kai Tak Cruise Terminal; The willingness of the China government to support the tourism sector of Hong Kong, China, through the IVS; The ability of the private sector of Hong, Kong, China to respond to the evolving consumer demands of the Chinese market has been built on ongoing product and service innovation and a strong sense of entrepreneurship; A proactive private sector that has developed and has been prepared to modify its institutions to assist the tourism sector and maximize its potential to attract the mainland market; The success the tourism sector of Hong Kong, China, has achieved in matching changing Chinese consumer behaviors (push factors) with new or refreshed products and experiences (pull factors); Hong Kong, China, has developed a highly skilled workforce supported by a well-funded education sector; and Strong business links between Hong Kong, China, and China have assisted growth.

44 42 KN Issues Paper Series Volume I 4.2 Challenges The research identified a number of challenges that have emerged in Hong Kong, China, due to the rapid increase of the Chinese market since 2002: The tourism sector responded to rapid growth with little knowledge of the anticipated rate of growth or data on specific cities within China; The government has yet to develop a comprehensive long-term strategic tourism plan that provides guidance on a range of issues including special tourism zoning and the ultimate level of tourists the city can accommodate on a yearly basis; While the HKTB has provided useful data, more comprehensive analysis is required on differences between market sectors in China, forecasting and changing demand patterns for non-chinese tourists; Despite over ten years of significant growth many local residents of Hong Kong, China, still continue to find fault with Chinese tourists leading to friction between members of the local community and Chinese tourists; Shopping related issues continue to be a concern and have resulted in a fall in service standards. There is also concern that local prices may have risen because of the nature of Chinese demand; Hong Kong, China, is in danger of becoming over-dependent on Chinese tourists; The success in attracting Chinese tourists may reduce efforts to develop non-chinese markets; Over reliance on the Chinese market may lead to problems if demand from the mainland falls in the future; Poor enforcement of regulations has allowed the illegal accommodation sector to grow at the expense of legal operators; and There is great need to pay greater attention to visitor management strategies in areas where there are high concentrations of tourists. PATA s forecast of future growth outlined in figure 1.7 indicates that past growth trends have not abated and that urgent attention will need to be given to both the physical infrastructure required as well as addressing concerns that the society of Hong, Kong China, has expressed about the destination s social carrying capacity. 4.3 Factors that should be considered by other destinations In identifying lessons that may be of use to other destinations facing large volume tourist inflows from China or elsewhere, it is useful to first look at the unique aspects of the growth of Hong Kong, China, and then draw lessons from the past decade. The city s location, competitive tourism sector, open economy and unique relationship with mainland China have been the driving forces in the growth of the Chinese market and will not be replicated elsewhere. Drawing on lessons from Hong Kong, China, factors that may affect a destination s ability to take advantage of rapid growth in the Chinese outbound market include: The level of cooperation between firms within the private sector and between the private sector and the government. To maximize the opportunity presented by the Chinese market while minimizing the level of risk, the public and private sectors should discuss and if possible reach a consensus on the level of reliance that will be placed on China as a source market;

45 Discussion and conclusions 43 The role the government is prepared to take in direct and indirect investment in tourism. The government should identify the type of investments needed to facilitate the flow of Chinese tourists and determine which sector (private or public) will be responsible for various classes of investment; The allocation of funding for promoting the Chinese market should be considered vis-à-vis other markets; The strength of business links between the destination and source markets is important. This is of particular importance for source markets that have potential for Meetings Industry; The level of government support that will be available for comprehensive research is important. China is a very large and diverse market offering destinations the opportunity to focus on specific cities and provinces rather than treat China as a homogenous market; Shopping is a key push factor for many Chinese tourists. It is therefore important to understand the changing lifestyle and needs of the Chinese tourists; The ability of investors to introduce innovations particularly on the distribution of tourism products in China, new products and new experiences should be assessed; Consideration needs to be given to the role of public sector directed strategy planning to ensure that appropriate levels of infrastructure (both public and private sector funded) are provided in a timely manner; Issues relating to long-term destination sustainability need to be identified and considered. Social carrying capacity and infrastructure enhancement are issues that may need to be considered if receiving destinations are likely to encounter problems with supplying essential services or the quality of the tourist experience is compromised because of large tourist numbers; The efficiency of public sector bureaucracies is likely to be a key factor in assisting industry to maximize its competitive advantage; There is a need to avoid over-reliance on a single market; To maximize available opportunities, destinations need a skilled well educated workforce; The impact of increased tourist numbers on the host community must be considered as a priority issue; It is important to establish clear lines of liaison between both the Chinese government authorities and individual source market city governments in China when determining the volume of tourist flows, visa requirements, bilateral air service agreements, transportation, entry points and communication channels; Destinations need to realize that they are likely to be dealing with inexperienced first-time tourists in the early stage of growth; It is important to understand that the profile of Chinese visitors is changing rapidly and that the pace of change might vary over time and from destination to destination; Chinese economic life is policy driven in many aspects including tourism; and; A comprehensive understanding and appreciation of the nuances in the Tourism Law of China 1 is required. 1 China National Tourism Administration (2013b), Tourism Law of the People s Republic of China, CNTA, Beijing (online), available at: ( ).

