Executive Summary

Hong Kong tourism recovered swiftly from SARS

2004 was a strong year for the Hong Kong travel and tourism industry. Not only did the travel and tourism industry recover from the effects of the SARS outbreak in 2003, but total tourism expenditure grew by nearly 20% compared to 2002. With strong support from the government and a coalition of major players in the Hong Kong travel and tourism industry, the number of arrivals jumped by 36% in 2004 over the previous year. Incoming tourism receipts recorded high growth rate of over 28%, while domestic tourist expenditure rose slightly by 3%, resulting in a growth of total tourist expenditure of 26%.

United travel and tourism industry

Although SARS severely impacted the Hong Kong economy, leading to severe losses for the tourism industry, the outbreak also brought about some positive changes and developments. After the outbreak of SARS, the Government, the Hong Kong Tourism Board and the private sector launched unprecedented joint efforts to promote tourism and local spending. As early as 1 May 2003, the " We Love Hong Kong" Campaign was launched as a self-help movement for Hong Kong businesses to encourage the Hong Kong public to go out and spend. The event greatly improved the image of Hong Kong as a popular tourist destination. Moreover, attention to and emphasis on cleanliness and hygiene have increased considerably in order to prevent a similar incident from occurring, resulting in an improvement in the environment in Hong Kong, thereby increasing the countrys  attractiveness to inbound tourists.

Implementation of individual visit scheme

From July 2003, residents of Beijing, Shanghai and Guangdong Province have been allowed to visit Hong Kong on an individual basis. The scheme brought Hong Kong millions of visitors from Mainland China, stimulated the growth of Hong Kong tourism and helped Hong Kong to regain its business rapidly. The recovery from SARS was mainly driven by the scheme as most of the rise in arrivals came from Mainland China. In July 2004, the scheme was then further extended to nine more cities in Zhejiang, Jiangsu and Fujian provinces, resulting as an even larger growth engine for the Hong Kong travel and tourism industry.

Long trips regain popularity

In 2003, due to the outbreak of SARS, most people in Hong Kong lost their appetite for travelling. While the number of holiday takers still recorded a marginal increase, growth was driven by a small increase in short trips of less than three days to nearby places like Macau and Mainland China, with the majority of these being weekend trips. The percentage of trips lasting more than 7 days recovered to almost 10% in 2004, from 8% in 2003. This rise in the number of long trips represents a significant regain in public confidence in travelling, and indicates the existence of good potential for future growth in long trips.

Growing demand for low tariff hotels

The Individual Visit Scheme boosted the number of Mainland China visitors in Hong Kong, which brought about an enormous rise in the demand for low tariff hotels. Since there are a far greater number of cultural and natural tourist attractions in Mainland China, most Chinese residents visit Hong Kong for its reputation as a shopping paradise. As a result, shopping is the major aim for the bulk of Chinese tourists travelling to Hong Kong. Mainland visitors spend most of their budget on goods such as jewellery and electronic appliances, and therefore prefer to spend less on travel accommodation. Budget accommodation, mainly low tariff hotels and guesthouses, are thus the favoured accommodation options among these tourists when staying in Hong Kong.

Slight decline of cultural tourist attractions

Cultural tourist attractions, including museums and historic buildings/sites, saw the number of visitors decline significantly in 2004 for the first time during the 1999-2004 review period. In the years leading up to 2004, growth in the number of visitors to these attractions was partly driven by the completion and opening to the public of two new museums: Hong Kong Museum of Coastal Defence and Hong Kong Film Archive, and the relocation and refreshed exhibition of the Hong Kong Museum of History. Importantly, growth was also driven by the weak economic conditions that beset Hong Kong during 2001 to 2003, as local residents preferred low-cost tourism options. These government-owned museums with low entry fees became popular alternatives to outbound trips and more expensive tourist attractions like theme/amusement parks. However, in 2004 macroeconomic recovery and improved consumer sentiment meant that more holiday makers ventured out of Hong Kong, leading to a fall in the totalnumber of visitors to local tourist attractions. Moreover, as many domestic tourists had recently visited the local cultural attractions, there was a general decline in consumer interest in these attractions.

