hong kong tourism benefits

12 Good Reasons for You to Visit Hong Kong

Hong Kong is best known as a shoppers' paradise. There is, however, so much more to Hong Kong than shopping. Visitors can enjoy views of the city from high altitude, sample local food, celebrate festivals, watch sports competitions, and visit movie settings in the city.

You can also take advantage of the visa-free policy and convenient transport. Your travel to and within Hong Kong can be easy, relaxing, joyful and meaningful.

This guide will help you know what to expect in Hong Kong. Just read on to find out why you should visit Hong Kong in 2019.

1. It's Multicultural: Experience Western Life and Chinese Customs

A colonial background gave Hong Kong a sophisticated fusion of east and west . Hong Kong's culture is unique, while simultaneously representing a fusion of different backgrounds.

In Hong Kong, you can visit a high-altitude café in a skyscraper and enjoy a cup of coffee there in the morning, before going to pray for good luck in a Chinese-style temple in the afternoon. You can taste the special menu of the Winter Solstice Festival on December 22, and then join in the prayers at St. John's Cathedral on Christmas Eve.

Diverse cultures in Hong Kong bring convenience for visitors. You will find it easier to travel around Hong Kong, for many people can speak English, with many major streets and places having easy-to-read and -understand English names.

• See the Top Places to Experience Hong Kong's Multiculture .

2. Cuisine: Tasty Local Dishes, and Food from All Over the World

Renowned as the culinary capital of Asia, Hong Kong is a world of exquisite, mouth-watering international dining options.

The local dim sum and fresh seafood should definitely be sampled! Hong Kong's local food is all well-prepared using fresh ingredients and has a pleasing appearance and light flavor.

Compared with the food in some other places in China, which may have a strong taste or strange ingredients, Hong Kong's food is more palatable and worth a try.

Apart from trying out the local food, you can also enjoy a full range of authentic cuisine from Japan, Korea, India, Thailand, or even Africa. There are also western restaurants. If you wish, you can eat just like you do at home.

• Top Dishes You Might Like to Try in Hong Kong .

3. Shopping: Resplendent Malls, Street Markets & Duty-Free Shops

Famed as a shoppers' paradise, Hong Kong offers a unique shopping experience. From trendy boutiques to traditional stores with Chinese products, from luxurious shopping malls to bustling street markets, you can find everything from the latest designer fashions and electronic products to best-value collectibles and antiques.

Trendsetters from all over the world find Hong Kong to be Asia's best place for buying fashion clothes, electronic goods, watches, cosmetics and ornaments. In some duty-free stores and during the sales season, some goods are sold at prices cheaper than the prices where they were produced.

• Shopping in Hong Kong - An Insider's Guide .

4. Sightseeing: Breath-Taking Harbor Views & Skylines

Reach the summit of Victoria Peak to enjoy spectacular views! This is an imperative for every first-time visitor to Hong Kong. On the observation platform of the peak, you can have a bird's-eye view of Victoria Harbour and downtown Hong Kong, and admire Hong Kong's skyline in the distance.

You wouldn't need long to climb up and see the great views, though riding an antique tram is a more popular and relaxing way of getting there. For closer contact with local people, you can also ride a Star Ferry on Victoria Harbour.

5. Family-Friendly: Kids Also Like Hong Kong

Hong Kong is a perfect destination for family tours, with distinctive parks, great museums, and nature reserves. Children will have fun meeting cartoon characters in Disneyland , taking a boat ride at a fishing village, and watching science movies shown on the hemispherical dome of the Hong Kong Space Museum.

6. Festivals: Celebrate Eastern and Western Festivals with Locals

There are many festivals throughout the year, and whenever you visit Hong Kong, you may have a good chance to experience its unique festival culture.

Hong Kong is one of the best places for celebrating Christmas and New Year's Eve . During Christmas, streets and buildings have special festival decorations. There are also countdown events and firework performances on New Year's Eve around Victoria Harbour.

Take the opportunity to experience Chinese festivals in Hong Kong, like Spring Festival, Dragon Boat Festival and Mid-Autumn Festival. Enjoy the lively celebrations and special festival cuisine.

• Celebrating Chinese New Year 2020 in Hong Kong .

7. Colorful Nightlife

Don't miss the night fun in Hong Kong. You will find plenty of places to have some food, a drink, or other fun. The bars and pubs are concentrated in east Tsim Sha Tsui, Lan Kwai Fong and Wan Chai. Most restaurants, bars and other places of entertainment operate until the wee hours.

You can alternatively take a night cruise at Victoria Harbour to enjoy the views and the Symphony of Lights. Of course, there are many other such possibilities.

8. Sports: International Competitions of Rugby, Tennis, Horse Racing…

Hong Kong, with its many world-class sports events , is the perfect place for you to watch top sports' stars perform and to join in the excitement! There are many high-profile sports events throughout the year, such as the Hong Kong Rugby Sevens, the Hong Kong Tennis Open and the International Dragon Boat Races.

Hong Kong horse racing is not only popular locally, but also important internationally. During the racing season from September to July, don't miss the races in Happy Valley Racecourse or Sha Tin Racecourse. International competitions are convened there every year.

9. Movie Pilgrimage: Shooting Sites of Hong Kong & Hollywood Movies

Like Hong Kong movies? Then go to Temple Street, Yau Ma Tei Fruit Market or Chung King Mansions to see where the movies were shot . Hong Kong is also the site of many Hollywood movies, like Transformers 4 , Doctor Strange and Ghost in the Shell .

If you are a fan of Hong Kong police and gangster movies, you can visit the Police Museum to see the history of Hong Kong police and the weapons they use.

