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Asian consumers starting to overcome fear of SARS

"It will take about one to two more months for people outside of Hong Kong to gain confidence."

Hyatt Regency Hong Kong spokeswoman

Yeo Hee Lien postponed a family vacation to Australia for nearly three months, worried that being Chinese and having a Singapore passport might invite discrimination because of SARS.

Now, as the deadly virus comes under control in her home country and the outbreak slows in Hong Kong and China, she and her husband are finally ready to fly, their two children in tow.

Like Yeo, consumers across Asia are climbing out of a SARS-induced hibernation and spending again, coaxed into shopping plazas by big discounts and splurging on overdue vacations.

If sustained, the rebound could cushion rising unemployment and weaker exports in Hong Kong and Singapore -- two of Asia's worst SARS-hit economies -- while limiting the economic fallout from SARS across the region.

Private consumption in Hong Kong comprises about 60 percent of GDP, while private expenditure by households and companies in Singapore contributes 43 percent.

"Now that the June holidays are coming, we are getting a lot of last-minute arrangements to get out of the city," said Alicia Seah, assistant general manager at SA (UIC) Tours in Singapore.

Seah says holiday travel is up 40 percent from March.

But experts say the recovery will be patchy until the September quarter, at least. People are still nervous over SARS, which has killed more than 750 people worldwide, mostly in China and Hong Kong, and consumer confidence needs time to heal.

Policy makers in Singapore, where 31 people have died of the disease, are using a public campaign to drum up spending.

A S$2.0 million (US$1.2 million) "Step Out! Singapore" campaign of street performances and promotions aims to draw people from their homes, where many took refuge to avoid catching the virus.

Beginning yesterday, a six-week "Great Singapore Sale" will cut prices by up to 70 percent at more than a thousand stores.

Property developer Far East Organization is reporting a pick-up in demand for property. It estimates 800-900 people flocked last weekend to the launch of "The Icon," its newest condominium, and 384 units of 413 offered were sold.

Like Singapore, Hong Kong is showing signs of curbing the spread of the disease, and shopping malls are busier.

The Hong Kong Retail Management Association said that store traffic and sales volumes have improved since the World Health Organization lifted its warning against travelling to the city on May 23.

"Immediately, we saw a substantial increase in pedestrian traffic over the weekend and in terms of head count at the stores. We have more or less returned to the pre-SARS level," said Yu Pang Chun, the association's chairman.

"Our traffic has increased by about 50 percent since Sunday," said Chan Yan, manager of the DKNY store in the Taikoo Shing district.

"But people are still not spending much more," she added, underscoring the concerns of many stores that sharp discounts and promotions were eating into profits.

Restaurants were also starting to see a pick-up. The Hyatt Regency Hong Kong said business had improved by 35 percent at its food and beverage outlets since May 23.

"Rooms take a bit more time to recover," the hotel's spokeswoman said. "It will take about one to two more months for people outside of Hong Kong to gain confidence."

While worries of SARS infections have abated, Hong Kong consumers still face the same problems they had before the disease struck in March: high unemployment, job insecurity and persistent deflation.

Japan's leading travel agencies this week restarted tours to Guangdong and Hong Kong after the foreign ministry eased travel warnings for SARS-hit areas, urging tourists to bring surgical masks and disinfectant tissues.

In Vietnam, the general manager of the five-star Caravelle Hotel in Ho Chi Minh City, said an international company in Singapore that had postponed a conference last month due to SARS had rescheduled it at his hotel for four days in July, bringing in 120 participants.

"It's a celebration," Stephen O'Grady said, citing occupancy rates were around 30 percent now, up from the trough of under 10 percent last month.
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