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1. Introduction
In this news analysis, we will focus on how the increase of tourists from Mainland
affects Hong Kong GDP after the government increased the number of short term
traveling permit. Besides, we will also discuss about how the hotel project by the
Hopewell Holdings solves the unemployment and affects the GDP of Hong Kong.
2. Tourists From Mainland China
A. The Shortage of hotel Rooms
After the government increased the number of short term traveling permit, the number
of tourists from China increases rapidly. Many tourists will stay over for a few days.
This increases the demand of the hotel rooms.
Price
D2
S1
D1
P1
Shortage
Quantity
Q1
Q2
The Shortage of Hotel Room After The Increase of Tourism
P1: Price of hotel room
S1: Total supply of hotel room
D1: Demand for hotel room before the increase of tourism
D2: Demand for hotel room after the increase of tourism
Q1: Quantity transaction before the increase of tourism
Q2: Quantity demand after the increase of tourism
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3. The Hotel Project by the Hopewell Holdings
A. Effect on Hotel Room Supply
Due to the rapid increase in the number of tourists, demand of hotel rooms increases.
Therefore the Hopewell Holdings decided to build two hotels in Wan Chai. This
increases the supply of the hotel rooms.
Price
D2
S1
D1
S2
P1
Quantity
Q1
Q2
The Increase in Supply Due to the Hotel Project
P1: Price of hotel room
S1: Total supply of hotel room before the hotel project
S2: Total supply of hotel room after the hotel project
D1: Demand for hotel room before the increase of tourism
D2: Demand for hotel room after the increase of tourism
Q1: Quantity transaction before the increase of tourism
Q2: Quantity transaction after the increase of tourism
Since the supply of hotel room increases, the problem of the shortage of hotel room is
solved.
The hotel project by the Hopewell Holdings not only solve the problem of shortage of
hotel rooms, it also solved the unemployment problem.
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B. Effect on Unemployment
Hong Kong has been suffering from serious unemployment problem for years. Due to
the hotel project by the Hopewell Holdings, part of the unemployment problem can be
released. Since the construction work of the hotel project needs a large number of
labour force, many people can have a job in the project.
Unemployment rate = (Unemployed population / Total labour force) x 100%
According to the information from the press released by the government, the total
labour force is 3 485 000 and the unemployed population is 282 000.
Unemployment rate = (282 000 / 3 485 000) x 100%
= 8.09%
Using the above equation, the unemployment rate is approximately 8.09%.
Assuming the hotel project will employ 5000 people, the unemployment rate will be
affected as shown in the follow:
Unemployment rate = (Unemployed population / Total labour force) x 100%
= [(282 000 - 5 000) / 3 485 000] x 100%
= 7.94%
Therefore the hotel project can decrease the unemployment rate by about 0.15% if the
Hopewell Holdings employ 5000 people.
C. Effect on GDP of Hong Kong
Gross domestic product refers to the total market value of final goods and services
produced by the resident producing units in a one-year period. The equation for
calculating GDP is as follow:
GDP at market price = C + I + G + (X – M)
C = private consumption expenditure
I = gross investment expenditure
G = government consumption expenditure
X = total exports
M = total imports
(X – M) = Net exports
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Due to the hotel project by Hopewell holdings, then I will increase since it is classify
as an investment. According to the equation above, when I increases, GDP at market
price will increase also. This data can provide a basis for the government to formulate
policies and provide useful information for the business organizations to make
commercial decisions.
4. Conclusion
As shown in above, the government increased the number of short term traveling
permit will lead to an increase in demand of hotel rooms, shortage of hotel rooms
occur. To solve this problem, the Hopewell Holdings plans to build 2 hotels in Wan
Chai. As the investment needs a lot of labour, the unemployment problem can be
slightly released. Besides, the hotel project will also increase the GDP of Hong Kong
as it is regarded as an investment. It will increase the amount of gross domestic
expenditure.
To conclude, the increase in number of short term traveling permit will affect Hong
Kong economy greatly. This can be shown by the GDP. We can see that government
policies are closely related to our economy structure.
Data Sources:
- News form The Standard
(http://www.thestandard.com.hk)
- The labour force data from Hong Kong Labour Department
(http://www.labour.gov.hk)
The End
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Tourism fuels GDP growth
Jonathan Tam
Hong Kong's economy has rebounded from a recession in the first half to expand faster than
expected in the third quarter, helped by a revival in consumer spending amid the tourism boom
and resilient external trade.
Gross domestic product, a common gauge of economic performance, rose 4 per cent in the
third quarter from a year ago, reversing a 0.5 per cent drop in the second, the Census and
Statistics Department said. That was higher than a market consensus of 2.6 per cent growth.
From a quarter ago, it rose 6.4 per cent, seasonally adjusted, compared with a 3.7 per cent
decline in the second. The government has kept its 3per cent forecast for the year, implying a
4 per cent growth in the last quarter.
``I'm pleased to see personal consumption, which is an important part of our economy,
resumed growth for the first time in two years. It reflects people are cautiously optimistic about
the economic recovery,'' said Financial Secretary Henry Tang. ``However, the job market
remains challenging. I think the growth in the third quarter can be maintained in fourth quarter,''
Tang said.
Spurred by the influx of mainland tourists, private consumption spending reversed a 2.6 per
cent decrease in the second quarter and rose 2 per cent in the third.
That prompted the government to revise up the full-year private consumption forecast to zero
from a 1.5 per cent decline and consumer prices are expected to narrow from 3 per cent to 2.7
per cent decline.