10. Visa-Free: 90-180 Days

Most foreign visitors can enjoy a 90-day visa-free stay in Hong Kong, including passport holders from America, Canada, Australia, New Zealand and EU countries. Visitors from the United Kingdom can stay visa-free for up to 180 days .

11. Transportation: Direct Flights from the World's Major Cities

Hong Kong International Airport has direct flights connecting many major cities of the world, including London, New York, LA, Toronto, Vancouver, Melbourne, Sydney, Tokyo, Osaka and Seoul.

Hong Kong also has one of the world's best subway systems , as well as convenient buses, trams and ferries. You don't even need to prepare loose change. Buy an Octopus Card and you can get on nearly all public transport with it.

12. Gateway: Your Starting Point for Visiting China and the Rest of Asia

Hong Kong's location makes it the main gateway to China as well as the rest of East Asia. Its international air service is excellent, and competition keeps the fares relatively low compared to neighboring countries.

• Hong Kong — Gateway to Chinese Mainland
• China Itineraries from Hong Kong for 1 Week to 3 Weeks  

Enjoy Exploring Hong Kong with Us

China Highlights can offer you a hassle-free journey to Hong Kong. If you travel with us, you will enjoy a private tour with an experienced guide. You can discover Hong Kong all at your own pace.

Here are some of our standard tour plans for your reference:

• Half-Day Hong Kong Island Tour — including Victoria Peak with a one-way Peak Tram, and Aberdeen with a sampan ride
• One-Day Lantau Island and Giant Buddha Tour — taking you to visit Po Lin Monastery and Tai O fishing village
• 10-Day China Family Tour to Beijing, Guilin, Yangshuo, and Hong Kong

See more Hong Kong tours , or let us customize a tour for you. Just let us know your interests and preferences.

You Might Like

• Hong Kong vs Shanghai — Which City Should I Visit?

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The 10 best things to do in Hong Kong in 2024

Feb 16, 2024 • 6 min read

It’s hard not to fall in love with Hong Kong at first sight... here's what to do when you get there © itsskin / Getty Images

It's hard not to fall in love with Hong Kong at first sight, a disarmingly high-rise metropolis in the dreamiest of island settings. Then you start to discover just how memorable the food scene is, how vibrant the nightlife is, how incredible the shopping is – and game over, you're smitten. 

This modern cityscape has become a global icon at a breakneck speed, emerging from British colonial rule to staggering wealth and success on the world's stage. This newfound power and influence have brought confrontational challenges with the Chinese government as it attempts to bring its upstart territory to heel. For now, at least, this incredible city retains its allure. 

It's hard to know where to begin in Hong Kong – the scale of its attractions can be overwhelming. Start your must-see list with our ten favorite things to do there.

1. Marvel at Hong Kong's skyline from the deck of the Star Ferry

Despite rumors in 2022 that the service would close after 142 years, Hong Kong's iconic Star Ferries continue to chug the ten-minute trip across Victoria Harbour between Kowloon and Central. Costing mere pennies each way, it's a commute dressed up as the world's cheapest sightseeing cruise. It's also simply the best way to take in the skyscrapers (over 500 are above 150m/492ft tall) and jungle-clad hills that Hong Kong Island is best known for.

Detour: Star Ferry also runs a one-hour Harbour Tour voyage with pick-ups at Tsim Sha Tsui, Central, and Wan Chai.

Read more: Copy My Trip: rediscovering Hong Kong's street markets, buzzy restaurants and Star Ferries

2. Savor craft cocktails in Asia's most creative bars

With eight venues ranking in Asia's 50 Best Bars for 2023 (including first and eighth place with Coa and Argo, respectively), Hong Kong's bar scene is positively humming with creativity. Coa is all about boutique agave and the flavors of Mexico, while Argo utilizes sustainably sourced staples like coffee and cacao to make a statement about climate change. Hong Kong's trailblazing mixologists also include Quinary , inspired by the Spanish molecular restaurant El Bulli, and The Old Man , which takes its inspiration from Ernest Hemingway.

3. Explore Hong Kong Island by tram 

Hong Kong's teetering trams have been traversing the north shore of Hong Kong Island since 1904. Looking like slimmed-down London buses, the double-decker "ding dings" are a fun and low-impact means of exploration, and you get a killer view from the top deck. Hop on an eastbound tram to North Point, and you'll have the added thrill of trundling right through the middle of Chun Yeung Street Market , inches away from stalls and carts stacked with glossy cabbages and fresh seafood.

4. Queue up for Michelin-starred roast goose

Glitzy Hong Kong has some of the best (and most expensive) fine dining in Asia, but you can still eat like royalty on a budget if you know where to go. Yat Lok and Kam's Roast Goose are two unpretentious local diners that specialize in the Cantonese staple of roast goose over rice. Both serve glorious renditions of the dish for around HK$100, and both also happen to have a Michelin star.

Local tip: Goose leg is more highly prized than breast and typically costs more on menus.

5. Go for a hike up and around Victoria Peak

Taller than Hong Kong's highest skyscraper, the 552m (1811ft)  Victoria Peak is Hong Kong's most popular beauty spot, with hordes of visitors riding the white-knuckle Peak Tram to its upper terminus for jaw-dropping views of the city and the South China Sea. To skip the crowds and stretch your legs, consider hiking up from Pok Fu Lam Reservoir, a relatively gentle ascent, and then circling the top following the Ludgard Road loop, a flat, accessible trail with panoramic viewpoints. They're worth the effort, but allow 2.5 hours to complete the 6km (3.7 miles) route.

Planning tip: Aim to hit the Peak just before sunset to see the skyline in both day and night mode.

