Hong Kong Tourism Report Q1 2012

Hong Kong Tourism Report provides industry professionals and strategists, corporate analysts, tourism associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Hong Kong's tourism industry.

BMI Still Upbeat About Hong Kong Tourism

2011 looks set to be another record breaking year for inbound Hong Kong tourism. January-October 2011 tourist arrivals were up by 16.2% year on year (y-o-y), to 34,217,497 people, according to data from the Hong Kong Tourism Board (HKTB). Given this strong performance, we have made a slight upwards revision to our 2011 full-year arrivals forecast, targeting a figure of 41.08mn tourists, or an increase of 14% y-o-y.

Looking at source markets, mainland China remains the dominant country, contributing 22.9mn tourists to Hong Kong over January-October, an increase of 23.7% y-o-y. Arrivals under the Individual Visit Scheme (IVS) were up by 27.4% y-o-y. Other short-haul markets that are performing well include South Korea (up by 15.8% in January-October 2011) and Indonesia (up by 16.2%). Further afield, the HKTB continues to identify Russia as a strongly performing source market. Arrivals were up by over 50% during January-October.

BMI remains bullish about the outlook for inbound tourism to Hong Kong over our forecast period through to 2015, with the territory continuing to offer high standards of hospitality and many different types of tourist attractions. China will continue to be the main source market for inbound tourists and should grow rapidly in the years ahead.

Beyond 2011, our forecasting model calculates a just over 5% average annual increase over the coming years, leading to a total of just over 50mn tourists by 2015. We believe that given the strong demand from China, there are significant upside risks to this forecast.

Melco Subsidiary Lists In Hong Kong

On December 7 2011, Hong Kong-based gaming conglomerate Melco Group dual-listed shares in its Melco Crown Entertainment subsidiary, which is co-owned by Australian gaming company Crown, in Hong Kong. The listing of the subsidiary company was by invitation, so new equity was issued as part of the dual-listing process.

Melco’s chief financial officer, Geoffrey Davis, stressed in November 2011 that Melco Crown Entertainment would be able to fund its new multibillion dollar Macau Studio City project without needing to raise fresh equity and that the company was in discussions with banks for project financing. That said, he added that the listing by introduction in Hong Kong offers the flexibility to raise capital in the future.

Macau Studio City is a planned entertainment and hotel complex on Macau’s Cotai Strip. Melco Crown Entertainment took control of the long-delayed project in June 2011 and Melco said it will invest about US$1.7bn to build the complex.

However, there is still some uncertainty as to whether the Macau government will allow Melco Crown Entertainment to install gaming floors at the project, which was originally envisaged as an entertainment and leisure travel destination. The company is hopeful that it will get the necessary approval to include gaming facilities and that construction can start in 2012, with a view to opening in 2015.

In August 2011, Melco announced its interim results. They showed Melco Crown Entertainment delivering a record-adjusted EBITDA of US$216.32mn for Q211, an increase of about 195% from US$73.4mn generated during Q210. Further information on the Melco group is available in the Company Profiles section of this report.

Construction Ongoing At New Cruise Terminal

Construction has started at the new Kai Tak cruise terminal, which is on the site of the old Kai Tak airport. The foundation stone for the project was laid in August 2011. International architecture firm Foster + Partners has designed the terminal, which will then be leased to a cruise ship operator. The government will retain ownership of the site.

The development cost, excluding the commercial area, was estimated at HKD2.4bn. According to Foster + Partners, the terminal will have capacity to berth two large 360m-long vessels and disembark a total of 5,400 passengers and 1,200 crew.
Some commentators have expressed dismay at the time it has taken to begin construction work at Kai

Tak, pointing out that Singapore’s International Cruise Terminal is scheduled to be completed before the end of 2011 and could take shipping traffic away from Hong Kong between then and Kai Tak’s opening. That said, the development of a cruise terminal in Hong Kong will be of crucial economic benefit to the territory. Consultative studies put the economic benefits of the new Kai Tak terminal at HKD1.4-2.2bn per annum by 2020. Estimates for the number of jobs that will be created by the terminal range from 6,900 to 10,900 positions. SHOW LESS READ MORE >

SWOT Analysis
Hong Kong Political SWOT
Hong Kong Economic SWOT
Hong Kong Business Environment SWOT

Industry Forecast Scenario
Arrivals
Table: Arrivals Data,2008-2015
Accommodation
Table: Hotel Rooms, 2008-2015
Expenditure
Table: Tourist Expenditure And Economic Impact, 2008-2015
Inbound Tourism
Table: Tourist Arrivals,2008-2015
Outbound Tourism
Table: Outbound Tourism Data,2008-2015
Meeting China’s Tourism Needs
MICE Travel Continues To Soar
Table: Overnight MICE Arrivals, January-September 2011
Disneyland Hong Kong

Market Overview – Travel
Commercial Airlines
Cruises
Table: Cruise Arrivals, 2010
Global Oil Products Price Outlook

Market Overview – Hospitality
Accommodation
Accommodation Developments

H5N1 And H1N1 Virus Update

Business Environment Outlook
Table: Asia Pacific Travel And Tourism Business Environment Ratings
City Terrorism Ratings
Table: BMI’s Asia Pacific City Terrorism Index
North East Asia Security Overview
The Geopolitical Importance Of North East Asia
Flashpoints And Faultlines In North East Asia
The Evolution Of North East Asia

Global Assumptions
Europe On The Edge
Table: Global Assumptions, 2009-2015
Table: Global And Regional Real GDP Growth, 2010-2013 (% chg y-o-y)
Table: Developed Market Exchange Rates, 2010-2013
Table: Emerging Market Exchange Rates, 2010-2013
Developed States
Table: Developed States Real GDP Growth Forecasts, 2010-2013 (%chg y-o-y)
Emerging Markets
Table: Emerging Markets Real GDP Growth Forecasts, 2010-2013 (% chg y-o-y)
Table: Real GDP Growth Consensus Forecasts, 2011-2012 (%chg y-o-y)

Company Profiles
Cathay Pacific
Melco Group
Shangri-La

BMI Methodology
How We Generate Our Industry Forecasts
Tourism Industry
Tourism Ratings – Methodology
Table: Tourism Business Environment Indicators
Table: Weighting of Components
City Terrorism Ratings
Table: City Terrorism Ratings Methodology
Sources

- Cathay Pacific
- Melco Group
- Shangri-La