SCMP Thursday, November 15, 2001
Downturn sobers up Lan Kwai Fong
Updated at 12.32pm:
The party seems to be ending for Hong Kong's hottest entertainment district, the lights slowly blinking off and the music dying down.
Lan Kwai Fong's bars and restaurants have long been popular with the city's free-spending bankers and brokers.
Now, as companies cut back on lavish expense accounts and lay off many of its patrons, the district faces a sobering downturn.
Hong Kong's second recession in four years looms, and many of the young finance professionals whose cash once filled the bars' coffers confront the spectre of unemployment.
''It used to be quite difficult to make one's way through the tables to the Le Jardin bar upstairs,'' said a waiter at Good Luck Thai, a Thai eatery.
''But these days there are less customers and most are here for the sole purpose of eating and not for the casual drinks and supper anymore.''
Joblessness in Hong Kong has surged to its highest in 17 months as the already sputtering economy slows further. Its food and beverage industry now expects about 1,000 restaurants to close in 2001.
The thinning ranks of bankers have hit Lan Kwai Fong.
More than a thousand bankers, many of them expatriates, are estimated to have lost their jobs since the beginning of the year. Most have already packed their bags and left.
Firms that have sacked staff include Credit Suisse First Boston, Dresdner Kleinwort Wasserstein and Merrill Lynch.
Banks wielding the axe after the September 11 hijacked aircraft attacks on the United States included Nomura International Securities, ABN AMRO and the Bank of China.
That has cast gloom over the clutch of glitzy bars and fancy restaurants in Lan Kwai Fong, a patch of narrow streets nestled above the central banking district usually packed with people from Hong Kong's 148 licensed banks, 106 of which are foreign.
Dubbed ''matchmakers' lane'' in the 1950s, Lan Kwai Fong is still a popular place to meet strangers.
But bar and restaurant owners say business has slowed, with many lamenting a near 30 per cent drop in revenues from a year ago.
''It's quieter these days, especially during weekdays. There are less tourists and bankers and they are not spending as much as they did before,'' said a waitress at trendy bar La Dolce Vita.
The Hong Kong Tourism Board says visitors to the territory fell 2.1 per cent in September on the year, and the figure is expected to get worse.
''They are spending a little less and a little more wisely,'' said Richard Feldman, chairman of the Lan Kwai Fong Association, who owns four bars and restaurants in the area.
Music still throbs at popular hangouts like Al's Dinner, Insomnia and Club 97 but conversations no longer focus on the next multi-million dollar deal.
They're more likely to be about who's next in line for the chop.
In Wing Wah lane, where tables crammed in open-air cobbled walkways were packed with patrons keen on relatively inexpensive Thai and Malaysian delicacies, business has also suffered.
Allan Zemen, who owns 22 of the 90 restaurants and clubs in the area, compared business conditions during the 1997 Asian financial crisis and the current downturn.
''During the previous crisis, things were different,'' said Mr Zemen, who has been based in Hong Kong for the past 30 years. ''Then, Asia was hit and Hong Kong was suffering mainly from a lack of Japanese tourists. Conditions in the US and Europe were all right then.''
''In this crisis every country is affected, and the worst is we are not through with this crisis. It's pain on top of pain, especially for most property owners who have not yet recovered from the first crisis.''
Still, Mr Zemen, 52, whose business has weathered the Asian financial crisis and the dotcom collapse, is optimistic that he will survive.
''Even if there is a drop, it might just be five per cent or so because people are definitely hurting,'' he said, referring to revenues. ''And yet because it is a special place even if things are bad, people still do come out for a drink.''
Only now they may be drowning their sorrows.