6. Have a night at the races, Hong Kong style

Wednesday night is race night on Hong Kong Island, with thousands of revelers descending on the Happy Valley Racecourse to watch horses thunder around the track, place a bet or two, and drink copious amounts of beer. The atmosphere is usually electric, with live music and silly wigs a-plenty, and entry costs just HK$10 using your Octopus (subway) card. It's one of the most fun things to do at night in Hong Kong. The oval race track, first laid out in 1845, is overlooked by a cliff face of towering apartment blocks and makes for a remarkable setting.

Local tip: Outside of race days, joggers can use the course as a public running track.

7. Get nostalgic for old Hong Kong at Yau Ma Tei

For a taste of old Hong Kong, steeped in neon and nostalgia, head to Yau Ma Tei in Kowloon where you'll find mahjong parlors, martial arts dens, dried seafood sellers, cleaver shops, plus Hong Kong's oldest theater , performing Cantonese opera. Be sure to stop in for a cuppa at one of the area's retro cha chaan tang (teahouses), and if you're feeling in fine voice, head to a neighborhood "singalong parlor" for old-time karaoke and beers with the locals.

8. Seek out atmospheric urban temples

Easily overlooked amid all the tightly packed, high-rise modernity are Hong Kong's many urban temples, with their double-eave tiled rooftops, resident fortune tellers and hanging coils of incense. Some are dedicated to Tin Hau (Mazu), a sea goddess, while others honor a Chinese general called Che Kung. The gods of literature and war are also represented, as is the case with the magnificent Man Mo Temple . Entry is usually free and the temples are at their busiest during Hong Kong's regular folk festivals.

9. Embark on an island-hopping adventure

There are some 250 islands around Hong Kong, a few of which are an easy ferry trip away from the piers at Central. You might try laidback Lamma with its hippy vibes and craft beer shacks, or hipster Cheung Chau with its temples, trails and beaches. Lantau , Hong Kong's biggest island that's been connected to the mainland since 1997, is home to the world's largest seated bronze Buddha , as well as the world's most famous mouse at Hong Kong Disneyland .

10. Bag a bargain at the street markets

Hong Kong is a shopper's nirvana with more malls per square mile than most places, but it's on the street and in its markets that you'll find the best retail buzz. Temple Street Night Market is perfect for souvenirs, while the nearby Yau Ma Tei Fruit Market is a hive of commerce at all hours. Cat Street is the go-to spot for vintage and curio stalls, and for snacks, the retro "cooked food markets" ( da pai dong ) of central and east Hong Kong island dish up homely meals like fish balls in soup and wok-tossed noodles.

This article was first published Oct 4, 2022 and updated Feb 16, 2024.

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Sustainable Travel & Ecotourism in Hong Kong

Hong Kong may be crowded, but it's remarkably clean compared to many other major Asian cities. That said, Hong Kong's most pressing environmental concern is air pollution, which has gotten progressively worse over the years, fueled largely by factories just over the border in mainland China and local vehicular traffic. In fact, pollution is sometimes so bad, that even a cloudless day can't guarantee that views will be good from atop Victoria Peak. The euphemism used in weather reports is "haziness." To learn more about grassroots efforts to improve the air, check out the websites www.cleartheair.org.hk and www.hongkongcan.org.

In any case, to ensure that you're not contributing to the global problem, try to choose a nonstop flight to Hong Kong, since it generally requires less fuel than an indirect flight that stops and takes off again. Try to fly during the day -- some scientists estimate that nighttime flights are twice as harmful to the environment. And pack light -- each 15 pounds of luggage on a 5,000-mile flight adds up to 50 pounds of carbon dioxide emitted.

In Hong Kong, use public transport where possible -- Hong Kong's trains, trams, buses, and ferries are more energy-efficient forms of transport than taxis. Even better is to walk; you'll produce zero emissions and stay fit and healthy.

Where you stay during your travels can also have a major environmental impact. To determine the green credentials of a property, ask about trash disposal and recycling, water conservation, and energy use; also question if sustainable materials were used in the construction of the property. Luckily, Hong Kong hotels are becoming increasingly environmentally aware. The InterContinental Grand Stanford, for example, has been a pioneer in green management practices; in 2007 it became the first hotel in Hong Kong to install a more efficient and environmentally friendly new hybrid fuel system for hot water and steam that reduces temperatures around the hotel and is equivalent to taking 70 cars a year off the road. The Eaton Hotel not only employs a full-time environmental manager responsible for monitoring environmental and social performance, but also has an in-house green team, recycles everything from plastic bottles and aluminum to office paper, and provides staff community service (it even used old banquet tablecloths to make restaurant place mats). Finally, to do your part, request that your sheets and towels not be changed daily. (Many hotels already have programs like this in place.) Turn off the lights and air-conditioner when you leave your room.

As for dining, try to eat at locally owned and operated restaurants that use produce grown in the area, like Posto Pubblico. This contributes to the local economy and cuts down on greenhouse gas emissions by supporting restaurants where the food is not flown or trucked in across long distances. You might also want to patronize restaurants that donate leftover food to food pantries, such as Pret A Manger and restaurants in the Eaton Hotel. And when shopping, keep in mind that you'll pay HK10¢ for each plastic bag you need at supermarkets, convenience stores, and health and beauty stores; to cut down on unnecessary plastic and to save a little money, bring your own bag.

Volunteer travel has become increasingly popular among those who want to venture beyond the standard group-tour experience to learn languages, interact with locals, and make a positive difference while on vacation. The Hong Kong YWCA, 1 MacDonnell Rd., Central (tel. 852/3476 1340; www.esmdywca.org.hk), serves as a local clearinghouse for volunteer opportunities under its "News & Events" button. Although directed toward local residents, some of the volunteer opportunities are short term. The website also offers a variety of courses, including classes for Cantonese, Mandarin, and cooking, open to both YWCA members and nonmembers.