46 44 KN Issues Paper Series Volume I 4.4 Conclusions In summary, five overarching factors will determine a destination s ability to maximize its potential in the Chinese outbound market: 1. Treat Chinese inbound tourism as a government-to-government diplomatic issue. Unlike most countries, China continues to exercise tight controls over the approval processes for both outbound and inbound tourism and foreign investment. Issues related to aviation, visas, business relations and security should be handled at a diplomatic level with the receiving country using its equivalent to the CNTA to undertake negotiations and build long-term relationships; 2. Monitor the responses and views of the local community. This is particularly important when there is a rapid and large increase in the number of Chinese tourists. Issues that need to be considered include physical carrying capacity of key attractions, visitor management strategies, the need to expand existing infrastructure or build new infrastructure and the emotional tolerance level (social carrying capacity) of the host community. Where there is evidence of push-back from the local community there may be a requirement to mount education campaigns to bridge any cultural gaps that may arise. In the case of Hong Kong, China, the response of the host community has had a political overtone that at times has been negative; 3. The Chinese market is large and diverse and consumer expectations vary between regions. The Beijing market for example is significantly different from markets in recently opened inland cities. Recent changes contained in the Tourism Law of China may expedite the growing trend away from group tours to individual travel and to special interest tourism. Chinese tourists are also becoming more experienced, more discerning, and more demanding although expectations will vary from region to region. It is essential that destinations target Chinese segments that best suit the destination s suite of experiences rather than letting the tourist flow develop without planning; 4. Destinations need to formulate detailed strategies to receive Chinese tourists based on their comparative and competitive advantages. The principle question that needs to be asked: Is the destination China ready? Failure to develop a comprehensive tourism experience that meets expectations will reduce the opportunity of destinations to tap into the Chinese market; and 5. Careful consideration must be given to the need to develop effective and coordinated long-term development strategies. Effective strategy development and management can avoid duplication, reduce costs and increase efficiency. Development strategies should be seen as an evolving process that is flexible enough to make rapid responses to changing demand conditions. Development strategies are not only a function of government but should also be undertaken by infrastructure providers in both the public and private sector. The rolling 20 year plans developed by the Airport Authority of Hong Kong provides a useful example for the type of long-term strategic planning required.

47 T 45 Epigraph 2015 Postscript In the period following the writing of this report a widely reported protest movement over political reforms in Hong Kong, China, developed in the last quarter of The movement known as Occupy Central paralyzed some areas of the central business district, as well as commercial and shopping districts for three months from 28 September The event has had a lingering negative effect on the overall tourism performance of Hong Kong, China, in the mainland Chinese inbound market. In the first five months of 2015, total Chinese visitor arrivals of 19.5 million rose by a modest 5.9% compared with 17.6% in the same period in 2014 and 16.0% for the whole year Overnight visitor arrivals of mainland China declined by 3.2% to 7.3 million; and same-day visitor arrivals increased by 12.2%. Overnight visitor arrivals account for 37.4% of total arrivals and same-day visitor arrivals 62.6%. 1 The lower than expected growth and decline in proportion of overnight Chinese visitors caused industry-wide concerns amongst many stakeholders in the local tourism market including hoteliers, caterers, retailers and travel agencies. Hotel occupancy was down and expenditure in the retail market was less robust. There were also concerns that the drawn out hostility shown by some local residents directed at mainland visitors might deter future visits and lead to reduced shopping expenditure. The Occupy Central movement demonstrates the potential impact of a number of points, raised in section 4.3 Factors That Should be Considered by Other Destinations of this report. Specifically, destinations need to consider if they are becoming over reliant on specific source markets and acknowledge that inbound markets are sensitive to domestically political factors such as protest movements. 1 Hong Kong Tourism Board (2015), Monthly Report Visitor Arrivals Statistics : May 2015, , HKTB (online) available at:

