So a white horse walks into a bar, asks the bartender for a drink. “Wow, did you know we had a Scotch whisky named after you?” asks the bartender.
The white horse replies, “I didn’t know you had a whisky named Eric.”
I’ll start with a light touch because goodness knows things are getting heavy in the world at present. Greetings from The Moodie Davitt Report Chiang Mai Bureau, deep in the beautiful mountainous north of Thailand. Today is supposed to be my penultimate day of operating out of Thailand although that all depends on whether Hong Kong International Airport, my next destination, is operating normally tomorrow.
Yesterday’s extraordinary scenes, when the airport operator was forced to cancel all departures after 6pm as protesters brought the airport to a standstill, were unparalleled in recent history. Seldom has the high profile of an airport been more underlined, or its crucial role to the functioning of a city or country been so grimly affirmed. It is a desperate situation with no apparent – and certainly no easy – solution in sight.
How the crisis will develop, let alone culminate, is deeply uncertain. Often in the face of such seismic political events, it seems unduly parochial, even banal, to consider the travel retail repercussions, though that is of course our job. And on that pure commercial level, it is clear that the damage to Hong Kong’s tourism industry and all related sectors such as travel retail is going to be severe in the weeks, and perhaps months, to come.
Travel retail has always been vulnerable to geo-political events. The problem right now is that they are coming in waves. There’s the escalating US-China trade war; and the worsening dispute between Japan and South Korea that this week saw the latter remove its neighbour from a list of trusted trading partners – an apparent (though denied) tit for tat response to a similar act by Japan last month. There’s the Hong Kong situation, which according to the Chinese Special Administrative Region’s controversial leader Carrie Lam today has “pushed Hong Kong to the brink of no return”. There is the deep uncertainty in Europe over a hard Brexit by the UK; there is worrying currency volatility across multiple countries; and there are real concerns for the global economy in the wake of this deepening maelstrom.
Travel retail is to a great extent insulated by its global nature. If Mainland tourists do not visit Hong Kong, they will go somewhere else (perhaps Thailand, where Chinese tourism to key locations such as Phuket has been soft this year). Ditto for the Japanese who will stay away in greater numbers from South Korea and vice versa. Brexit, hard, soft or not at all, will be played out with travel retail repercussions both negative and positive. Life, and commerce, will go on. Nonetheless, it’s a deeply uneasy time. In aviation terms, fasten your seatbelts, we’re going through a bout of heavy turbulence. I may just have to hunker down in Chiang Mai for a while and have a few nice Scotches with my new equine friend.