Sustainable tourism is conscientious travel. It means being careful with the environments you explore and respecting the communities you visit. To participate in ethical tourism at a local level, your best bet in Hong Kong is in the village of Tai O on Lantau Island.

Resources for Responsible Travel

In addition to the resources for Hong Kong listed above, the following websites provide valuable wide-ranging information on sustainable travel.

• Responsible Travel (www.responsibletravel.com) is a great source of sustainable travel ideas; the site is run by a spokesperson for ethical tourism in the travel industry. Sustainable Travel International (www.sustainabletravelinternational.org) promotes ethical tourism practices and manages an extensive directory of sustainable properties and tour operators around the world.
• Carbonfund (www.carbonfund.org), TerraPass (www.terrapass.org), and Cool Climate (http://coolclimate.berkeley.edu) provide info on "carbon offsetting," or offsetting the greenhouse gas emitted during flights.
• Greenhotels (www.greenhotels.com) recommends green-rated member hotels around the world that fulfill the company's stringent environmental requirements. Environmentally Friendly Hotels (www.environmentallyfriendlyhotels.com) offers more green accommodation ratings.
• Volunteer International (www.volunteerinternational.org) has a list of questions to help you determine the intentions and the nature of a volunteer program. For general info on volunteer travel, visit www.volunteerabroad.org and www.idealist.org .

Note : This information was accurate when it was published, but can change without notice. Please be sure to confirm all rates and details directly with the companies in question before planning your trip.

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Open Access

Peer-reviewed

Research Article

Tourism’s long- and short-term influence on global cities’ economic growth: The case of Hong Kong

Contributed equally to this work with: Andy C. L. Tai, David W. H. Wong

Roles Conceptualization, Data curation, Formal analysis, Methodology, Software, Validation, Visualization, Writing – original draft, Writing – review & editing

Affiliation Division of Business and Hospitality Management, College of Professional and Continuing Education, The Hong Kong Polytechnic University, Hong Kong, Hong Kong

Roles Conceptualization, Formal analysis, Funding acquisition, Methodology, Supervision, Validation, Writing – original draft, Writing – review & editing

* E-mail: [email protected]

Affiliation Department of Management, The Hang Seng University of Hong Kong, Hong Kong, Hong Kong

Roles Resources, Validation, Writing – review & editing

Affiliation Department of Geography and Resource Management, The Chinese University of Hong Kong, Hong Kong, Hong Kong

• Andy C. L. Tai, 
• David W. H. Wong, 
• Harry F. Lee, 

• Published: September 29, 2022
• https://doi.org/10.1371/journal.pone.0275152
• Reader Comments

This research examines how tourism development has impacted economic growth in a global city–Hong Kong. A large body of research has investigated national tourism-led growth in developed and developing countries. However, many such studies have overlooked how policies aimed at fostering the development of tourism affect the local economic development of global cities. The Chinese and Hong Kong governments liberalized their visa policies with the launch of the Individual Visit Scheme in 2003. Such liberalization has led to significantly more tourist arrival from China. Our autoregressive distributed lag model of tourism-related data from 2003 to 2019 provides strong evidence that more tourism can spur short-run economic growth. Yet, such tourism can lead to uncertain effects on local economic development in the longer run. Hong Kong’s transient tourism-led growth has almost entered the stagnation stage of the Tourism Area Life Cycle model. During such stagnation, jurisdictions like Hong Kong can expect limited long-term economic growth from their tourist sector. Our findings thus sound a warning for global cities looking to tourism to sustain longer-term economic growth.

Citation: Tai ACL, Wong DWH, Lee HF, Qiang W (2022) Tourism’s long- and short-term influence on global cities’ economic growth: The case of Hong Kong. PLoS ONE 17(9): e0275152. https://doi.org/10.1371/journal.pone.0275152

Editor: Ricky Chee Jiun Chia, Universiti Malaysia Sabah, MALAYSIA

Received: July 6, 2022; Accepted: September 11, 2022; Published: September 29, 2022

Copyright: © 2022 Tai et al. This is an open access article distributed under the terms of the Creative Commons Attribution License , which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.

Data Availability: All relevant data are within the paper and its Supporting Information files.

Funding: The Hang Seng University of Hong Kong Research Support Grant, Grant Number: URC-RS-2122-020.

Competing interests: The authors declared that no competing interest exist.

1. Introduction

The travel and tourism industry represents one of the most extensive and fastest-growing sectors worldwide. Such tourism thus contributes significantly to national and regional economic development in many developed and developing economies. The World Travel and Tourism Council estimates tourism accounted for about 10% of global gross domestic product (GDP) and global employment in 2019. Yet, the sector lost a bit more than US$9 trillion in 2019 and less than US$5 trillion in 2020 as a result of the COVID-19 pandemic. Such losses trimmed almost 4% of GDP off the global economy. Global employment in the sector fell about 19% from 334 million in 2019 to 2020 [ 1 ]. The COVID-19 crisis devastated the travel and tourism industry, posing severe challenges for the recovery of the global economy.

Hong Kong’s economy has been particularly prone to the COVID-19 pandemic’s economic effects. According to the Hong Kong Tourism Board, international tourist arrivals in Hong Kong grew from 13.6 million in 2000 to 55.9 million in 2019 [ 2 ]. Revenue from such tourism receipts rose from US$7.9 billion in 2000 to US$32.8 billion in 2019 [ 3 ]. The signing of the Individual Visitor Scheme between the Mainland and Hong Kong in 2003 exacerbated these trends. Mainland tourist arrivals multiplied 5 times from 8.4 million in 2003 to 2019. Mainland tourists accounted for about 78% of Hong Kong’s tourism market share. Tourism—especially from mainland China—became to form one of Hong Kong’s central economic pillars.