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49 T 47 Annex I List of consultancy studies available at the Hong Kong Tourism Commission Website 2006 Consultancy Study on the Development of New Tourism Infrastructure Spa and Resort Facilities; and Consultation Report on the Initial Concept Plan for the Aberdeen Tourism Project Suggestions for Development of New Cruise Terminal in Hong Kong; Invitation for Expressions of Interest: Suggestions for the Development of New Cruise Terminal in Hong Kong; Paper on Initial Concept Plan for the Aberdeen Tourism Project; Consultation on the Northern New Territories Green Tourism Development Programme Analysis Report; Workshop on Consultancy Study on the Development of Spa and Resort Facilities Workshop Summary Report; Public Workshop and Collection of Public Views on the Initial Findings of the Consultancy Study on the Development of Spa and Resort Facilities; and Consultancy Study on the Development of Spa and Resort Facilities: Workshop Information Note Consultancy Study on the Development of New Tourism Infrastructure Spa and Resort Facilities Study Report: Development of Tourism in the Northern New Territories of the Hong Kong Special Administrative Region MTR Corporation s Tung Chung Cable Car Feasibility Study Report; and Source: Consultancy Study on the Provision of Additional Convention and Exhibition Facilities in Hong Kong. Tourism Commission website: ( ).

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51 T 49 Annex II Literature search The literature search was performed under the following conditions: Literature search was carried out in four databases, namely Hospitality and Tourism Complete, Sage Journals Online, ScienceDirect, and Emerald Insight; Any peer-reviewed full-length articles contain Mainland Chinese, Hong Kong and tourism in the abstracts; and 21 articles were identified (as shown on the table below). Articles identified from systematic review (in chorological order) Year Title Authors Journal Population Theme 1996 The trends of China s outbound travel to Hong Kong and their implications 1997 The Hong Kong Tourism Industry in Transition: Challenges and Opportunities A travel demand model for Mainland Chinese tourists to Hong Kong 1999 An analysis of Mainland Chinese visitors motivations to visit Hong Kong 2000 Satisfaction levels of mainland Chinese travellers with Hong Kong hotel services 2002 The emergence of the mainland Chinese outbound travel market and its implications for tourism marketing 2004 Theory of Planned Behavior: Potential Travellers from China Application of importance-performance model in tour guides performance: evidence from mainland Chinese outbound visitors in Hong Kong Hanqin Qiu Zhang, Hailin Qu Vincent C. S. Heung Hailin Qu, Sophia Lam Zhang Qiu Hanqin, Terry Lam Vincent C. S. Heung Hanqin Qiu Zhang, Vincent C. S. Heung Terry Lam, Cathy H. C. Hsu Hanqin Q. Zhang, Ivy Chow Journal of Vacation Marketing, vol. 2 (4), pp Cornell Hotel and Restaurant Administration Quarterly, vol. 38 (1), pp Tourism Management, vol. 18 (8), pp Tourism Management, vol. 20 (5), pp International Journal of Contemporary Hospitality Management, vol. 12 (5), pp Journal of Vacation Marketing, vol. 8 (1), pp Journal of Hospitality & Tourism Research, vol. (4), pp Tourism Management, vol. 25 (4), pp Destination Destination Destination Visitors Visitors Destination Visitors Visitors Tourism trends Challenges and opportunities Travel demand Travel motivation Satisfaction Tourism trends Travel behavior intention Tour guide performance A Cross-Cultural Comparison of T rip Characteristics Joanne Jung-Eun Yoo, Bob McKercher, Miguela Mena Journal of Travel & Tourism Marketing, vol. 16 (1), pp Visitors Trip characteristics

