Hong Kong is betting free alcohol and longer shopping hours will revive the city’s once-bustling nightlife.
The government has been in discussions with major property groups to encourage them to roll out measures to boost the nighttime economy, including extending mall operating hours, according to Allan Zeman, a nightclub baron and adviser to Hong Kong’s Chief Executive John Lee.
Lan Kwai Fong Holdings Ltd., which owns the bulk of Hong Kong’s largest party district, will offer flash discounts on some weekday evenings in September and set up street performances by DJs, Zeman said. Other property firms say they’re going to distribute drink and shopping vouchers and hold nighttime events in the push to re-ignite sluggish tourism and consumer sectors hurt by Covid.
This year was meant to herald Hong Kong’s grand reopening to the world after final pandemic curbs were scrapped and cross-border travel with mainland China fully resumed. But officials’ ‘Hello Hong Kong’ campaign to entice tourists is falling flat and instead of throngs of shoppers and club-goers, the city’s best-known retail and nightlife districts are a shadow of their former selves.
Domestic pressures are also mounting. Harsh pandemic controls and the government’s national security law have sparked a wave of emigration since 2020 and current residents are flocking to holiday hotspots like Thailand and Japan or splashing their cash on day trips to Shenzhen.
“The vanished night economy is a symptom of a deeper problem that Hong Kong is facing,” said Gary Ng, senior economist at Natixis SA. While “regional peers focused on improving tourism quality in the past two years, Hong Kong was busy thinking and spending resources on how to restrict mobility,” meaning the city may find it hard to regain its competitiveness, he said.
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The city’s tourist arrivals in the first half of this year were about 37% of pre-pandemic levels, compared with 57% for the neighboring casino hub of Macau, according to official statistics. There are signs of an uptick though, with Hong Kong hitting 53% of 2019 levels in June and Macau reaching 71%.
Still, about 80% of Hong Kong’s arrivals come from the mainland and those visitors are grappling with a worsening economic outlook and a weak yuan that’s eroding their consumer confidence, according to Michael Cheng, mainland China and Hong Kong consumer markets leader for PwC Asia Pacific.
Revenue Slump
Some venues are managing to weather the downturn. Zeman said his group’s business, which is largely concentrated on bars and restaurants in tourist areas of Hong Kong, has been recovering well and some tenants are seeing year-to-date sales that exceed pre-Covid levels by as much as 20%.
But many others, particularly those operating outside of the central areas popular with visitors, are struggling. Castelo Concepts shut nine of its 14 Hong Kong restaurants in July as it entered liquidation. Louie Chung, owner of Lubuds, which operates more than 40 restaurants across Hong Kong including in more residential neighborhoods, said revenue last month registered a double-digit drop from a year earlier.
“The evening business in July and August is the quietest in my 17 years in the food and drinks industry,” Chung said.
For the city as a whole, sales from restaurants’ evening dine-in operations in July and August plunged an average of 30% year-on-year, partly due to more residents heading to mainland Chinese cities for weekend visits or even just for after-work shopping and eating, according to Simon Wong, president of Hong Kong Federation of Restaurants and Related Trades.
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That’s spurring the effort to get people into bars, restaurants and shopping malls. Chinachem Group is hosting a three-day music festival at Central Market, a historic building near the heart of the financial district that was reopened in 2021 as a cultural and retail hub. The venue, which currently closes at 10pm, will ask bars to stay open until midnight for the event.
Meanwhile, Robert Ng’s Sino Land Co. is planning to distribute 10,000 vouchers for free drinks for people who spend a certain amount of money at its malls after 8pm. Henry Cheng’s New World Development Co. is also considering extending its malls’ operating hours and hosting events at night to attract customers, while Lee Shau-Kee’s Henderson Land Development Co. plans to give out shopping vouchers.
Those efforts, however, are unlikely to be enough to address the core hurdle Hong Kong’s retail and food and beverage industries face, according to Natixis’ Ng.
“The night economy is demand-driven,” he said. “If there is no demand, no measure the government is taking right now can boost it.”
