Tourism Spending in Hong Kong jumps to HK$91.8 Billion in 2004

Hong Kong’s record-breaking achievement of 21.8 million visitor arrivals in 2004 has brought with it a substantial boost to the economy, with total expenditure associated to inbound tourism for 2004 reaching an impressive HK$91.8 billion.

Both major components of tourism expenditure also recorded strong increases. Total Destination Consumption Expenditure – defined as the payments made by visitors for goods and services consumed in Hong Kong – grew to HK$69.6 billion. Of this total, HK$38.6 billion (55%) was contributed by the record 12.2 million arrivals from Mainland China. Across all markets, the destination expenditure contributed by overnight visitors was HK$61.1 billion, while same-day in-town visitors spent HK$5.6 billion.

According to the Census and Statistics Department of the Hong Kong SAR Government, Passenger International Transportation Expenditure – the receipts of Hong Kong based carriers for the cross-boundary transportation of non-resident visitors by air, sea or land – also grew to HK$22.3 billion. These various components of expenditure are in line with a standardised World Tourism Organization system for measuring the economic impact of tourism on each destination, adopted by the Hong Kong Tourism Board (HKTB) since 2002.

HKTB Executive Director Clara Chong said that the substantial increase in 2004 expenditure was highly encouraging and reflected the growing contribution made by tourism to Hong Kong’s economy. “We design our Mega Events and other special promotions to provide a business platform for our trade partners, and we build in special elements that can stimulate length of stay and spending,” she explained. “We are very grateful for the strong support we’ve had from our local and overseas partners in 2004, which has added value to these events both in terms of enhancing our visitors’ experience and of maximising return on investment.”

Per capita spending – Overnight Visitors

In terms of per capita spending, almost all key non-Mainland source markets surpassed their performances of 2002 – Hong Kong’s previous landmark year – which serves as a more reliable comparison base for 2004, as the severe impact of Sars in 2003 gave rise to untypical travel and spending patterns during that year. The higher per capita spending in 2004 accompanied record arrivals from several major markets, and points to the success of the HKTB’s strategy of maintaining a balanced portfolio of visitors from all Hong Kong’s key markets.

For example, overnight visitor per capita spending from the Americas grew to HK$5,250, the highest spending for any region; Australia, New Zealand and the South Pacific increased to HK$5,072; Europe, Africa and the Middle East to HK$5,122; Taiwan to HK$4,789; and South / Southeast Asia to HK$4,350. The only non-Mainland region to show a lower result against 2002 was North Asia (HK$4,112), where disposable income spent on travelling has been affected by the weak Japanese economy.

Despite an increase in overall destination consumption expenditure by overnight Mainland visitors to HK$33.9 billion, per capita spending for this market fell to HK$4,355 in 2004. This was due largely to the radically different behaviour of visitors travelling under the Individual Visit Scheme (IVS).

The introduction of IVS has increased the average number of visits by Guangzhou residents from 1.3 to 2.7 a year, and by Shenzhen residents from 3.3 to 5.6 a year. In addition, the length of stay of IVS overnight visitors is considerably shorter: an average 2.7 nights in 2004 compared with 5.1 nights for non-IVS visitors. This is not only because they visit more often, but also because they come mainly for leisure and, in any event, are limited to seven days’ stay. In contrast, a majority of non-IVS overnight visitors come for business or to visit friends and relatives.

To reflect the significant impact on travel patterns of both the abolition of Mainland tour group quotas from early 2002 and the introduction of IVS from mid-2003 onwards, the HKTB enhanced the methodology and scope of its data collection from the beginning of 2004, notably by strengthening its visitor survey operations at major land ports such as Lo Wu and Lok Ma Chau. As a result, the exit survey data for 2004 is now more complete and reflective of the current profile and behaviour of Mainland visitors.

Adopting the enhanced methodology, the average per capita spending of overnight visitors (those that stay one night or longer) across all markets in 2004 was HK$4,478.

Per capita spending – Same-Day In-Town Visitors

To gain additional insights into the growing global trend of same-day in-town visitors – those who leave for another destination on the same day as arrival – the HKTB maintains separate expenditure statistics for this group. In 2004, the total expenditure of same-day in-town visitors reached HK$5.6 billion, significantly higher than the 2002 figure, while their average per capita spending was HK$689.

Mainland same-day visitors contributed the highest per capita spending, an average of HK$1,043. Among same-day visitors, IVS travellers tend to be higher-than-average spenders as many now visit Hong Kong just for same-day shopping sprees or entertainment, whereas non-IVS same-day travellers may come for a variety of reasons including stopover en route to or from another destination.

“Despite the lower PCS, the overall impact of IVS on spending figures was strongly positive,” said HKTB Executive Director Clara Chong. “The IVS has given us the opportunity to increase further the number of Mainland visitors, especially at low season periods, and to stimulate impulsive consumption to maximise the overall returns for Hong Kong. This directly benefits not just the travel trade but also a host of related services.

“We expect to see a similar trend maintained in 2005, with continued growth in IVS travel having some dilution effect on per capita spending, but the overall arrivals growth bringing a further increase in total tourism expenditure.”

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