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Challenges and Opportunities
Despite some uncertainties, Hong Kong's prospects appear bright after the reinstatement of Chinese control.
As Hong Kong enters the final phase of the transition period when political control is returned by the United Kingdom to China, the hotel and tourism industry has been attempting to position itself for the change in the face of a degree of uncertainty. While the changeover presents challenges to tourism officials and management professionals, opportunities also exist. Against this background, the Hong Kong tourism industry is still performing up to expectations. However, when Hong Kong becomes part of China, will the tourism industry stand on its own? What are the main factors influencing the changes in the hotel and tourism industry? Will 1997 put an end to tourism growth? This paper briefly describes the tourism industry and its development for the past decade, discusses impending changes, examines key challenges and opportunities for investors, hoteliers and tourism officals, and concludes with some implications for tourism investment and planning.
Growth in Tourism
With strong growth beginning in the 1980s, the tourism industry is now Hong Kong's second biggest earner of foreign exchange, after textiles.1 Hong Kong remains one of the most popular destinations in Asia. Visitor arrivals in 1994 totaled 9.3 million, an increase of nearly three times over 1985 (Exhibit 1).
Only in 1989 was the growth in the number of visitors to Hong Kong interrupted. That year's 3.6-percent drop in arrivals from 1988 was due mainly to fallout of the democratic movements in China and the Tiananmen incident in June 1989. In recent years the number of mainland Chinese visitors has been rising as China adopts more of an open-door policy.
Hong Kong's top three markets are China, Taiwan, and Japan, which together account for over 50 percent of the total visitor arrivals. In 1994, China overtook Taiwan as the largest single market for the territory (see Exhibit 2).
Economic contributions.
Tourism's status as the number-two industry means that it plays a substantial role in the Hong Kong economy. Visitors spent HK$6.3 billion in Hong Kong in 1994,4.3 times as much as in 1985. Exhibit 3 shows the contribution of tourism to the Gross Domestic Product (GDP) from 1986 to 1995. Tourism represents an...