Group Members: Ronda Lee (18), Maggie See (30)
Sources and Date of Article: channelnewsasia.com [21/4]
C on t e n t :
In this newspaper article, it talks about there will be more Chinese coming
to Hong Kong from 1st May as China extends its travel scheme for visitors from
nine more countries. Since SARS broke out last year, the economy in Hong
Kong declined. With the help of the Individual Travel Scheme, more tourists will
visit Hong Kong on individual basis. The economy was boosted and the
demand for tertiary production, like hotel room services and travel agency
services increase.
Analysis:
COMPARISON ON NUMBER OF MAINLAND TOURISTS DURING
SARS OUTBREAK AND NOW
During the SARS outbreak in both Hong Kong and the Mainland China,
there was a large decline of the mainland visitors to Hong Kong. This caused
the travel agents, airlines and hotels to suffer a lot. These firms bear heavy
losses over the few months in last year, 2003. However, after the adaptation
of the Individual Visit Scheme in China, the mainland sightseers can visit Hong
Kong without joining package tours. This results in a boost in the tourism in
Hong Kong. Besides, as the Central government extends its travel scheme
for mainland visitors from nine more cities recently, Hong Kong’s tourism is
greatly promoted a lot.
INDIVIDUAL VISIT SCHEME
Individual Visit Scheme is a lately implemented policy in China, which the
aim is to boost Hong Kong’s economy due to the influence of SARS.
Mainland visitors can individually travel to Hong Kong without joining package
tours. This causes an expectation of millions more tourists from the mainland
this year as China extends its travel scheme for visitors. Therefore, this really
benefits Hong Kong’s economy because these visitors are willing to spend
money on different consumer goods.
For instance, since more mainlanders
are coming, Hong Kong’s tertiary production will have a rapid rise in order to
provide services and products to the visitors’ high demand. And hence Hong
Kong travel agents, hotels, transports, restaurants and retailers will benefit.
Tertiary production refers to the provision of various kinds of services. With the
growth of tertiary production, more job opportunities will be created. This can
help improving the unemployment problem in Hong Kong. According to the
government’s estimation, the scheme can bring revenue of 9 billion Hong Kong
dollars. This indicates that the Individual Visit Scheme can advantage Hong
Kong’s economy.
INCREASE IN DEMAND FOR HOTEL ROOMS
As the 1st May “Golden Week” is coming, visitors to Hong Kong increase,
the demand for hotel rooms thus increases sharply. However, the supply of
hotel rooms is fixed and is perfectly inelastic. Also, there are few substitutes for
hotel rooms, the demand for them is inelastic. Moreover, as hotels belong to
private enterprises, they are owned by private individuals and they usually aim
at making profits. They will increase the hotel room rate in order to earn more.
P
S
Because of the increase in
P2
P1
D1
D2
0
Q
number of tourists coming to
Hong Kong, the demand of
hotel rooms increase. The
hotel room rate increase but
the
quantity
transacted
remains unchanged as the
supply is fixed.
Qt
Hotel Rooms
P
S
P2
GAIN
P1
D1
0
Qt
D2
Q
As the supply of hotel rooms is
perfectly inelastic, the quantity
supplied
will
remain
unchanged. While the demand
is also inelastic, there is a
change in the price but the
quantity demanded remains
constant. Therefore, there will
be a gain in total revenue.
Hotel Rooms
HK expects millions more Chinese tourists as travel
scheme extended
By: Channelnewsasia.com
URL: http://www.channelnewsasia.com/stories/afp_asiapacific_business/view/81137/1/.com
Date: 21 April 2004
HONG KONG: Hong Kong can expect millions more tourists from the mainland this year
as China extends its travel scheme for visitors from nine more cities, the territory's
government said.
A total of 43 million residents of Nanjing, Suzhou, Wuxi, Hangzhou, Ningbo, Taizhou,
Fuzhou, Xiamen and Quanzhou will be eligible to travel to the former British colony from
July 1.
The Individual Visit Scheme was first set up last July to boost the Hong Kong economy in
the wake of the outbreak of Severe Acute Respiratory Syndrome (SARS).
Secretary for Economic Development and Manpower Stephen Ip said the extension was
"very good news," adding that he was confident Hong Kong could cope with the visitor
surge.
"At the moment, we have 43,000 hotel rooms (in Hong Kong). We are confident that this
should be sufficient to meet the need of the mainland visitors," he said.
Meanwhile, the scheme will become effective for visitors from seven more cities in
Guangdong province from May 1. After July, 150 million people from 32 mainland cities
will be eligible to visit Hong Kong.
So far the travel scheme has brought 1.6 million travellers into the city and an estimated 9
billion Hong Kong dollars (1.2 billion US).
Ip said the scheme would be extended to more cities soon.
Hong Kong saw a sharp drop in both mainland and overseas visitors after the SARS
outbreak early last year.