Rapid growth in online travel bookings

Internet transactions saw healthy growth in 2004 and continued to expand as a share of total travel and tourism sales. Key drivers of this growth were the rising number of households owning PCs, increasing Internet penetration, a growing number of companies offering online booking services, aggressive promotion of those services, and availability of lower prices online. Transportation experienced the fastest internet transaction growth in percentage terms with 220% in current value terms, while hotels saw the strongest growth in absolute terms. Internet transactions as share of total sales, was also by far the highest for hotels, with over 15% in 2004. For transportation, by contrast, that share was a mere 1%. One important reason why Internet transactions achieved a much higher share for hotels is that these were predominantly booked by international visitors, many who come from countries where online bookings are much more common than in Hong Kong, while a larger proportion oftransportation was booked by Hong Kong residents who tend to be less comfortable with online transactions.

Series of new tourist attractions

Over the forecast period, a series of tourist attractions, including Hong Kong Disneyland, the Hong Kong Wetland Park, the Tung Chung Cable Car System and the Habour Lighting Plan will be completed and opened. These will all improve Hong Kongs  image as being an attractive tourist destination. In addition, improvements on existing tourist attractions, including Tsim Sha Tsui, Stanley and The Peak were in progress in 2004. Moreover, new tourist attractions in the form of events were introduced in 2003 and 2004, such as the Hong Kong HarbourFest, in addition to traditional annual events such as Rugby Seven and the Hong Kong International Marathon. These new attractions and events, present the Hong Kong travel and tourism industry with a great opportunity to demonstrate and enhance the reputation of Hong Kong as a -shopping paradise- and entertainment hub.

1. EXECUTIVE SUMMARY

2. OPERATING ENVIRONMENT

2.1 GDP

• Table 1 GDP 1999-2004

2.2 Disposable Income

• Table 2 Disposable Income 1999-2004

2.3 Leisure Expenditure

• Table 3 Consumer Expenditure on Leisure 1999-2004

3. INDUSTRY ISSUES

3.1 Political and Legislative Environment

3.2 Terrorism and Security

3.3 Sustainable Tourism

3.4 Health and Hygiene

3.5 Positive Growth Factors

• Summary 1 Positive Growth Factors

3.6 Negative Growth Factors

• Summary 2 Negative Growth Factors

4. DEMAND FACTORS

4.1 Leave Entitlement

• Table 4 Paid Holiday and Public Holidays 2004

4.2 Holiday Taking

• Table 5 Levels of Holiday Taking 1999-2004

16. Demographics

• Table 6 Holiday Taking by Demographic Groupings 1999-2004

17. Length of Trip

• Table 7 Holiday Taking by Length of Trip 1999-2004

18. Seasonality

• Table 8 Month in which Holidays Are Taken 2004

5. TOURISM PARAMETERS

5.1 Incoming Tourism Receipts

• Table 10 Incoming Tourism Receipts % Growth: 2000-2004
• Table 9 Incoming Tourism Receipts: 1999-2004

5.2 Outgoing Tourism Expenditure

• Table 11 Outgoing Tourism Expenditure: 1999-2004
• Table 12 Outgoing Tourism Expenditure % Growth: 2000-2004

5.3 Balance of Tourism Payments

• Table 13 Balance of Tourism Payments: Value 1999-2004

23. Number of Arrivals

• Table 14 Total Arrivals: 1999-2004

24. Mode of Transport

• Table 15 Arrivals by Mode of Transport: 1999-2004
• Table 16 Arrivals by Mode of Transport: % Breakdown 1999-2004

25. Purpose of Visit

• Table 17 Arrivals by Purpose of Visit: 1999-2004
• Table 18 Arrivals by Purpose of Visit: % Breakdown 1999-2004

26. Country of Origin

• Table 19 Arrivals by Country of Origin: 1999-2004
• Table 20 Arrivals by Country of Origin: % Breakdown 1999-2004

