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 Up Front With Martin B. Deutsch

martin THE HONG KONG OUTLOOK

BY MARTIN B. DEUTSCH

October 1, 1988 -- There’s a new reality today behind the façade of glitz and glitter that Hong Kong shows its visitors and the world. No matter how optimistic the overt speculation about Hong Kong’s future after the takeover or repossession by the People’s Republic of China in 1997, residents of the Crown Colony are deeply concerned. They are more than concerned: those who have the wherewithal and/or opportunity are taking concrete steps to hedge their bets, steps that are having a discernible impact on hotel and other service industries.

The anxiety or uncertainty to which I refer is already acutely demonstrated by the growing exodus of professionals and other middle-class talent to such receptive Commonwealth destinations as Australia and Canada. This outbound migration has a flavor all its own, because many of the emigrants plan to earn their passports in three or five years, then return to Hong Kong to see what transpires in 1997 and beyond.

That’s the scenario for now—and it’s a serious one. These people, most of them Chinese, are fiercely dedicated to Hong Kong and its vivacious lifestyle. The fall-back position they gain from a second passport will allow them the luxury of testing the Chinese presence first-hand, or watching it from afar—then deciding where to settle permanently. My guess is that the sentimental and overwhelming choice would be this tiny, throbbing hangnail sliver of land off mainland China.

The hotels have not been immune, as I mentioned, from the middle-management and executive-level defections. Some of the finest hotels in the world grace this territory and, depending on the source, are each losing from two to four key employees a month. The problem is exacerbated by the fact that some 10,000 hotel rooms are coming on line in the next two years, representing a 55 percent growth over the 18,000 rooms Hong Kong now provides. Among the chains included in this surge of new properties (which is certainly a harbinger of confidence in post-British Hong Kong, at least on the surface) are Hyatt, Marriott, Nikko, Conrad (Hilton), Ramada, and possibly others.

Where will all the new properties find and recruit the necessary skilled help? How will the existing hotels keep staff or replace workers and managers lost to competitors or the exodus?

The general manager at one of the established hotels makes these points: He says the huge investment in renovation, expansion, and new hotels is certainly a positive manifestation vis-à-vis what will or won’t happen in eight years. He says much of the capital for this growth comes from the People’s Republic in conjunction with Hong Kong partners, and that $75-80 million is from U.S. sources. On the other hand, he says, the “Chinese are unpredictable; there are bound to be changes. One can only hope they won’t be too drastic.” He adds that there’s a huge amount of money to be made by the PRC from Hong Kong and “it would be foolish [for them] to upset the applecart.”

One of his colleagues noted that in terms of business or pleasure visitors, Hong Kong, at least until now, hasn’t been adversely affected by fears of what 1997 will bring. The citywide occupancy in 1987 was a fantastic 88 percent; this year will also be excellent; and next year will be 75-78 percent, mainly due to the dilution of the many new rooms, which he believes are required. He also pointed out that the new properties, which are goading the existing ones into upgrading and expanding, are a factor.

(Several months after my visit, I read a newspaper article in which a leading Hong Kong politician predicted a sizable departure of professionals before 1997 if the Basic Law now being drafted was not more democratic. The Basic Law will define how China will manage Hong Kong. According to the story, 27,000 residents left Hong Kong last year; another 40,000 are expected to go this year.)

Several of my hotel and tourism contacts refer to the predictable impact on Kai Tak Airport that the flood of new rooms would have. One said he “envisioned a nightmare” at that facility. I also have this mind-blowing vision of an airport already stretched beyond its limits, processing thousands of added travelers every day. It’s not a pleasant prospect. And Hong Kong’s present government has no substitute blueprints on the drawing boards for Kai Tak. As one person said to me, “They’ll wait for the Chinese to spend the required monies when they come in.”

(When I arrived at Kai Tak from Australia last April just after 9:00 P.M. on a Saturday, I was met by a Cathay pacific ground hostess who went to find a cart for my luggage. After twenty minutes and several jaunts around the Customs area, she finally snagged a cart. There are moments when normally sane people—exhausted and disoriented, cowed by the crowd—would kill for a baggage cart. And just to imagine if the pressure for space and civility at Kai Tak was increased by more than 50 percent? From chaos…to anarchy.)

Despite the problems, real or imagined, that face Hong Kong, investment capital continues to pour in to new hotels, condominiums, and other projects. The motto seems to be: let’s make the money now!

I took a helicopter ride several months ago over the magnificent tableau that is Hong Kong. Consider me impressed. Structures sprouting in every direction, cranes crowing the skyline. I was struck, as always, by Hong Kong’s setting: the gods were certainly in a creative mood when they engineered this layout. The confluence of distinctive hills and valleys, the singular harbor—what a place!

Meanwhile, it’s hard to believe that this beehive of activity, this powder keg of competition and investment, hides a deep-seated uneasiness, if not fear. But for the next eight years this should not be the concern to travelers, although the outflow of talent could pose a growing problem for visitor-service industries. But I wouldn’t let it keep me away, at least in the near term. Hong Kong remains a most attractive destination. Maybe the attitude should be: let 1997 take care of itself, the future is now.

This column originally appeared in Frequent Flyer magazine.

Copyright © 1991-2007 by Martin B. Deutsch. All rights reserved.