China Bars Domestic Tour Groups From Going to Hong Kong

China’s tourism board has stopped approving mainlanders’ group tours to Hong Kong because of the spread of pro-democracy demonstrations in the city, amplifying the impact of the protests on the economy.

Chinese tourists accounted for 75 percent of the 54 million visitors to Hong Kong last year, helping make the city one of the most vibrant markets for luxury goods in the world. Group tours account for 8 percent to 10 percent of Chinese visitors to the city, said Joseph Tung, executive director of the Hong Kong Travel Industry Council.

The decision took effect Oct. 1, the first day of Golden Week when hundreds of thousands of Chinese descend on Hong Kong for their vacations, bolstering sales of luxury brands from Prada to Patek Philippe. Images of police lobbing tear gas at protesters last weekend may also make people in other countries reconsider planned visits to Hong Kong.

“It creates great damage to the Hong Kong tourism industry,” Tung said in an interview. “As a matter of fact, besides groups arriving from mainland China, we understand that there are groups from overseas telling our members, telling our agents, that they’re going to cancel the tour.”

Existing bookings for group travel from China were being honored, with the ban barring future trips, Tung said, citing information from travel agents in Shenzhen and Shanghai.

Retail Disruptions

Apart from causing cancellations, the protests prompted some large retailers to close their doors in the key commercial areas of Mong Kok and Causeway Bay. Companies have been reassessing the risks, with Chow Sang Sang Holdings International Ltd., operator of the city’s second-largest jewelry chain, saying today that its shops resumed normal operations.

“The protests have been peaceful,” said Dennis Lau, the company’s sales operations director, explaining why six stores had reopened.

Some restaurants had used bicycles to bring in supplies because protesters had blocked roads with barriers and sit-ins. Dolce & Gabbana and Fendi stores on Canton Road in the Tsim Sha Tsui district popular with Chinese visitors have been among those closed during at least part of the protests, which escalated on Sept. 27.

The protests may have cost retailers HK$2.2 billion ($283 million), or an estimated six percent of the month’s sales, Raymond Yeung, an economist at Australia & New Zealand Banking Group Ltd., wrote in a report today.

Early Closings

“Traditionally, this is the week that mainlanders come to Hong Kong,” Allan Zeman, chairman of bar and restaurant operator Lan Kwai Fong Holdings Ltd., said yesterday. “What we found since the last seven days, we had to close many of the restaurants early and shut many of the buildings early,” he said, adding that sales in the entertainment district fell about 15 percent from a year earlier compared with normal expectations for a 20 percent increase.

Business was slow Oct. 1 on the Chinese National Day holiday at Rula Bula bar in Lan Kwai Fong.

“National Day usually brings out quite a lot of mainlanders who come to Lan Kwai because it is a tourist attraction and I’ve barely seen any of them,” said Ravi Beryar, the bar’s general manager.

An hour’s ferry ride away from Hong Kong, Macau may also be feeling the effects, according to Karen Tang, an analyst at Deutsche Bank AG. Some high-end gamblers canceled trips because of the protests, Tang wrote in a report dated yesterday. China’s suspension of group tours to Hong Kong will also hurt Macau, since some visitors’ bookings are for packages that take them to both cities, according to Tang.