Hong Kong protests take a toll as companies flag impact

HONG KONG (Reuters) - Cathay Pacific Airways Ltd 0293.HK and the owner of Hong Kong's luxury Peninsula hotel became the latest companies to highlight the impact of recent protests on their business, as an escalating cycle of violence clouds the outlook for the city.

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Millions have taken to Hong Kong streets in anti-government protests that have intensified since mid-June, at times forcing banks, stores, shopping malls, restaurants and even government buildings to close as the demonstrations degenerated into violent clashes between police and activists.

Hong Kong’s flagship airline, Cathay Pacific, said on Wednesday the protests reduced inbound passenger traffic in July and travelers were weighing on forward bookings, as it reported it swung to a half-year profit.

Thousands of protesters descended on the Chinese-ruled city’s airport in July, where some chanted “free Hong Kong” and others handed out flyers explaining the city’s crisis to tourists.

Protesters plan to rally at the airport again this weekend, potentially causing further disruptions after a strike on Monday saw more than 200 flights canceled.

The Hongkong and Shanghai Hotels Ltd 0045.HK, owner of the opulent Peninsula hotel in the bustling shopping district of Tsim Sha Tsui, said it too was worried about the impact of the protests on tourist arrivals as well as the broader economy.

“We are concerned about the effect this political uncertainty may have on our results, especially given the proportion of our income which is earned in Hong Kong,” said Clement Kwok, CEO of the hotel group, in an earnings statement on Wednesday.

In June, Hong Kong-based cosmetic and healthcare products chain operator Bonjour Holdings Ltd 0653.HK issued a profit warning which it partly blamed on the protests.

What started as an angry response to a now-suspended extradition bill, which would have allowed people to be sent to mainland China for trial, now includes demands for greater democracy and the resignation of Hong Kong leader Carrie Lam.

Hong Kong retail sales, a key part of the city’s economy, felt a growing impact in June from the mass protests, falling 6.7% from a year earlier in the biggest decline since February.

Many businesses in Hong Kong are already facing strains from China’s economic slowdown, a weak Chinese yuan and fallout from the Sino-U.S. trade war.

Tourism to Hong Kong, especially from mainland China, has dropped markedly, weighing on hotel occupancy rates. Britain, Japan, Singapore and Australia have issued travel alerts following the violent protests.

Reporting By Anne Marie Roantree and Donny Kwok; editing by Gopakumar Warrier