Hong Kong’s travel agencies encounter unprecedented closures ahead of Labour Day celebrations

Insert picture: Timothy Chui

21st April 2024 – (Hong Kong) As Labour Day approaches, bringing with it a five-day public holiday across Mainland China, an unexpected trend is emerging in Hong Kong’s travel industry. While the city anticipates a modest surge in inbound tourism, several small and medium-sized licensed travel agencies have been shutting their doors. Since late March, at least six agencies including CARELY LIMOUSINE LIMITED , EXTRATRAVEL LIMITED, W & J TRAVEL SERVICE (HK) LIMITED, GOLD POWER TOURS COMPANY LIMITED, EL SOL TOURS (H.K.) LIMITED etc have ceased operations, with some specifically choosing to close on Labour Day or 30th April, seemingly ignoring the potential business opportunities presented by the holiday.

Last month, Hoi Kong Travel Limited, a travel agency frequently collaborating with unions, unfortunately ceased operations on the 31st.

The wave of closures has had a significant impact on the industry. According to the Travel Industry Authority, the number of business permits issued under the Travel Industry Ordinance has decreased by over 200 in the past year. Moreover, the number of licensed practitioners, including tour guides and leaders, has also dropped by more than a hundred, reaching a record low for the year.

Industry insiders suggest these closures might be driven by business factors rather than a lack of market opportunities. The decline in licensed personnel might not be entirely negative in the long term; it could potentially lead to an increase in the professionalism among remaining operators.

Timothy Chui, Executive Director of the Hong Kong Tourism Association, commented on the situation, noting that the reduction in licenses and the certification requirements could be factors. Many who initially obtained licenses are choosing not to renew, contributing to the decline. Chui suggests that this might not necessarily be detrimental for the sector. With sufficient licensed guides to support current needs, the focus could shift towards enhancing service quality.

Before the pandemic, in 2018, Hong Kong welcomed approximately 60 million visitors. Last year, this number only recovered to half of the pre-pandemic figures, with projections for this year estimated between 43 and 46 million visitors. Chui believes that to sustain growth, Hong Kong must adapt to changing times by broadening its tourist base through individual travel and expanding the “one trip, multiple stops” policy to the entire Guangdong Province.

Chui also pointed out the evolving patterns of tourism, noting that while many visitors previously came to Hong Kong for shopping, the rise of e-commerce has changed consumer behaviours. Additionally, Shenzhen’s increasing appeal is diverting potential visitors away from Hong Kong, posing new challenges for the local tourism industry.

The data from the Travel Industry Authority shows a sharp decline in business licenses, with 222 fewer permits as of March this year compared to last year. Chui speculates that travel agencies might be reducing physical branches or shifting towards online operations, further affecting the number of permits.