52 50 KN Issues Paper Series Volume I Year Title Authors Journal Population Theme 2008 Shopping behaviors of individual tourists from the Chinese Mainland to Hong Kong Tsan-Ming Choi, Shuk-Ching Liu, Ka-Man Pang, Pui-Sze Chow Tourism Management, vol. 29 (4), pp Visitors Shopping behavior How do Mainland Chinese travellers choose restaurants in Hong Kong?: An exploratory study of Individual Visit Scheme travellers and packaged travellers Rob Law, Tammy To, Carey Goh International Journal of Hospitality Management, vol. 27 (3), pp Visitors Gastronomy 2009 Effects of Travel Motivation, Past Experience, Perceived Constraint, and Attitude on Revisit Intention 2010 Fashionable hospitality: A natural symbiosis for Hong Kong s tourism industry? 2011 Motivations and experiences of Mainland Chinese medical tourists in Hong Kong Attributes that influence the evaluation of travel dining experience: When East meets West 2012 Using Quantile Regression to Understand Visitor Spending Comparing Mainland Chinese Tourists Satisfaction With Hong Kong and the UK Using Tourist Satisfaction Index Tourism demand in Hong Kong: income, prices, and visa restrictions 2013 How competitive is Hong Kong against its competitors? An econometric study Why immigrants travel to their home places: Social capital and acculturation perspective Residents Perceptions Toward the Chinese Tourists Wave in Hong Kong: An Exploratory Study Songshan Huang, Cathy H. C. Hsu Asli D.A. Tasci, Basak Denizci Ben Haobin Ye, Hanqin Zhang Qiu, Peter P. Yuen Richard C. Y. Chang, Jakša Kivela, Athena H.N. Mak Alan A. Lew, Pin T. Ng Gang Li, Haiyan Song, Jason Li Chen, Doris Chenguang Wu Ka Ming Cheng Gang Li, Haiyan Song, Zheng Cao, Doris Chenguang Wu Kam Hung, Honggen Xiao, Xiaotao Yang Grace Siu, Louisa Y. S. Lee, Daniel Leung Journal of Travel Research, vol. 48 (1), pp International Journal of Hospitality Management, vol. 30 (4), pp Tourism Management, vol. 32 (5), pp Tourism Management, vol. 32 (2), pp Journal of Travel Research, vol. 51 (3), pp Journal of China Tourism Research, vol. 8 (4), pp Current Issues in Tourism, vol. 15 (3), pp Tourism Management, vol. 36 (1), pp Tourism Management, vol. 36, pp Asia Pacific Journal of Tourism Research, vol. 18 (5), pp Visitors Visitors Visitors Visitors Visitors Visitors Destination Destination Visitors Local residents Travel motivation Tourism product co-branding Travel motivation Gastronomy Spending patterns Satisfaction Tourism demand Tourism demand Travel decision Perceptions toward tourism development

53 T 51 Annex III Media reports on Chinese tourism in Hong Kong, China Media advertisement example This advertisement appeared in 2012 with the message that Hong Kong citizens had enough of mainland Chinese swarming HK like locust taking away our baby milk powder, medical services, education, etc. Discussion blogs examples The following blogs from a Hong Kong, China discussion platform illustrate some of the views that the local community has of mainland Chinese visitors. Example 1 自由行之惡行 ~ 極之勞氣今朝早, 停左架車向運動場道 ( 旺角警署側門 ) 去銀行入數, 我入完數後上車準備開車, 但因為有架中港旅遊巴停左我右手邊, 我咪等佢落完客先開車,D 自由行差不多落晒, 突然間有兩條 歲自由行亞毛行到我車頭, 一句唔該都無聲, bump 一聲張佢個手提旅行袋放向我車頭蓋上面, 我即時反應 bu 佢, 佢先即刻攞返起個袋... Translation: Individual visitors how upsetting This morning I parked in a street near Mong Kok Police station and then went to a bank. After making the deposit, I was preparing to start the car. Then there was a group of individual visitors coming out from a coach on the right of my car. So I waited and let them all get out. There were women aged approached my car and dropped a travel bag on the bonnet with a bump. I immediately responded with the horn, and she lifted the bag Source: ge=1 ( ).