Hong Thai Travel Services (Hong Thai), in business for over half a century, announced on Oct. 28 that it will start liquidation proceedings due to insolvency. Some commented that its demise was a result of the Hong Kong government’s paradoxical and sometimes contradictory anti-pandemic policy and the related containment measures. The benefits granted to the industry were just “too little, too late.” Others said that the industry has entered its “severest winter” even after the latest “0+3” regulation (quarantine of inbound travellers policy). Some people in the industry said they worry that more travel agencies will close in the near future.
The board of directors of Hong Thai’s parent company Caissa Tosun Development Co., Ltd. announced that Hong Thai’s core business in Guangdong, Hong Kong, and Macao, had been adversely affected by COVID-19. “Its profitability has plummeted. It has been unable to service its debts that have fallen due, and there remains an apparent lack of ability to settle debts,“ the owning company said. The announcement also stated that when preparing the financial statements for 2021: ”Full consideration was given to the possibility that Hong Thai would no longer be able to continue operation and go bankrupt in the future. In view of that, relevant impairment testing procedures were implemented for the main assets of Hong Thai Travel Services.”
Two Consecutive Years of Losses After Sale to Mainland Company
Looking through the information of the first and second phases of the “2020 Employment Support” plan, Hong Thai was approved to receive two grants of RMB 9.2 million (about $1.26 million) to subsidize its wages commitment from June to August, and then from September to November of that year, when the number of committed salaried employees was 390. However, in the list of employers whose applications to the 2022 Employment Support plan were successful, Hong Thai was absent.Hong Thai Travel Service, one of the oldest travel agencies in Hong Kong, was founded in 1966 by Jackie Wong See-sum, who was later succeeded by his son Jason Wong Chun-tat. Hong Thai sold its major shares to an HNA-related company in 2011, subsequently sold all the shares in 2019, and Wong and his son resigned as directors and withdrew completely from the company. Hong Thai is currently wholly-owned by Beijing Caissa Huihuan Network Technology Co., Ltd., whose parent company is Caissa Tosun Development Co., Ltd. (Caissa Tourism) (0796.SZ), a Shenzhen A-share listed company.
Caissa accumulated losses of RMB 1.388 billion (about HK 1.5 billion, US $190 million) in the following two years. According to the mainland listing rules, the name of the listing transaction with two consecutive losses is prefixed with “ST” (special treatment). So, it is now ST Caissa, a tag indicating it is at risk of being delisted.
Government Policies ‘Too Little, Too late,’ and Worries Abound on Tide of Bankruptcy
Media person Gary Tsang Chi-ho pointed out in his online program that Hong Thai was once number one in the Hong Kong tourism industry. “When even such a giant can fold, what more can we expect from the Hong Kong tourism industry?” He said that the latest 0+3 policy, that applies to incoming tourists, does not help, and on the contrary pulls the industry into its “severe winter” instead. Because the previous stricter measures had restricted almost all outbound travel of Hong Kong residents, the tourism industry could still have some local tourism, and the staycation business still offered “a sliver of life.” With 0+3, Hong Kong people can now travel abroad, and as long as there is no “0+0” on the horizon, the situation can only become worse.He described the whole situation as a “slingshot” (today goes one way, tomorrow another) game by the Secretary of Health, Lo Chung-mau, and the “people from above.” As Hong Kong needs to lean towards China for political reasons, it is bound from behind all the time. “Even if it wants to face the world, it cannot go full out towards the outside world.” “Hong Kong’s advantages have just become its disadvantages.”
Sam Ng Chi-sum, a senior media person, said in his online programme that the incident reflects the current business situation in Hong Kong. Because of the delayed opening to the outside world, the anti-pandemic policy to date has been losing direction, and the return to normal is a long way off. The 0+3 policy has encouraged many Hong Kong people to “travel after a long wait,” and travel agencies should be able to benefit from it. But all these measures are just “too little, too late,” and travel agencies such as Hong Thai “cannot afford to wait” any longer. He further pointed out that Hong Kong’s dependence on the mainland market under the axiom “backed by the motherland” has instead caused the travel, and retail industries, to be “persecuted” now.
Morning Star Travel Also Closed
Hong Thai is not the first victim of the government’s indefinite travel restrictions. Another travel agency, Morning Star Travel, established in 1972, also announced its voluntary liquidation in January this year. Morning Star Travel received a subsidy of HK$3.57 million (about $455,000) in the first and second round of the “employment support” program so it could maintain its 147 employees. But in December 2020, it was sued by VOS, a Danish travel service company, which, as a creditor, filed a case with the High Court to close the company.Morning Star Group, the parent company of Morning Star Travel, listed in 1989, was the first listed travel agency in Hong Kong. In its heyday, it had 14 branches in Hong Kong and Macau. The group sold its travel business to independent investors in 2012, and in 2015 to mainland property developer Fantasia Holding Group (01777). By 2020, Fantasia sold all the shares to another independent third party for RMB 50.42 million (about $6.9 million).
