Hong Kong’s inbound tourism last year was “weak,” said the city’s financial secretary John Tsang in his budget speech on Wednesday.

Visitor arrivals dropped by 8% in the fourth quarter, down 2.5% for whole of last year compared with 2014, the first drop since 2004.

Tsang says the fall is likely to be more severe this year, and the numbers support him. The number of mainland Chinese outbound tourists to Hong Kong declined 11.7% during the Lunar New Year holiday earlier this month. Meanwhile, Macau recorded a 4.7% year-on-year rise over the same period.

Hong Kong’s finance chief blames a number of things for the decline.

The devaluation of currencies in Hong Kong’s neighboring countries, like China, South Korea, and Japan (before the yen’s rise this month), together with the Hong Kong dollar rising with the U.S. dollar it’s pegged to, discouraged tourists from coming into the city. The general outlook of a gloomy global economy also doesn’t help.

Besides the currencies and the economy, something else has been pushing tourists away, something not seen until in recent years – protests.

There was the Occupy Central civil disobedience movement in 2014, violent demonstrations against mainland Chinese parallel traders in 2015, and riots in one of the most popular shopping districts at the start of the Lunar New Year.

“These destructive acts have not only damaged the economy, but have also severely tarnished Hong Kong’s reputation as a hospitality city internationally,” said Tsang.
A rioter holds a lamp post as a fire burns in the Mong Kok area of Hong Kong, on Tuesday, Feb. 9, 2016. Rioters set fires and threw bricks at police in Hong Kong early Tuesday, injuring officers and shuttering one of the city’s busiest subway stations in a clash over illegal food stalls during the three-day Chinese New Year holiday. (Billy H.C. Kwok/Bloomberg)

The protests, which have anti-Beijing sentiments, have led tourists from mainland China to decrease by 2.9% since 2014. That is a significant decline as China accounts for about 70% of Hong Kong’s total visitors.

Tourism is one of Hong Kong’s four key industries, contributing 5% to its GDP and employing 270,000 people.

To help the faltering industry, Tsang said he will launch short, medium and long-term measures to reduce the industry’s costs of operation and enhance the city’s competitiveness.

In the short term, Tsang will waive license fees for various hospitality and retail-related players, like hotels and restaurants, for a year.

In the medium term, he will launch various joint government and industry measures, including major events to be held this year, such as the first Formula E Championship in Hong Kong.

In the long run, the government will upgrade its tourism infrastructure, including Hong Kong Disneyland, which will open a new themed area based on Marvel’s Iron Man franchise this year, and a new hotel in 2017.
Disney character Mickey Mouse displays a welcoming gesture with other Disney staff members after a press tour of the Hong Kong Disneyland hotel. (Vincent Yu/AP)

But we don’t have to wait too long too see the first signs whether Hong Kong’s investment in its Disneyland resort will pay off. In June, Walt Disney DIS +0.05% Company is set to open its first Disneyland resort in mainland China, in Shanghai, which will be three times larger in size and with ticket prices that are 20% cheaper.

Hong Kong Disneyland already recorded a loss of $19 million in the year ending October 2015, its first loss in four years.

This article originally appears on Forbes



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