27. Per Capita Expenditure

• Table 21 Per Capita Expenditure per Arrival: 1999-2004

28. Number of Departures

• Table 22 Total Departures: 1999-2004

29. Mode of Transport

• Table 23 Departures by Mode of Transport: 1999-2004
• Table 24 Departures by Mode of Transport: % Breakdown 1999-2004

30. Purpose of Visit

• Table 25 Departures by Purpose of Visit: 1999-2004
• Table 26 Departures by Purpose of Visit: % Breakdown 1999-2004

31. Destination

• Table 27 Departures by Destination: 1999-2004
• Table 28 Departures by Destination: % Breakdown 1999-2004

32. Per Capita Expenditure

• Table 29 Per Capita Expenditure per Departure: 1999-2004

33. Number of Trips and Expenditure

• Table 30 Total Number of Domestic Trips: 1999-2004
• Table 31 Domestic Tourist Expenditure: 1999-2004

34. Trips by Mode of Transport

• Table 32 Domestic Trips by Mode of Transport: 1999-2004
• Table 33 Domestic Trips by Mode of Transport: % Breakdown 1999-2004

35. Trips by Destination

• Table 34 Domestic Trips by Destination 1999-2004
• Table 35 Domestic Trips by Destination: % Analysis 1999-2004

36. Per Capita Expenditure

• Table 36 Per Capita Expenditure Per Domestic Trip 1999-2004

5.18 Tourism Spending

• Table 37 Spending on Tourism 1999-2004
• Table 38 Spending on Tourism: % Breakdown 1999-2004

38. Method of Payment

• Table 39 Method of Payment for Tourism Spending: % Breakdown 2003

6. TRAVEL ACCOMMODATION

6.1 Market Size

• Table 40 Travel Accommodation Market 1999-2004
• Table 41 Travel Accommodation Market: % Growth 1999-2004

6.2 Sales by Sector

• Table 42 Travel Accommodation Value Sales by Sector: Value 1999-2004
• Table 43 Travel Accommodation Value Sales by Sector: % Value Breakdown 1999-2004

6.3 Outlets by Sector

• Table 44 Travel Accommodation Outlets by Sector: Units 1999-2004
• Table 45 Travel Accommodation Outlets by Sector: % Volume Breakdown 1999-2004

6.4 Hotels by Region

• Table 46 Hotels, Rooms and Beds by Region 2004

6.5 Hotels by Star Ratings

• Table 47 Number of Star Rated Hotels by Region 2004

6.6 Hotels by Ownership

• Table 48 Hotel Sales by Independent vs Chained Outlets: Value 1999-2004

6.7 Internet Transaction Trends

• Table 49 Travel Accommodation Internet Transactions Sales: Internet Transaction Value 1999-2004

6.8 Emerging Products

48. Mergers and Acquisitions

49. Revenue Rankings

• Table 50 Key Players by Revenue 2003

50. Market Share

• Table 51 Hotel Companies by Market Share 2001-2004

51. RevPAR

• Table 52 Key Hotel Players by RevPAR 2003

6.13 Forecast Sales by Sector

• Table 53 Forecast Travel Accommodation Sales by Sector: Value 2004-2009

6.14 Forecast Outlets by Sector

• Table 54 Forecast Travel Accommodation Outlets by Sector: Units 2004-2009

7. TRANSPORTATION

7.1 Market Size

• Table 55 Transportation Market 1999-2004
• Table 56 Transportation Market: % Growth 1999-2004

7.2 Sales by Sector

• Table 57 Transportation Sales by Sector: Value 1999-2004
• Table 58 Transportation Sales by Sector: % Value Breakdown 1999-2004

7.3 Airline Capacity and Utilisation

• Table 59 Airline Capacity by Type 1999-2004
• Table 60 Airline Utilisation by Type 1999-2004
• Table 61 Airline Utilisation by Type : % Breakdown 1999-2004

7.4 Airline Sales by Seat Class

• Table 62 Airline Volume Sales by Seat Class 1999-2004
• Table 63 Airline Volume Sales by Seat Class: % Breakdown 1999-2004

