The city of Hong Kong is often a destination spot for tourists from all over the world. For some, Hong Kong is as close as a few train stops away, while others spend hours in the air to visit the vibrant metropolis. Recently, however, Hong Kong’s tourism has decreased significantly by 5-10% since March, and luxury sales have seen a substantial decline as well. In the retail market, sales have reached a decline of 10% within the year. In rough times like these, having a audience research tool can help counteract the decline in sales.
However, what caused the decline? After the proposal of an extradition bill that allows Hong Kong citizens to be brought over to China for trial, many have begun rioting up a storm. Which ultimately hurts the Hong Kong economy. So, we were interested in looking at the three verticals that Hong Kong citizens spend the most on. They were the real estate, luxury goods, and the travel industry. Using Profiler, our audience research tool, we created profile target audiences for each sector to aid us in the process.
What Does the Housing Market Look like in Hong Kong?
The housing market in Hong Kong is constantly changing, with people downsizing to micro flats and selling properties below market value.
With the aid of Toyota, Ikea, Novi, eBay, and Numbeo, South China Morning Post created an infographic to help readers visualize how truly micro the flats are. It was no surprise for Hong Kong citizens who know this fairly well; in fact, many people rush to purchase flats of this size.
Real estate development in Hong Kong looks like this: the government leases a plot of land to the highest bidder for 50 years. These bidders are kept anonymous and residential units or offices are built up on the land. Billion Development, one of the city’s largest real estate developers, is no exception to this deal, having recently created “238 flats, ranging from 217 square feet to 859 sq ft.” However, due to today’s uncertain economy, Billion Development will be selling the micro-flats “at an average of HK$17,740 (US$2,264) per sq ft,” of course, “after factoring in the discounts.” After the newly discounted prices, these apartments have become more affordable than second-hand units for many.
Who Should the Real Estate Market be Targeting?
Using Profiler, our audience research tool, we first found that the majority of Hong Kong citizens show an interest in housing and garden. More than 32.3% are interested in decor and interior decoration, and 14.7% are interested in home-owning.
We found that many Hong Kong citizens are between 25 to their mid-40s, and housing may be an essential factor for them. Most Hong Kong natives have completed secondary school and higher education.
The housing market can drastically increase their sales by targeting consumers who are between 25 and 40, and have completed secondary or higher education.
Real estate insiders can even work hand-in-hand with popular decor and gardening brands. We found that more than a quarter of Hong Kong citizens like to have a beautiful home and garden. This new information can make it much easier for real estate developers to cater to their consumers and increase sales.
Saving the Travel Industry
Traveling to Hong Kong used to be the norm for many. It made sense. Hong Kong is reasonably close to mainland China, and its system of free speech without censorship made it a prime destination. However, after the recent protest, airlines have reported a drastic drop in tourism coming into Hong Kong. According to the Hong Kong Federation of Trade Unions (HKFTU), a rapid decline of tourists from Mainland China has been recorded these past few months. Compared to 7,800 monthly average tourists in January, there were only 5,641 tourists in June.
The decline in tourism is affecting hotels, restaurants, and retail businesses in the city. HKFTU reported a declining occupancy rate in hotels, from 20% in June and an expected 40% this month when compared to prior months. Some tourists, however, report not seeing or hearing any protests and are able to enjoy their time in Hong Kong.
By using Profiler, our audience research tool, we noticed that over 70% of Hong Kong citizens enjoy traveling, and almost 60% are interested in tourism. Combined, it’s the top interest group for Hong Kong natives. Therefore, it would be beneficial for travel companies, especially airlines, to offer more flight destinations to increase sales.
How Cathay Pacific Turned Loss into Profit
Recently, Cathay Pacific, a native Hong Kong airline did just that. After seeing a loss of $160 million in 2017, Cathay Pacific bought out four other airlines and increased destination options. It recognized the growing demands of travelers and expanded its reach to accommodate. In 2018, Cathay Pacific reported $293 million in profit alone, not to mention becoming the first choice for many travelers. Great move, Cathay Pacific!
Last but not least, let’s talk about hotels. We noticed that going to the beach, hiking, sightseeing, and theme parks are top activities for many.
Hotels can use this data produced by our audience research tool to target popular activities, attract clients, and increase revenue. For example, a hotel may choose to offer vouchers for in-air sightseeing, hiking in the mountains, or visiting theme parks.
Luxury and Beauty Sales Decline
Hong Kong is a hot retail destination because of the massive presence of luxury brands. In fact, many retail brands have placed their headquarters and flagship stores in this booming city because of its history of massive sales. However, because of the recent protests, many retail brands have closed shops or reported a loss in sales. On the flip side, other regions, like China, have outperformed Hong Kong.
For example, with the exception of Hong Kong, the luxury retail group, Richemont, reported a rise in sales from February to June in the Asia-Pacific region. In Hong Kong, sales sank drastically and Richemont attributes it to the street protest. Similarly, Swiss watch brand Swatch reported a double-digit decline in sales since the protest.
For L’Occitane, the situation is quite similar. Prior to the protest, Hong Kong used to be their fourth-biggest market, globally. However, in the second-quarter reports, the sales in hong Kong has declined a total of 19%.
Another beloved brand of Chinese consumers, Prada, faces the same issues. In their second-quarter reports, Prada reported mainland China has outperformed the city of Hong Kong and attributes these numbers to the protests as well.
In retail crisis situations, the use of audience research tools can turn the situation around. Our platform found that the majority of Hong Kong citizens enjoy shopping online and have an interest in cosmetics. Brands with cosmetic lines, like L’Occitane and Prada, have a strong customer base.
How Profiler can Help Benefit your Business
Many industries have faced a rapid decline in sales because of the protest in Hong Kong. But, knowing your audience can change that and improve sales. Profiler gives you the resources to narrow down well-loved hobbies and activities in Hong Kong. It can also be used to bring back lost profit from previous months. Learn more about our audience research tool, Profiler, today to elevate your brand.