Tourists start ditching Hong Kong for other countries

Retail sales had been badly hurt.

It has been noted that Global Blue data indicates that Chinese tourism spending was still 49% y/y in December globally.

According to a research note from Barclays, visitor arrival growth to other countries is also outpacing that to HK.

Barclays believe reasons could include demand for Chinese tourists to venture to new destinations, but it also believes weakened currencies such as the euro make travel to certain countries desirable.

Here's more from Barclays:

We also note that pricing in HK, particularly for high-end products, is not competitive. Our checks indicate luxury handbags are available at an average 37% discount in Europe vs HK (if tourists claim VAT back).

Prices are also cheaper in countries with depreciated currencies such as Japan. We also find that the price difference between buying handbags in HK vs. China is only 13%.

We believe that if visitor arrivals, in particular those more able to spend, continue to disperse to other travel destinations, 2015 retail growth in HK will likely remain single digit, and high-end/luxury players should continue to underperform.