Friday, December 2 2022

Travel management companies are warning that airfares will continue to rise in the coming weeks following Hong Kong’s decision to ease travel restrictions this week.

Since September 26, international travelers to Hong Kong have not had to undergo a mandatory hotel quarantine. Hotel rates have also jumped as the financial hub begins to compete for international business travelers again with rival Singapore, and could soar by up to 40% in the coming months.

Singapore, which lifted most of its travel restrictions in March, has already seen a strong return to conference business, in part due to the ongoing shutdown of Hong Kong.

Business travel agency CWT said inbound and outbound bookings in Singapore had increased fivefold since the start of the year, but booking levels in Hong Kong were now rising, with transactions currently three times higher. higher than at the start of the year.

“The volume of calls to our travel advisors in Hong Kong has increased following the announcement, and we expect this to translate into a strong increase in bookings in the coming weeks,” said Akshay Kapoor, head of of sales, Asia-Pacific, CWT.

“We are getting many inquiries from travelers who previously planned itineraries with multiple destinations but are now looking to split them into separate trips because they won’t have to quarantine upon their return,” he added.

BCD Travel also saw an “immediate” increase in inquiries after the Hong Kong announcement, particularly for reservations that were on hold as travelers waited for more details.

“The increase in activity continues this week,” said Jonathan Kao, managing director, Greater China. “Travellers are planning their trips to avoid quarantine upon returning to Hong Kong.”

He added that most customers were surprised by the new policy, which came into effect within three days of the announcement. “Speculation was that it would go live around mid-October, in preparation for the Hong Kong Sevens and the Global Financial Leaders Investment Summit, hosted by the Hong Kong Monetary Authority and scheduled for November,” he said. he declares.

Price shocks

The message now is that travel managers need to prepare.

“It’s important to communicate their projections to their travel agencies and other suppliers like airlines and hotels, so we’re all better prepared to support the return to travel,” Kao said.

According to CWT, hotel rates in Hong Kong are expected to see year-on-year price increases of 40% in 2022 and 14% in 2023, while Singapore could increase by 25% and 7% year-on-year. next.

“I don’t see demand pressures on pricing diminishing anytime soon,” CWT’s Kapoor said. “On the contrary, I expect demand to rise sharply once China eases border restrictions and removes quarantine requirements for international travel.”

While airfares died in most markets in 2020 and 2021, CWT saw the opposite for these two financial powerhouses. Airline ticket prices to Hong Kong rose 13% and then 5%, and Singapore rose 10% in 2020 and another 25.8% in 2021.

Further, air fares in Hong Kong are expected to jump 24% this year and 4% next year. For Singapore, they are expected to climb 15% in 2022, then 9% in 2023.

Singaporean multinational bank DBS said the island’s hospitality industry was also on track for a “spectacular” second half of 2022, with room rates rapidly reaching pre-pandemic levels and the average length of stay stay almost doubling compared to 2019.

“Travelers have to compromise on travel class due to limited inventory, and therefore for example travel in economy class instead of business class,” said Andrew Yeo, managing director for Singapore and Australia at CWT. “They should also consider other airlines and be prepared for last minute itinerary changes due to current conditions.”

All roads lead to China

With limited direct flights to China, business travelers have been using Hong Kong as a major transit point in the country since it shortened the quarantine requirement to seven days in April.

This business traffic could now increase further.

“We are seeing our first serious number of bookings in Hong Kong in recent days,” said Hugh Batley, co-founder of Singapore-based business travel agency TruTrip. These reservations include many micro-events, such as trainings and events. “Singapore, Malaysia, China, all of these routes will see significant growth,” he added.

For BCD, Hong Kong-China routes have been consistently sold out over the past six months and will likely be so through the end of the year, with most flights sold out as soon as inventory becomes available.

Once China reopens, experts warn demand will outstrip supply as airlines try to boost their reduced capacity. It can also be difficult to get seats for a desired destination, while airport staff and ground handling can be another problem.

However, the Asia-Pacific region will likely avoid the chaos that Europe and the United States experienced after these regions reopened.

“The policy change in China could be a bit more gradual and the government could take a phased approach to reopening,” Kao noted.

“If you look at the United States, they had the boom. In Asia-Pacific, they’re a bit more delayed with reopening, so we’re still in that boom. The boom may not be as big as it would have been due to the recession, and we won’t see it in our industry for a few months,” Batley added.

There is also a chance that China is watching Hong Kong closely. “I suspect Hong Kong is a bit of a test bed to see what happens when internationals arrive in an area,” Batley added.

However, BCD’s Kao said the Chinese government had always planned for the reopening.

“Hong Kong certainly plays a role in their strategy. However, although information and information can be drawn from the reopening of Hong Kong, it will not be the reference for China due to the difference
scale and complexity,” he said.

Also in the region, Japan plans to lift Covid restrictions, ease border control measures on par with the United States from October 11, while Taiwan will end quarantine for incoming arrivals to from October 13.

Previous

Netflix launches an interactive site of its New Mexico productions

Next

Del. Bankruptcy Rulings Instruct Creditors' Rights to Sue | Proskauer Rose LLP

Check Also