Mainland visitor arrivals surged 43 per cent in August and 29 per cent in September after the
mainland gradually allowed its residents to travel to Hong Kong individually since late July.
That bolstered retail sales, eased deflation and jobless rate - all hit by the severe acute
respiratory syndrome outbreak in the second quarter.
``Hong Kong's recovery this time is thanks to China. Tourism is the single driver,'' Dong Tao,
chief regional economist at Credit Suisse First Boston, said.
That encouraged retailers such as Giordano and Sa Sa International to expand and hire more
workers to capture the opportunities, thus easing unemployment to a six-month low of 8 per
cent in October.
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``We don't think that domestic income growth and job security is strong enough to warrant
significantly stronger demand at a broad level, and most certainly feel that tourists from the
mainland will provide only short-term relief,'' Commercial Economics Asia chairman Enzio von
Pfeil said.
External trade also propelled economic growth. Exports leapt 9.8 per cent in the third quarter
as Hong Kong gained from mainland demand for raw materials and machines to feed its
rapidly rising economy.
The government revised up exports by three percentage points to 14.5 per cent for the whole
year.
``Growth is looking to continue at least until the end of the year. We expect to have good
readings in regional exports, including Hong Kong,'' ING Financial Markets chief economist
Tim Condon said. ``The risk is of some sort of the slowdown in the US, but it looks unlikely.''
ING and other banks such as DBS Bank (HK) and HSBC have revised up or will upgrade their
growth forecasts.
The government also revised down its own spending by two percentage points to a 1.5 per
cent increase, which its economist, Tang Kwong-yiu, said was due to spending cuts on a weak
fiscal position.
Third-quarter growth was faster than in Singapore, where the economy expanded 1.7 per cent,
and South Korea's 2.3 per cent pace. But it was slower than other major Asia economies such
as the mainland, Taiwan and Thailand.
Economists expected growth to accelerate further next year when the Closer Economic
Partnership Arrangement begins to kick in and banks are allowed to run some yuan
businesses.
``It is natural for economic growth, in what is now a mature economy, to be lower than in a
developing economy,'' HSBC Holdings group chairman John Bond said. ``The worst is
definitely behind us.''
1 December 2003 / 01:40 AM
Hopewell defers $4b hotel plan
Raymond Wang
Hopewell Holdings will defer submitting its final proposal for the HK$4-billion mega hotel
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project to the Town Planning Board, according to chairman Gordon Wu.
Wu said the deferral would give Hopewell more time to conduct consultations, adding he was
confident the Wan Chai project would gain support from the public. ``We will submit the
proposal at the end of February next year,'' he said.
He said he believed the parents of students at nearby St Francis Canossian College, with
whom the company held a meeting on Thursday, would back the project.
Wu said last week that the project, adjacent to the company's headquarters, would cost
Hopewell more than HK$4 billion. This included everything from the purchase of land, to
development costs and replanting of trees.
A revised blueprint for the project was submitted to the Town Planning Board at the end of
October and a decision is expected by the middle of this month.
Located between Queen's Road East and Kennedy Road, the project consists of two hotels in
an L-shape, providing more than 2,000 rooms, with the podium space to be earmarked for
commercial use, such as cinemas and a shopping mall.
8 December 2003 / 01:11 AM
Wu push for mega hotel project
Dennis Eng
Gordon Wu's embattled Wan Chai hotel project will cost Hopewell Holdings more than HK$4
billion to realise, the tycoon said.
``This is still just an initial estimate, but it includes everything from the purchase of land to all
the development costs and the replanting of trees,'' he said.
The proposed two-hotel development, adjacent to the company's headquarters, still requires
Town Planning Board approval. The revised blueprint was submitted at the end of last month
and a decision on whether or not to go ahead is expected by December 19.
The much-delayed project consists of two hotels in an L-shape. The site is sandwiched
between Queen's Road East on the ground level and Kennedy Road 16 storeys up.
Wu said he had originally earmarked the site for residential use but was convinced by former
financial secretary Donald Tsang to develop the site into a hotel. His initial plan to build Hong
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Kong's tallest hotel, Mega Tower Hotel, received the green light from the board in 1994. This
was then changed to the two-hotel layout.
``With this hotel project, we can hire between 5,000 and 6,000 people,'' Wu said.
He also plans to replant 78 trees that will have to make way for the hotel development.
Despite the seemingly good intentions of Wu, the hotel project has drawn fire in some
quarters.
Wu met yesterday with representatives of the Kennedy Road Protection Group, co-founded by
Stuart Wolfendale, a columnist for The Standard.
Wolfendale, who purchased a property not far from the proposed hotel, has said that a traffic
accident on Kennedy Road ``will seal up the north of the island for hours''.
``It's not personal. The issue is practicality,'' he said before meeting Wu.
Another meeting is planned for next week after neither party offered any concessions,
according to Wolfendale.
Yesterday's three-hour meeting also involved two nearby schools, Tang King Po College and
St Francis Canossian College.
Wu said the hotels were beneficial to the area as they would provide free shuttle lifts to the
public between Queen's Road East and Kennedy Road.
``I want to know what the impact will be on traffic conditions along Kennedy Road if these
students cannot use the shuttle lifts. I really don't want to inconvenience them but I will bar
them from using the lifts for one week just to see what happens,'' Wu said.
``I am open to anyone who opposes this hotel project. But I really despise hypocrites. If Stuart
Wolfendale uses these lifts, I will definitely turn him away.''
Wolfendale said that he used the lifts in Hopewell Centre every day.
28 November 2003 / 02:52 AM
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