For decades, policymakers in places like Hong Kong have considered tourism an engine of economic growth. However, the chicken-and-egg problem affects tourism’s effect on economic growth or visa-versa . Fast-growing metropolises attract far more tourists than stagnant ones. According to Solow’s neoclassical growth model, an aggregated production function approach has been adopted and postulates technological change as an exogenous variable [ 4 ]. Yet, a city’s touristic luster develops independently and exogenously from decisions about deploying capital in the most productive way. Thirty years later, economists like Mankiw, Romer, and Weil, and Romer saw the potential such tourism could bring [ 5 , 6 ]. Tourism brings talented innovators, business people, and touristic places attract research interest. Such ‘human capital’ forms part-and-parcel with the endogenous technological innovation that drives Solow’s capital into scenic world cities. In recent years, theoreticians and econometric modelers have directly incorporated tourism into their models of economic growth. Tourism brings employment opportunities, foreign exchange earnings, and infrastructure improvements (among other things); positively contributing to a country’s/region’s economic growth and development [ 7 ]. Tourism also promotes connections between sectors—adding economies of scope and helping redistribute growth to lagging regions [ 8 ]. Asset bubbles, the increased cost of living, environmental degradation, and the over-exploitation of natural resources represent clouds to these silver linings in Hong Kong and other global cities [ 9 ].

Four major hypotheses have dominated the literature’s discussion about the association between tourism and economic growth [ 10 ]. First, the tourism-led growth hypothesis has recognized the catalytic effect of tourism on the economic growth process in many countries/ regions. It has argued for tourism’s direct contribution to components of GDP like the hotels/ hospitality sector, travel agents, passenger transport, and other leisure/ recreational services [ 11 ]. Unlike other sectors like manufacturing or finance, governments and/or public-private consortia must work together to increase investment in infrastructural development [ 12 ]. Second, the economy-driven tourism growth hypothesis posits a country/ region’s economic growth can strengthen the tourism sector. It indicates unidirectional causality from economic development to tourism, not vice-versa . More business travelers and upgrades to electric/ water mains and roads occur only when the local business expands enough to demand and pay for these services [ 13 ]. Third, the feedback hypothesis postulates bi-directional causality between tourism and economic development. Developing tourism and economic growth jointly determine each other [ 14 , 15 ]. Finally, the neutrality hypothesis argues that tourism has no significant effect on economic growth [ 16 ].

Numerous dynamic models have sought to move past these simplistic views of tourism-led growth. Butler’s Tourism Area Life Cycle (TALC) model, for example, depicts the evolution of a tourist area from its discovery to its final stage [ 17 ]. A tourism area’s S-shaped growth on a graph of time versus growth passes through the six stages of exploration, involvement, development, consolidation, stagnation, and decline (or, in some cases, rejuvenation). Some researchers point to the progressively increasing growth rates of tourist arrivals in a specific tourist area during the exploration, involvement, and development stages of a tourist area [ 18 , 19 ]. Decreasing tourist visits characterize the consolidation and stagnation stages of the area’s life cycle. In all stages, a tourist area’s economic growth goes hand-in-hand with its tourism development.

The literature, though, still leaves two questions unanswered. First, how does the tourism-economic growth relationship work for global cities? According to Globalization and World Cities Research Networks, global cities are important sites for foreign direct investment and take a pivotal role in production, finance, and advanced producer service to facilitate the operation of multinational corporations. New York, London, Singapore, Hong Kong, Paris, Beijing, Shanghai, Tokyo, and Madrid are typical global cities. These areas have large, urbanized populations working and living in a diversified economy [ 20 ]. If many researchers examine the tourism-growth nexus at the international, regional, and country levels, they leave the push and pull of global city factors completely unexplored [ 15 , 21 ]. Second, how has empirical or econometric methodology sorted out whether global cities encourage tourism? Time series arguments like Granger causality cannot identify the source of this growth. These methods also over-simplify the interaction between these factors [ 22 ]. Even if they could perform these feats, existing models cannot identify the short-term versus long-term effects of tourism on economic growth and visa-versa [ 23 ]. Authors like Song and Wu have called for their peers to comprehensively review the still nebulous association between tourism development and economic growth [ 24 ]. The results would allow policymakers to promote regional economic development with more effective tourism marketing and policy decisions.

Looking specifically at Hong Kong, we systematically examine how its economic growth responded to tourism after the 1997 Handover. Hong Kong represents a prime example of a renowned global city embedded with other prominent, factor-intensive, and trade-heavy metropolitan areas [ 25 ]. Understanding the growth-tourism nexus in Hong Kong thus teaches us something about this nexus in other global cities. The 2003 Individual Visit Scheme (IVS) also offers a large-scale natural experiment—or event where tourism changed independently of economic factors in any particular region. We use an autoregressive distributed lag (ARDL) model on several variables ranging from 2003 to 2019. The ARDL model will thus help us assign short-run and long-run effects on the role of tourism (and other factors) in Hong Kong’s economic development over the roughly 17-year period. The analysis will allow us to answer three questions left by gaps in the literature we cite above. First, does the TALC model apply to Hong Kong in the early part of this century? Second, what influence has tourism had on Hong Kong’s economic growth? Third, do short- and long-run factors influence how tourism development and economic growth evolve over time?

