Hong Kong's "Golden Week" holiday to be marred by 30% drop in visitor bookings

Retailers are getting jittery.

Early indicator signals weak Chinese visitor flow to HK during the upcoming Golden Week, and Hong Kong retailers have a cautious outlook for the holiday season sales.

According to a research note from Maybank Kim Eng, they are also concerned about the impact from potential political tension.

The report also noted that more mainland visitors are travelling overseas and South Korea is their top destination.

Here's more from Maybank Kim Eng:

The HK Inbound Tour Operators Association expects the number of mainland visitors to HK on group tours to fall by one-third from last year during the National Day "Golden Week" holiday next month.

Association chairman Ricky Tse Kam-ting said the number of bookings so far is only half of last year's total, and assuming some last-minute bookings, he expects the total to be down 30% YoY.

Most of the HK retailers have a cautious outlook for the Golden Week due to the mixed sales signals. While sales trends have been sequentially improving since Jul-14 after the effect of the Gold Rush last year, there is concern about the impact to tourist sentiment from the political reform tension.

In addition, the performance of retailers’ China stores’ gold and jewellery sales continues to outperform HK since early this year. Separately, Dai Bin, president of the China Tourism Academy expects outbound tourism will see the biggest increase during the coming holiday.

According to Ctrip.com and Hotel.com, S Korea is the top choice for Chinese tourist in the coming week. The number of Chinese visitors to S Korea surged 51% YoY in the past six months. Thailand, Taipei and Japan were also popular destinations.

Comments from HK retailers. Chow Tai Fook management indicated sales in HK have improved sequentially in recent months, which is in line with normal seasonality. China stores continue to outperform HK, in particular the gem-set sales.

China SSSG has turned positive while the HK SSSG trend is improving. The company did not make any special inventory replenishments to prepare for Golden Week sales.

Luk Fook is cautious about Golden Week sales. It expects sales to be only 10-20% higher than normal days, which would be lower than the normal pattern. Luk Fook is launching a series of A&P (total gifts valued at HKD6.5m) to boost sales.

Sa Sa: SSSG in HK improved to 9% from just 1.9% during Apr-Jun. Sa Sa reiterated the impact of the Golden Week on its business is diminishing as its customer mix turns more to the day travelers.