Businesses in Hong Kong count cost of protests
Global companies are feeling the strain of Hong Kong’s protests with international hotel chains and major airlines bracing for more pain as the global financial hub descends into its worst political crisis in decades.
Hong Kong’s flagship carrier Cathay Pacific said protests had hit inbound traffic. International hotel brands including Marriott, Wynn and InterContinental Hotels are preparing for business in Hong Kong to suffer in the second half of the year because of the demonstrations and the US-China trade war.
“We are a Hong Kong business and, like all businesses based here, we are feeling the impact of the local political unrest. We have most recently seen a fall off [in] future bookings over the next few months, particularly for inbound travel to Hong Kong,” said John Slosar, chairman of Cathay Pacific.
Inbound, forward bookings are suffering from double-digit year-on-year declines, according to Cathay Pacific’s chief customer and commercial officer Paul Loo. Lower fuel prices helped the company register a profit in the first six months to June.
Bob Iger, chairman and chief executive of Walt Disney, said the protests had significantly affected its business in Hong Kong, which had its first city-wide strike in more than half a century on Monday. “While the impact is not reflected in the results that we just announced, you can expect that we will feel it in the quarter that we’re currently in,” Mr Iger said.
Declining tourist arrivals and broader economic stability were concerning businesses such as Hongkong and Shanghai Hotels. Chief executive Clement Kwok noted in an earnings statement on Wednesday that the group, which owns the city’s luxury Peninsula Hotel, was continuing to monitor the situation.
InterContinental Hotels, the world’s third-largest hotel group by room numbers, said the Sino-US trade dispute and the Hong Kong protests were hitting demand.
Retail sales in Hong Kong dropped 6.7 per cent in June from a year earlier reflecting the toll of the protests on sales, a key pillar of the territory’s economy. A monthly survey released on Monday that measures private sector business activity plunged to its lowest level since the financial crisis.
“As long as these protests continue in this way, the outlook remains very weak for Hong Kong,” said Rajiv Biswas, Asia Pacific chief economist at IHS Markit, adding that flight disruptions over the past week had significantly worsened the city’s economic situation. Hundreds of flights in and out of the international transport hub were cancelled or delayed on Monday.
The head of China’s Hong Kong and Macau Affairs Office said Hong Kong was facing its biggest crisis since the territory was handed over by the British to the Chinese in 1997, Reuters reported on Wednesday.