Our study contributes to the tourism-growth literature in three ways. First, our research provides new insights into how existing tourism and economic growth evolve in a global city. Many researchers—focused on countries or popular regions—have overlooked the large metropolitan regions that drive much global growth. Second, our study allocates the effects of tourism and growth in short and long-run terms. We find that tourism does not affect contemporaneous economic growth in the short run. The data also show a statistically significant one-quarter lagged effect on tourism development on economic growth. These results suggest that policies aimed at promoting tourism in places like Hong Kong have only transient effects. Third, and finally, recalling the TALC model, Hong Kong’s stagnation period in its tourism has resulted in short-term positive economic growth, while long-term growth spurts have not made up for. These findings argue that policymakers like Hong Kong can lean on tourism policies to juice growth—particularly during down-turns like those caused by the recent COVID-19 pandemic.

Our article has six sections. Section 2 analyzes Hong Kong’s current tourism sector. Section 3 outlines our methodology and our model specifications. Section 4 describes the data we used and our variable selection. Section 5 presents and discusses our empirical results. The concluding section draws together conclusions and presents implications from our study.

2. Hong Kong’s tourism sector

Over the past two decades, the tourism industry gradually became one of the strategic sectors in Hong Kong’s economy. According to Fig 1 , the share of international tourism receipts in total exports increased from 3.9% in 1998 to 7.5% in 2014 and then declined to 5.1% in 2019. Moreover, based on Fig 2 , the contribution of travel and tourism to Hong Kong’s GDP grew from 2.5% in 1995 to about 6.0% in 2013 and then dropped to 4.4% in 2018. The data trends in the two figures match closely.

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Data source: The World Bank. https://data.worldbank.org/indicator/ST.INT.RCPT.XP.ZS?locations=HK .

https://doi.org/10.1371/journal.pone.0275152.g001

Data source: World Travel & Tourism Council. https://tcdata360.worldbank.org/indicators/tot.direct.gdp?country=HKG&indicator=24648&countries=BRA&viz=line_chart&years=1995,2028 .

https://doi.org/10.1371/journal.pone.0275152.g002

Mainland visitors to Hong Kong have exploded since the Handover in 1997. Fig 3 shows the number of inbound tourist arrivals into Hong Kong from 1997 to 2019. Before 1997, Mainlanders could only visit Hong Kong by applying for business visas or joining organized group tours. From 1997 to 2002, Mainland visitor numbers steadily increased from 2.4 million to 6.8 million. The Severe Acute Respiratory Syndrome (SARS) epidemic in 2003 disrupted this growth. In response, government authorities on both sides of the border set up the IVS in July. The Scheme allowed Mainland visitors to travel to Hong Kong for up to seven days at a time. They could make only one or two trips per year under the Scheme and originate from only four cities in the Guangdong province (the province abutting Hong Kong). Mainland visitors to Hong Kong under the IVS scheme rose gradually from 8.5 million in 2003 to 18.0 million in 2009 and 22.7 million in 2010.

Data source: Hong Kong Annual Digest of Statistics. https://www.censtatd.gov.hk/en/EIndexbySubject.html?scode=100&pcode=B1010083 .

https://doi.org/10.1371/journal.pone.0275152.g003

Following the global financial crisis in 2009, the Shenzhen government allowed its permanent residents to visit Hong Kong multiple times under a modification to the IVS scheme. Such a visitor received an M-permit under the IVS scheme, with the M-permit endorsement granting the bearer the right to enter Hong Kong multiple times during one year. By 2015, Mainland tourist arrivals hovered at around 45.8 million people.

The growth of illegal black-market trade across the Shenzhen-Hong Kong border encouraged the authorities to modify the M-permit regime in 2015. In April 2015, government leaders announced the M-permit’s replacement with an Individual Visit Endorsement, allowing one weekly trip. By 2020, the mainland government extended the IVS scheme to 49 cities in 18 provinces [ 26 ]. Yet, the number of Mainland visitors remained relatively stable during this period. Mainland tourist arrivals from 2014 to 2018 only increased by about 3.8 million people. Social unrest in Hong Kong in 2019 led to a drop in Mainland visitors to about 44 million.

The introduction of the IVS scheme had a noticeable effect on the type and number of tourists/ visitors to Hong Kong. Non-Mainland visitors to Hong Kong rose from 8.9 million in 1997 (the year of Hong Kong’s Handover) to 12.6 million in 2008 (the start of the financial crisis). Such a rise vastly exceeded the increase in Mainland visitors until the introduction of the IVS scheme in 2003. The number of non-Mainland visitors oscillated between 13.3 million and 14.1 million from 2010 to 2018. By the end of 2019, non-Mainland visitors declined to 12.1 million. Such numbers make up only about one-quarter of the number of Mainland tourists. Since the COVID-19 pandemic, inbound tourism has almost halted from January 2021 [ 27 ].

In Butler’s TALC model, Hong Kong’s current tourist figures lie at the stagnation stage of the city’s tourism life cycle curve. The general reduction in tourist arrivals and the decline of the travel and tourism sector’s contribution to Hong Kong’s GDP after 2018 implies Hong Kong’s tourism infrastructure has reached its carrying capacity.

