Economic Impact Of Equestrian Events

The Economic Impact of the Olympic Equestrian Events on the Tourism and Hospitality Industry in Hong Kong

In 8th July 2005, when the Secretary for Home Affairs announced Hong Kong’s endorsement by Beijing as the host of the 2008 Olympic equestrian event, he expressed his optimistic anticipation of the economic benefits affiliated1. While the economic impact is still non-quantifiable at present, doubtless, the tourism and hospitality industry, which foreign visitors would first get contact with in Hong Kong, is one of the biggest beneficiaries --- from an economic perspective, the industry is poised to thrive.

To begin with, in the course of the Olympic equestrian events, a short-term economic influence will be seen in several tourism components, namely the accommodation, aviation and retail sector.

In the accommodation sector, the Royal Park Hotel is appointed as the athlete village, whereas the Regal Riverside Hotel is for the accommodation of the judges, the media, and the national technical officials as vets2; each of the hotels has 443 and

1. Secretary for Home Affairs. (2005). 2008 Beijing Olympic Equestrian Events relocated to Hong Kong. Hong Kong Home Affairs Department

http://www.equestriancommittee.gov.hk/press/pdf/SHAspeech_e.pdf

2. http://www.equestrian2008.org/chi/NewsDetail.aspx?nid=102

858 rooms respectively3. Full houses would be expected in both hotels4, meaning a guaranteed return of over a million.

Visitors categorized as drop-by travelers from Mainland and equestrian fanatics would also pose induced demand shock on the industry5. In appraisal, a large portion of the drop-by travelers would be those who adopt the multi-destination package tour co-launched by Hong Kong and Mainland6; they usually drop by Hong Kong after visiting the Beijing Olympics, vice versa. Most of these travelers would not opt for

5-star hotels; instead, they are in favor of high tariff B hotels and medium tariff hotels7. According to statistics, during the summer holiday (July to August) in 2007, the average hotel occupancy rate of these hotels exceeded 90%8. Given the expected flocks of visitors, there is a patent shortage of hotels. To prevent the rise of hotel room price initiated by the shortage, new hotels with additional rooms would be built before

3. Damon Pang. (2008 January 16). Sha Tin hotels spruce up for Olympic village role. South China Morning Post. P11

4. Damon Pang. (2008 January 16). Sha Tin hotels spruce up for Olympic village role. South China Morning Post. P11

5. Christoforos Ignatis. (2003). Athens 2004 Olympic Games - A challenge for the Hotel Sector of Athens and Greece. GÐ"¶teborg University, School of Economics and Commercial Law. P.29

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8. Hong Kong Tourism Board (HKTB) December 2007. Hotel Room Occupancy Report. Hong Kong: Research Department, HKSAR. P.3

mid 20089. With approximately 2 thousands high tariff B hotel rooms costing 800 dollars each per night10 and 1.5 thousands medium tariff hotel rooms costing 50011, a return of over 20 millions is not surprising.

On the other hand, in the light of the popularity and aristocratic history of equestrian sports in European regions, a majority of the equestrian fanatics who intentionally reach Hong Kong for the game are Europeans, and most likely high-end travelers. These enthusiasts, who comprise about 3000 people by government estimation12, are not hesitant in paying for relatively costly hotel rooms. Whereas the average occupancy rate of high tariff A hotels in summer holiday 2007 topped 80%13, the hotel rooms would be on the verge of shortage in 2008. Although the demand for the hotel rooms would be slightly relieved by the construction of new hotels, the

9. Hong Kong Tourism Board (HKTB) September. Hotel Supply Situation. Hong Kong: Research Department, HKSAR. P.4-9

10. Hong Kong Tourism Board (HKTB) December 2007. Hotel Room Occupancy Report. Hong Kong: Research Department, HKSAR. P.4-5

11. Hong Kong Tourism Board (HKTB) December 2007. Hotel Room Occupancy Report. Hong Kong: Research Department, HKSAR. P.4-5

12. Nickkita La. (2008 28 January). Hotel workers to get hefty bonus, 4pc pay increase. South China Morning Post. P04

13. Hong Kong Tourism Board (HKTB) December 2007. Hotel Room Occupancy Report. Hong Kong: Research Department, HKSAR. P.3

overall occupancy rate would still remain high. In short, with 10 thousands hotel rooms14 and an achieved room rate of around 2000 dollars per night in summer 200715, the statistics forebode a considerable revenue of over 10 millions.

Concerning the aviation sector, notwithstanding the threat of the proliferating direct flights from overseas to Mainland along with the establishment of new air routes16, Hong Kong is still reaping from the event. Hong Kong, being in vicinity with China, would also be a possible stop-by destination on their itineraries. In this case, Hong Kong could transform China’s aviation sector from a competitor to a partner, thus expanding and securing its sources of tourists. While Hong Kong has over 2200 scheduled passenger flights per week in 200617 and a passenger traffic of 4 millions in a single month of January 200818, immense demand for and revenue from air transport in 2008 summer is foreseeable.

14. Hong Kong Tourism Board (HKTB) December 2007. Hotel Room Occupancy Report. Hong Kong: Research Department, HKSAR. P.5

15. Hong Kong Tourism Board (HKTB) December 2007. Hotel Room Occupancy Report. Hong Kong: Research Department, HKSAR. P.4

16. Liang Qiwen. (2008 2 February). Air Asia plans expansion ahead of 2008 Olympics. China Daily, Hong Kong Edition. HK2

17. Hong Kong Tourism Board (HKTB) 2006.