By Chia-Peck Wong
Dec. 22 (Bloomberg) -- Hong Kong businessman Dino Sadhwani spends HK$10,000 ($1,290) on a typical, twice-a-week night of dining and partying at the city’s top-end restaurants and clubs. That’s after some belt tightening.
Before the global financial crisis cut the value of his stocks portfolio by 40 percent and reduced his company’s projected sale of hammers and drill bits to the U.S., Sadhwani, 25, would spend up to a third more at exclusive joints like Zuma and China Club. He is also taking one vacation this year, instead of the usual four.
Even with the cutbacks, the dining bill of Hong Kong’s richest 1 percent, such as Sadhwani, remains large enough to keep some of the city’s most expensive eateries going amid the recession, said Nick Debnam, KPMG’s partner in charge of consumer markets in Hong Kong.
“The chunk of the population that eats at these sorts of places once or twice a year is going to disappear,” Glenn Maguire, chief Asia-Pacific economist at Societe Generale SA in Hong Kong, said in an interview. Still, the rich are likely to keep returning to their favorites. “They may, instead of having a holiday, go out for a nice restaurant meal instead.”
Government data show Hong Kong’s restaurant receipts rose 14 percent to HK$20 billion in the three months ended Sept. 30, even as the local benchmark Hang Seng Index fell 18 percent from the preceding quarter as the effect of the U.S. slowdown spreads.
HK$16,888 A-Head Dinner
At Gaddi’s, the French restaurant at The Peninsula, about 40 guests paid HK$16,888 each for a Dec. 18 dinner to celebrate the five-star hotel’s 55th anniversary, according to a spokeswoman.
The price tag, excluding a 10 percent service charge, covered six courses, such as Atlantic blue lobster and slow- roasted venison loin. Each course was paired with a wine of the 1953 vintage, including a Chateau Margaux.
Petrus, with one Michelin star from the guide’s inaugural local edition launched last month, is expected by its managers to sell out its eight-course New Year’s Eve dinner at HK$4,088 a head.
Clients don’t mind splashing out as they “don’t want to get caught up in the rut” of bad economic news, said Ilona Yim, director of communications for the Island Shangri-La, where the restaurant is located. “They want to enjoy a good meal.”
‘Gourmet Paradise’
Hong Kong’s tourism board promotes the city as a “Gourmet Paradise” for its diversity of cuisine for every budget. Frequent sightings of movie stars and tycoons at bolthole eateries show the city’s ardor for good food. Hong Kong became the third Asian city after Tokyo and Macau where top Michelin chef Joel Robuchon has opened a restaurant.
“If you get into a Michelin restaurant or into those top trendy places, you will find they are relatively recession- proof,” said Debnam.
Restaurants also have room “to buffer their margins” amid the drop in food costs and removal of wine taxes in Hong Kong, Maguire said.
Recent statistics are more sobering. Revenue of Hong Kong eateries fell an average of 10 percent in November, with upmarket eateries among the worst performers, said Lok Kwok-on, chairman of Hong Kong Federation of Restaurants & Related Trades, earlier this month.
On Nov. 14, the Hong Kong government cut its growth forecast for the city this year to between 3 percent and 3.5 percent from the previous estimate of 4 percent to 5 percent. Chief Executive Donald Tsang warned the city’s 7 million people of a difficult 12 months ahead and called a recession next year “inevitable.”
Dragon-I
That might prompt the less well heeled to hunt for bargains like the HK$1 noodle dish Tasty Congee & Noodle Wantun Shop’s plans to sell in January. Still, places such as Gilbert Yeung’s Dragon-I, one of Hong Kong’s trendiest dining and entertainment spots, will be able to ride out the recession, thanks to clients such as Sadhwani, said Debnam.
“The slowdown is definitely a concern,” said Sadhwani, whose parents own Hong Kong’s Holiday Inn Hotel and who has a penchant for Audemars Piguet watches. “But I want to enjoy life as I’m young and I’m single.”
Yeung, who has hosted Sting and David Beckham at his 6,000- square foot venue, said regulars, including Sadhwani and his posse of models and tycoon’s sons, aren’t spending less.
“I still see a lot of Dom Perignon’s floating around,” Yeung, 42, said in an interview. A 750 milliliter bottle of the champagne costs HK$2,200 at Dragon-I.
Partying Every Night
Michael Chan, a 31-year-old private banker whose annual salary tops HK$1 million, said he’s been out on the town about five nights a week, spending as much as HK$3,000 each time to beat the gloom.
“It’s a choice that I make to continue to go out and enjoy life,” Chan said.
Bonnie Gokson, Hong Kong socialite and former Chanel Inc. executive, said Sevva, her trendy restaurant and bar, is “pretty packed all the time” in the past few months as the rich pursue their “passion for entertaining and dining out nicely.”
Still, Dragon-I isn’t immune to the economic slump. Its turnover since October has fallen at least 10 percent, Yeung said.
Yeung said some clubs in Hong Kong’s central district “are suffering” and may have to close next year unless they buck up.
Until then, owners may have to hope that the economy doesn’t worsen further.
“If the financial situation deteriorates,” Sadhwani said, “This is the first place I’d cut spending.”
To contact the reporter on this story: Chia-Peck Wong in Hong Kong at cpwong@bloomberg.net
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