7.5 Airline Sales by Distance

• Table 64 Airline Volume Sales by Distance: % Breakdown 1999-2004

7.6 Internet Transaction Trends

• Table 65 Transportation Sales: Internet Transaction Value 1999-2004

7.7 Emerging Products

62. Mergers and Acquisitions

• Summary 3 List of Mergers and Acquisitions 2002-2004

63. Revenue Rankings

• Table 66 Key Players by Revenue 2003/2004

64. Passengers Carried

• Table 67 Key Players by Numbers of Passengers Carried 2003/2004

65. Market Share

• Table 68 Airline Companies by Market Share 2001-2004

7.12 Forecast Sales by Sector

• Table 69 Forecast Transportation Sales by Sector: Value 2004-2009

8. CAR RENTAL

8.1 Market Size

• Table 70 Car Rental Market: 1999-2004
• Table 71 Car Rental Market % Growth: 1999-2004

8.2 Fleet Size and Number of Operators

• Table 72 Structure of Car Rental Market 1999-2004

8.3 Sales by Sector and Location

• Table 73 Car Rental Sales by Sector and Location: Value 1999-2004
• Table 74 Car Rental Sales by Sector and Location: % Value Breakdown 1999-2004

8.4 Rental Duration

• Table 75 Car Rental Average Duration by Sector 1999/2004
• Table 76 Average Car Rental Duration: % Breakdown 1999/2004

8.5 Time of Booking

• Table 77 Time of Booking: % Breakdown 2004

8.6 Internet Transaction Trends

• Table 78 Car Rental Sales: Internet Transaction Value 1999-2004

8.7 Emerging Products

75. Mergers and Acquisitions

76. Revenue Rankings

• Table 79 Key Players by Revenue 2003

77. Fleet Size

• Table 80 Key Players by Size of Fleet 2001-2004

78. Average Daily Rate

• Table 81 Key Players by Average Daily Rate for Car Hire 2003

79. Market Share

• Table 82 Key Players by Market Share 2001-2004

8.13 Forecast Sales by Sector and Fleet Size

• Table 83 Forecast Car Rental Sales by Sector: Value 2004-2009
• Table 84 Forecast Car Rental Fleet Size 2004-2009

9. TRAVEL RETAIL

9.1 Market Size

• Table 85 Travel Retail Market: 1999-2004
• Table 86 Travel Retail Sales % Growth: 2000-2004

9.2 Outlets by Sector

• Table 87 Travel Retail Outlets by Sector: Units 1999-2004
• Table 88 Travel Retail Outlets by Sector: % Volume Breakdown 1999-2004

84. Services

• Table 89 Travel Agency Value Sales by Service: % Breakdown 1999-2004

85. Type of Holiday and Destinations

• Table 90 Travel Agency Value Sales by Type of Holiday: % Breakdown 1999-2004
• Table 91 Travel Agency Value Sales by Destination: % Breakdown 1999-2004

86. Exchange Services

• Table 92 Travel Agencies Offering Exchange Services 1999-2004

87. Source of Sale

• Table 93 Tour Operator Value Sales by Type of Holiday: % Breakdown 1999-2004
• Table 94 Tour Operator Value Sales by Destination: % Breakdown 1999-2004

88. Sales by Outlet and Type

• Table 95 Exchange Service Value Sales by Outlet: % Breakdown 2003
• Table 96 Exchange Services Value Sales by Currency vs Travellers  Cheques: % Breakdown 2003

9.9 Online Travel Agencies

• Table 97 Travel Retail Sales: Internet Transaction Value 1999-2004

9.10 Emerging Products

91. Mergers and Acquisitions

92. Revenue and Market Share

• Table 98 Travel Agents: Revenue Rankings 2003
• Table 99 Travel Agencies: Market Share 2001-2004

93. Revenue and Market Share

• Table 100 Tour Operators: Revenue Rankings 2003
• Table 101 Tour Operators: Market Share 2001-2004

