The earnings of some of the world’s most visible travel and leisure brands have been battered by months of anti-government protests in Hong Kong, the latest figures show.
Financial results and projections of firms such as Hong Kong-listed airline Cathay Pacific Airways, United Kingdom-based Holiday Inn-owner InterContinental Hotels Group (IHG) and French spirits maker Remy Cointreau have been dragged down over the past three months as tourists stay away from the Chinese city due to the protests that have turned increasingly violent.
Rapid economic growth in Hong Kong and mainland China has made a lot of people very rich in recent decades, giving them a taste for travel and luxury, while leaving behind millions of poorer people who are finding it increasingly difficult to buy adequate housing.
Cathay lowered expectations for its full-year profit due to “incredibly challenging” conditions in its home market as it was racked by the protests which it expects to persist for the rest of 2019, it said on Friday.
The airline reported a 7.1 percent drop in passenger numbers for the month of September.
Cathay warned that its second-half financial results were likely to be below those of the first half, a reversal in its usual financial pattern. It also shelved plans for its first US dollar-denominated debt deal in 23 years.
The airline, which is trying to complete a three-year financial turnaround plan, has become the biggest corporate casualty of the Hong Kong protests after China demanded suspension of staff involved in, or supporting, the demonstrations that have plunged the former British colony into a political crisis.
“We continue to see a significant shortfall in inbound bookings for the remainder of 2019 as compared to the same snapshot last year,” Cathay Chief Customer and Commercial Officer Ronald Lam said in a statement on Friday.
Cathay said last month it would cut capacity for the upcoming winter season.
Inbound traffic to Hong Kong was down 38 percent in September compared with the same month in 2018, following a similar drop in August, with demand from the mainland Chinese market hit especially hard, the airline said.
Hoteliers such as IHG and Accor, which operate the Ibis and Novotel chains, have also been hit by the sharp decline in tourists, as have many luxury goods retailers who have been forced to temporarily close their shops.
IHG saw quarterly revenue per room fall 0.8 percent globally, but recorded a whopping 36 percent drop in Hong Kong sales. The group blamed lower business bookings in China and the protests in Hong Kong.,
The company, which has nearly 5,800 hotels under brand names such as Crowne Plaza and Regent Hotels & Resorts, said revenue per available room declined 6.1 percent in Greater China.
Its competitors such as Hilton Worldwide Holdings Inc and Raffles owner AccorHotels have also warned of slowing growth in China as the China-US trade war and a slowing global economy dampen spending on business and leisure travel to China.
Meanwhile, Remy Cointreau also accused falling tourism in Hong Kong for hurting cognac sales in its latest quarter, adding to a decline in revenue across the group.
Group sales of its brands such as Remy Martin cognac and Mount Gay rum were down 4 percent in July to September period after a 3 percent sales fall in the previous quarter.
Cognac sales had “suffered from the fall in tourism in Hong Kong and from slower than anticipated stock replenishment by retailers in the United States”, the company said on Friday.
Globally, spirit makers cheered as cognac, champagne and blended whiskies were excluded from a list of goods set to be slapped with 25 percent US tariffs on Friday, as part of a trade dispute over European Union aircraft subsidies.
But some wines and types of whisky will still be affected. France’s Pernod Ricard said on Thursday it may raise prices on spirits like its Glenlivet Scotch whisky as a result.