Spending in Hong Kong by Mainland and non-Mainland tourists varies, depending on whether they return to the Mainland on the same day or spend at least one night in Hong Kong. As shown in Fig 4 , spending by Mainland visitors to Hong Kong grew sharply from HK$26.1 billion in 2002 to HK$166.0 billion in 2014. Such growth represents a 41% compounded annualized growth rate in such spending until the end of 2014. In 2015, such spending gradually declined from HK$142.6 billion to HK$126.3 billion in 2016, bouncing back to HK$139.9 billion in 2018. By 2019, such spending plunged again to HK$97.2 billion.

https://doi.org/10.1371/journal.pone.0275152.g004

Spending by non-Mainland visitors at least one night in Hong Kong differed significantly from the trends described previously. Such spending increased from HK$25.7 billion in 2002 to HK$41.0 billion in 2008. Such spending slightly dropped to HK$33.7 billion in 2009 and hovered between HK$48.1 billion in 2010 and HK$53.7 billion in 2018. Reflecting the first results of the pandemic, tourist spending in Hong Kong by this stratum of tourists plummeted to HK$41.0 billion in 2019.

Spending by Mainland day-trippers skyrocketed from HK$2.0 billion in 2002 to HK$76.1 billion in 2014. Such spending then fell from HK$75.1 billion in 2015 to HK$59.5 billion in 2017. Since then, their spending has chaotically bounced from HK$74.9 billion in 2018 to HK$60.4 billion in 2019. Day-trippers’ spending thus mirrors the trends in spending by Mainland tourists spending at least one night in the city. However, spending by non-Mainland visitors bucked these trends. Whether day-tripping or spending the night in Hong Kong, their spending remained remarkably stable from 2002 to 2019. Such spending stayed between HK$1.6 billion (in 2002) and HK$3.8 billion (in 2019).

3. Methodology and model specification

The ARDL approach makes the relationship shown in Eq 2 more dynamic. Specifically, we perform the data transformation by log-differencing all variables for econometric reasons and make Eq 2 allow us to regress lagged values of the dependent and independent variables. Results related to short lags describe short-term effects, and a slight mathematical manipulation of the equation allows us to find any possible long-term equilibria. The Error Correction Model (ECM)–a simple recombination of the equation shown above—demonstrates how quickly the variables return to their long-term equilibria. Compared to conventional estimation techniques, such as Granger causality, the ARDL method can evaluate the short-run and long-run relationship between tourism development and economic growth. As such, the ARDL method is more relevant in our study [ 31 – 33 ]. Numerous studies have also used similar approaches in contexts like ours [ 23 – 34 ].

Which lags should we choose? And will the variables react to each other in the same time period? In other words, are our variables cointegrated (meaning we do not need to remove past information about our variables to do our analysis)? By applying the ARDL technique, we further develop our following model. We use Augmented Dickey-Fuller (ADF) and Philips-Perron (PP) unit root tests to estimate each variable’s level value, first-order difference, and second-order difference over time. The constant a does not change over time, the error term ε equals zero over a short span of time and θ represents the effect that past output has on current output. If Δ represents a change in a variable between two immediate periods; thus, Δy t represents the difference between y in time t and time t-1 . Eq 3 shows the simplest one-period difference, whereas Eq 4 shows the difference with i periods in the past. Variables with bars over them represent constants.

If we allow for Δ over many periods, we could have θ t-1 y t-1 + θ t-2 y t-2 and so forth on the current y t . Each theta represents a separate time effect. Variables with short lags represent short-term effects, and those with long-term lags represent longer-term effects. Eq 4 expresses this mathematically—with a sub-set of lag terms representing these short-term effects and a bar over the top to indicate a stable, equilibrium value.

If our variables affect each other in the long run and thus exhibit co-integration, we will observe the same long-term and short-term parameters described in the equation above. The adjustment toward the long-run values represents the error-correction part of our model. We do not choose our period i arbitrarily. We look at the lags with the best Akaike Information Criteria (AIC). We checked the usual assumptions behind time series models, using the relevant diagnostic tests when we were unsure about the good behavior of some of our variables. We found no issues that jeopardized our procedure or required changes to the data.

4. Data and variable selection

We suppose real GDP develops according to the production function we have described. We use the number of international tourist arrivals as one of the explanatory variables to test the effect of tourism development on economic growth. As a city’s economy grows in line with the development of its tourism resources and visitors, we hypothesize that tourism positively affects economic growth.

To examine this tourism-growth relationship in Hong Kong, we control for a number of factors. First, we include the amount of physical capital used in production as gross fixed capital formation. Second, we include employment figures to control the labor used in production. Third, we include the number of secondary school graduates as our proxy for human capital development. Hong Kong is an international financial hub. We use the GEM’s market capitalization to control the business activities of small and mid-sized technology firms and start-ups listed in Hong Kong. The extent of market capitalization represents our final control variable. These control variables thus represent the variables we described in Eqs 3 and 4 above.

5. Results and discussion

Before analyzing our results, we need to look at the validity of our regression. Table 1 presents the descriptive statistics for our entire data set. These statistics indicate that our variables follow the Gaussian distributions required for linear regression. We specifically show the skewness and kurtosis test results for our variables. The ARDL bounds approach to cointegration deployed in this study will minimalize the effects of some outliners, making our measures and inferences more robust. Table 2 shows the correlation between our variables. The correlation matrix reveals that the number of international tourist arrivals ( ta ) and economic growth ( y ) are positively correlated at a 1% significant level, providing preliminary evidence to support the tourism-growth nexus. More importantly, no correlation coefficients appear high enough to warrant concerns about multicollinearity between our variables.

https://doi.org/10.1371/journal.pone.0275152.t001

https://doi.org/10.1371/journal.pone.0275152.t002

Besides, non-stationarity (when variables are not cointegrated) represents a first problem that can invalidate our regression results. Fig 5A–5F show the difference in our variables’ natural logarithmic form over our period. As expected from these trends, our variables likely contain unit roots (and are thus integrated). Table 3 reports the results of the ADF and PP tests we described earlier–looking for unit roots. All our variables show statistically significant integration over one period.

