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Dr YK Pang, chairman of the Hong Kong Tourism Board (HKTB), said it’s a milestone for preparing the city for the return of visitors.
“We expect that travellers at the early stage of the launch of the ATB are those who travel for family visits or other essential reasons, and leisure travellers will return successively,” he said.
Whether the decision will have a positive impact on retailers is hotly debated, but travel retailers are glad to see some signs of movement once again.
Victor Chan, general manager of Heinemann Hong Kong, told Inside Retail: “While we don’t expect a material impact on sales due to the limited flights, we see it as a very positive first step towards the eventual recovery of air travel through two of Asia’s biggest aviation hubs, and we are hopeful that a successful Hong Kong-Singapore bubble can serve as a model for the safe reopening of borders until the pandemic is under control.”
He added that the bubble will also allow the team to better understand the needs of the post-pandemic traveller.
The brand’s Australian counterpart is buoyed by the return of New Zealand travel and is “cautiously optimistic of meaningful trade”.
“Sales have effectively doubled from the previous week’s very low base, which means that we are still operating at a small fraction of pre-Covid levels,” Heinemann Australia managing director Richard Goodman said.
“Our wine and spirits category has seen the greatest uplift reflecting previous buying preferences of Australian and New Zealander travelers, and we remain hopeful that the Australian Duty Free Association’s appeal to the Federal Government to bring inbound alcohol allowances in line with New Zealand will be successful, so that Australian producers can benefit more fully from the Trans-Tasman bubble.”
Goodman is eager to see travel open up with Australia’s “pacific and Asian neighbours”, however, he said that the ecosystem is a lot leaner than it used to be and that they need to be “vigilant and flexible” with operations.
“We are optimistic about the vaccination roll-out and are appreciative of the position that the country is in to receive it. [But] it’s clear that the road to recovery of the travel market will be very long. We’ll need to adapt to a changing market … Buyer behaviour will surely change as new bubbles open up but we are committed to adapting while ensuring to continue to meet our customers’ needs.”
Michael Baker, retail consultant and former head of research at the International Council of Shopping Centers, has a more cynical view of travel bubbles and their impact on the industry.
“I don’t think a few travel bubbles will make anything more than a marginal difference to retailers or to national economies as a whole, unless the people coming into your country have a lot more money to spend than the people leaving,” he said. “But all else being equal, if you’ve got full flights going both ways, then you have the same number of people going in and out and roughly the same amount of spending.”
He also points to the risks associated with opening borders to select countries, as any potential outbreaks could cause major disruption.
“Better to wait until vaccination programs are up and running, then be courageous and open the borders completely, accept there will be some cases and move on.”
For Hong Kong and Singapore, he expects the primary benefit will be “a social and recreational one, not economically-related”. Meanwhile, he suspects the only winners in Australian retail from the Tasman bubble will be grocery retailers and hospitality.
“New Zealanders are going to spend mainly on groceries; they’ve never been big discretionary spenders as travellers. But the outbound Australians were spending on groceries too, and Aldi and Coles don’t care much if it’s Australians or New Zealanders at the checkout. Restaurants might benefit at the margin.”
Baker believes that domestic tourism is far more beneficial to Australian retailers and that open borders between states is key to increasing spend.
“Pre-Covid, international tourism only accounted for about 1.3 per cent of Australia’s GDP. But spending by Australians travelling overseas was twice that amount. So to the extent you can keep Australians home, it’s good for the domestic economy and probably a net positive for retail as well. Add to that the fact that domestic tourism is far more important to the economy than international tourism anyway.
“If you can get the states to keep their borders open, then you will have interstate tourism up and running and you’ve got something good going.”