Hong Kong widens cross-border driving scheme to boost visitor spending

Economists say longer stays matter more than higher arrival numbers.

Hong Kong is letting more motorists from Guangdong drive directly into the city, betting easier cross-border travel will boost tourism and consumer spending.

But economists said the policy's success depends more on whether visitors stay longer and spend more than on higher arrival numbers alone.

“It is supportive, but it's not necessarily a game-changer in really reversing all the pressure that we see right now,” Gary Ng, a senior economist for Asia-Pacific at Natixis CIB, told Hong Kong Business.

The expanded Southbound Travel for Guangdong Vehicles Scheme allows eligible private vehicles registered in Guangdong to enter Hong Kong under a quota system.

The latest expansion adds Shenzhen, Foshan, Dongguan, Huizhou, and Zhaoqing to the existing coverage of Guangzhou, Zhuhai, Zhongshan, and Jiangmen, bringing the scheme to all nine mainland cities in the Greater Bay Area.

About 8,400 applications for urban-area entry had been approved as of the end of May, with about 6,700 travel bookings recorded, Hong Kong's Transport and Logistics Bureau said in an emailed reply to questions.

Applications rose to 15,000 in July, exceeding the available quota, after bookings during the Labour Day Golden Week holiday were oversubscribed by two to three times.

From 25 July, the daily quota for vehicles entering Hong Kong's urban areas will double to 200. Eligible vehicles from the five newly added cities can also enter via the Hong Kong-Zhuhai-Macao Bridge.

Authorities will also introduce a “Park & Visit” service allowing approved Guangdong vehicles to remain in Hong Kong for as long as three days.

The bureau said the program gives mainland residents a more convenient option to visit Hong Kong for tourism, business, exhibitions, concerts, and airport transfers.

It also wants hotels, retailers, and tourism operators to offer accommodation, shopping, and parking packages to attract more overnight visitors.

Ng said Hong Kong's retail sector remains under pressure as more residents travel overseas and to Mainland China for shopping, whilst mainland visitors are also spending less than before the pandemic. “They are not spending as much as before,” he said via Zoom.

Simon Lee Siu-po, an economist and part-time senior lecturer at the Chinese University of Hong Kong's Shenzhen Finance Institute, said the expansion could increase same-day visitor numbers by 5% to 10%.

But any increase in overall spending would likely come from higher visitor volumes rather than increased spending per traveller, he pointed out.

Lee said average visitor spending has declined since the pandemic because more mainland tourists are making day trips instead of staying overnight. As a result, overnight stays and average spending per visitor are better measures of the scheme's success than arrival numbers, he added.

Ng said the policy's success should be measured by whether visitors stay longer rather than simply make more cross-border trips.

Lee said financial services, including cross-border wealth management, investment, and insurance, as well as transportation, could benefit from stronger cross-border travel.

Ng added that visitors arriving by private vehicle might also explore attractions beyond Hong Kong's traditional shopping districts, helping broaden tourism spending.

Hong Kong and Guangdong authorities plan to extend the program to all 21 Guangdong cities by the first quarter of 2027.