94. Revenue and Market Share

• Table 102 Exchange Services: Revenue Rankings 2003/2004
• Table 103 Exchange Services: Market Share 2001-2004

9.15 Forecast Sales and Outlets

• Table 104 Forecast Travel Retail Value Sales: 2004-2009
• Table 105 Forecast Travel Retail Outlets by Sector: Units 2004-2009

10. TOURIST ATTRACTIONS

10.1 Market Size

• Table 106 Tourist Attractions Market: 1999-2004
• Table 107 Tourist Attractions Market % Growth: 1999-2004

10.2 Sales by Sector

• Table 108 Tourist Attractions Sales by Sector: Value 1999-2004
• Table 109 Tourist Attractions Sales by Sector: % Value Breakdown 1999-2004

10.3 Visitors by Sector

• Table 110 Tourist Attractions Visitors by Sector: 1999-2004
• Table 111 Tourist Attractions Visitors by Sector: % Breakdown 1999-2004

10.4 Internet Booking Trends

10.5 Emerging Products

102. Mergers and Acquisitions

103. Visits

• Table 112 Major Tourist Attractions by Visitors 2002-2004

10.8 Forecast Sales and Visitors by Sector

• Table 113 Forecast Tourist Attractions Sales by Sector: Value 2004-2009
• Table 114 Forecast Tourist Attractions Visitors by Sector: 2004-2009

11. KEY STRATEGIC ALLIANCES

11.1 Trends

• Summary 4 Key Strategic Alliances 2000-2004

12. GROWTH COMPANY PROFILES

12.1 Cathay Pacific Airways

• Summary 5 Cathay Pacific Airways Ltd: Key Facts
• Summary 6 Cathay Pacific Airways Ltd: Summary of Key Events 1999-2004
• Table 115 Cathay Pacific Airways Ltd: Financial Summary 1999-2004

12.2 Singapore Airlines

• Summary 7 Singapore Airlines Ltd: Key Facts
• Summary 8 Singapore Airlines Ltd: Summary of Key Events 1999-2004
• Table 116 Singapore Airlines Ltd: Financial Summary 1999-2004

12.3 Mandarin Oriental Hotel Group International

• Summary 9 Mandarin Oriental Hotel Group International Ltd: Key Facts
• Summary 10 Mandarin Oriental Hotel Group International Ltd: Summary of Key Events 1999-2004
• Table 117 Mandarin Oriental Hotel Group International Ltd: Financial Summary 1999-2004

12.4 China Travel International Investment Hong Kong

• Summary 11 China Travel International Investment Hong Kong Ltd: Key Facts
• Summary 12 China Travel International Investment Hong Kong Ltd: Summary of Key Events 2001-2004
• Table 118 China Travel International Investment Hong Kong Ltd: Financial Summary 1999-2004

12.5 Ocean Park Corp

• Summary 13 Ocean Park Corp: Key Facts
• Summary 14 Ocean Park Corp: Summary of Key Events 1999-2004
• Table 119 Ocean Park Corp: Financial Summary 1999-2004

13. FUTURE OUTLOOK

13.1 Market Opportunities

• Summary 15 Opportunities for Growth and Investment

13.2 Tourism Receipts and Expenditure

• Table 120 Forecast Incoming Tourism Receipts: 2004-2009
• Table 121 Forecast Outgoing Tourism Expenditure: 2004-2009
• Table 122 Forecast Domestic Tourism Expenditure 2004-2009

13.3 Balance of Payments

• Table 123 Forecast Balance of Tourism Payments: Value 2004-2009

13.4 Number of Arrivals

• Table 124 Forecast Visitor Arrivals: 2004-2009

13.5 Number of Departures

• Table 125 Forecast Visitor Departures: 2004-2009

13.6 Travel and Tourism Markets

• Table 126 Forecast Sales by Travel and Tourism Markets: Value 2004-2009

13.7 Developments in Internet Transaction Sales

• Table 127 Forecast Sales by Travel and Tourism Markets: Internet Transaction Value 2004-2009

14. DEFINITIONS