https://doi.org/10.1371/journal.pone.0275152.g005

https://doi.org/10.1371/journal.pone.0275152.t003

To examine the co-integrated relationships among all variables, we performed the bounds test developed by Pesaran, Shin, and Smith [ 33 ]. Table 4 presents the bounds test for co-integration. Since the calculated value of the F-statistic (51.481) is greater than the upper bounds critical value (4.764) at a 1% significant level, all variables are co-integrated. Concurrently, our result of co-integration confirms the existence of the short- and long-run associations among the variables in the ARDL model specification.

https://doi.org/10.1371/journal.pone.0275152.t004

As previously mentioned, we used the AIC to determine the optimal lag length for each variable. The best information criteria of tourism development for lag times are two periods. After applying the appropriate lags and rearranging our equation to fit the ECM format, we estimated the short and long-term effects between tourism development and economic growth. Table 5 reports whether the data exhibited a long-run estimate. According to our ARDL model, the first variable shows one period lag while the remaining variables demonstrate two periods lag (or ARDL (2,1,2,2,2,2)). Our results show tourism development has no causal link with economic growth in the long run (i.e., in the same period), which has the same result reported by Tang [ 16 ]. Still, tourism development has a positive and statistically significant influence on economic growth after a one-period lag. For example, a 1% increase in tourism development today leads to a 0.205% rise in economic growth tomorrow. Corroborating authors like Oh and Tugca [ 7 , 8 ], our results show that the development of tourism in Hong Kong likely contributed to transitory economic growth in the area. However, such effects do not persist.

https://doi.org/10.1371/journal.pone.0275152.t005

According to Table 6 , the ECM produced an error correction term, which was -0.902 and significant at the 1 percent level, implying a short-run relationship prevails between the dependent variable and the regressors. Looking at the error correction side of our model, roughly 90% of a shock to tourism persisted beyond a single quarter. Changes in tourism definitely affect GDP growth—just as such, growth affects how tourism changes in Hong Kong from quarter to quarter. Nevertheless, even if they persist in small amounts, the relationships between the growth in tourism and GDP continue in the longer run.

https://doi.org/10.1371/journal.pone.0275152.t006

We checked the robustness of our model by looking at testing for all the usual problems. The Breusch-Godfrey serial correlation Lagrange Multiplier test found no autocorrelation in the residual terms. A Breusch-Pagan-Godfrey test found no heteroskedasticity in our model’s residual terms. A Ramsey RESET test found that we did not misestimate our model by forgetting to use squared terms. Finally, our Jarque-Bera test found normal distributions in our model’s residual terms.

Further, the stability of coefficients is tested by CUSUM and CUSUMSQ. The plots of both CUSUM and CUSUMSQ are presented in Figs 6 and 7 , respectively. Our results indicate that the estimated CUSUM and CUSUMSQ are generally within the 5 percent significance level, showing that the residual variance is reasonably stable. Finally, we dropped the variable–human capital development h in the equation to perform a robustness check. After conducting the robustness check, we found that the coefficients are plausible and robust.

https://doi.org/10.1371/journal.pone.0275152.g006

https://doi.org/10.1371/journal.pone.0275152.g007

6. Conclusions and policy implications

Our work has developed on TALC modeling, mainly how tourism development affects a global city’s economic growth. This study has also examined how tourism development in Hong Kong has affected the city’s economic growth. We investigated the short- and long-run tourism-growth relationship using a dataset from 2003 to 2019 and the ARDL model. We found that Hong Kong likely wrung out most of its tourism industry’s benefits. In the short run, tourism development in Hong Kong spurred the city’s economic growth after a one-quarter lag. We clearly have such lagged effects with introducing tourism-friendly policies, like the visa liberalization policy. Yet, the relatively small impact of tourism on economic growth dissipates away quickly.

Our findings have two significant policy implications. First, Hong Kong’s economic, social, and environmental issues swamp the effects on GDP growth of any pro-tourism policy. Our regression coefficients continued to show that the good old factors of production enshrined in a standard Cobb-Douglas production function affected GDP growth more than tourism policy. The sudden closure of borders between Hong Kong and other countries after 2019 has seriously reduced the number of international tourist arrivals into Hong Kong. Such a sudden stop in tourism has given policymakers ample opportunity to reassess tourism’s role in Hong Kong’s future development. Hong Kong’s future tourism policy should focus on quality above quantity. Mainland visitors will continue representing the lion’s share of Hong Kong’s tourists. Mainland tourism-related firms, government bodies, and industry associations have started focusing tourism activities on higher value-added and productive experiences for all parties.

Second, tourism affects local economies differently over time. The initial positive short-term effects on growth can quickly dissipate away as fundamental factors of production decide GDP growth in the longer term. The 2003 IVS boosted tourism, benefitting Hong Kong’s economic development by fostering employment, increasing tax revenues, and generating positive spillover effects across industries. After almost two decades, though, visa liberalization has yielded diminishing returns. Echoing Qiu, Fan, Lyu, Lin, and Jenkins’s and Tsai’s views on such tourism [ 9 , 35 ], policymakers may need to reevaluate the equity-efficiency trade-off inherent in tourism development. Using tourism simply to foster economic growth will need to give way to a more sustainable view of tourism.

Our results suggest that tourism development can stimulate economic growth in global cities like Hong Kong. The COVID-19 pandemic may affect how previous tourism policy and planning influenced the global city’s economic growth. However, having econometric estimates of the short-term and long-term relationship between tourism and economic growth can help policymakers develop better tourism strategies. Future research on other global cities like Beijing, Shanghai, Singapore, New York, and London may lead to more specific findings.

Supporting information

https://doi.org/10.1371/journal.pone.0275152.s001

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