By Jane L. Levere

Tourism in Hong Kong has suffered dramatically in the wake of the government handover last summer, and subsequent economic turmoil in Asian countries that normally generate almost three-fourths of its business. As of late winter, arrivals were down 25% year over year, as they were in the second half of 1997.

With tourism Hong Kong's number two source of foreign exchange, local travel interests are not sitting back and taking the downturn lightly. Rather, they are coming up with a wide variety of new marketing plans and promotions, the latter largely price-driven, to stimulate traffic.

The centerpiece of the various campaigns is a new marketing program, launched in April, by the Hong Kong Tourist Association. Developed in conjunction with BBDO, the campaign's tagline is, "We are Hong Kong, city of life."

According to HKTA executive director Amy Chan, the campaign "focuses strongly on Hong Kong's key attraction as one of the world's top travel destinations-the extraordinary diversity and energy of Hong Kong and its people, and their way of life."

The campaign was created after extensive consumer research showed that market perceptions about Hong Kong had deteriorated. "Some misconceived concerns-over Hong Kong's identity, for example-were largely beyond the industry's control. And Hong Kong had lost its ability to compel visitors to come here urgently. This and the misconceptions about Hong Kong's vitality, international atmosphere, diversity of attractions and value for money, could be tackled and addressed by a new campaign," explained Lily Shum, HKTA's general manager of marketing communications.

The HKTA plans to run its new advertising on TV and the Internet and in print publications, rolling it out globally by mid-1998. The budget is over $13 million.

Travel suppliers are also aggressively tackling the downturn, particularly Hong Kong hotels, many of which are creating special packages or setting special rates to fill up guest rooms. The Grand Hyatt Hong Kong has come up with "Grand Deal" rates which include a discounted room, free shuttle service and use of the gym, and late check-out. It has also created special packages for meeting and incentive groups, and with its sister hotel, the Hyatt Regency Hong Kong, special rates for long-stay guests.

Shangri La is taking $50 off room rates at its two hotels, the Kowloon Shangri-La and the Island Shangri-La, while the Peninsula is using the celebration of its 70th anniversary as an excuse to set a special rate: guests paying a standard room rate for two nights receive a third night for $70. Like the Hyatts, the Peninsula also has created a discount program for extended-stay guests. And with an eye to business travelers, its sister hotel, the Kowloon, has put together a package that combines breakfast and in-room Internet access with 400 Mileage Plus frequent flyer miles.

The Regent Hong Kong is targeting both business and leisure travelers. Packages for business travelers feature services like airport transfers, free pressing and mobile phone usage, and meeting room space. For vacationers, it has created two-night packages that focus either on dining in its fine restaurants or on a "romantic escape," with a bottle of champagne, breakfast in bed and four-course dinner, among other amenities. Mandarin Oriental is similarly targeting the leisure segment with several vacation packages, including one with champagne, fruit and flowers and a free bed for a child in the same room.

Price also is the driver for Pacific Delight Tours, a leading tour operator specializing in the Orient. According to director of marketing Gerry Kerr, bookings for the company's Hong Kong-only tours have fallen 12% since May 1997, right before the handover. To jump-start this business, Pacific Delight created a $715, eight-day, six-night vacation package, which includes air fare from the West Coast. "We always have good promotional rates to Hong Kong, but these are exceptional, at least $200 lower than they've been in some time," Kerr said.

Marco Polo Hotels is taking a slightly different tack, reported Barbara Corbine, director of sales and marketing in North America. In an effort to stimulate cruise-related business, earlier this year the company brought a group of cruise line executives to Hong Kong to show off its Hong Kong Hotel, near the harbor. Corbine also said Marco Polo has been running fam trips for travel agents and corporate travel managers "to reaffirm our belief that Hong Kong is still the dynamic center it's always been. There's been absolutely no change since the handover."

Kent Hayden-Sadler, HKTA deputy executive director, hopes these various marketing initiatives will help Hong Kong turn around its fortunes in the not-too-distant future. "We expect to see Hong Kong in a positive growth situation again by the end of 1998. We hope growth for the whole year will be positive, because we expect the second half to be so much stronger," he said.