Hong Kong will experience a lackluster luxury retail performance over the three-day May Day holiday that starts on Friday, and the city might be gradually losing its allure as the region's shopping paradise, according to an analyst.

"Many Chinese mainland tourists feel they are not welcomed in Hong Kong, fearing the confrontation and tension simmering between the ‘Great Mall of China' and the mainland would lead to an unpleasant holiday," Derek Dong, group account director of research agency Millward Brown, a New York-based global market-research firm, told China Daily. "This will directly hurt the retailers in Hong Kong, which have for years relied on the booming tourism spending from the mainland to drive growth, especially the luxury sector."

Dong said Hong Kong's luxury retailers are being battered by the cancellation of multiple entry permits for Shenzhen residents, the strong Hong Kong dollar compared to the weaker currencies in Japan and Europe that have diverted Chinese tourists away, and China's continuous anticorruption campaign.

"It's a worrying sign for a city that becomes increasingly reliant on the luxury retailers and the tourism spending from mainland visitors," said Dong.

The number of mainland tourists to Hong Kong fell during the lunar new year from 676,297 in 2014 to 675,155 in 2015, the first time since the city reverted to Chinese rule from British rule in 1997, according to official figures.

Hong Kong's retail sales fell to HK$46.6 billion ($6 billion) in January, down 14.6 percent from a year earlier and followed a 4 percent retail decline in December, according to Hong Kong government figures.

Sales of luxury products, including jewelry and watches, were the second most-hit category, followed by the 44 percent drop in sales for miscellaneous consumer durable goods.

The decline in the number of mainland visitors has taken a toll on local retail businesses, with roughly 40 percent of Hong Kong retail sales driven by mainland buyers, Caroline Mak, chairperson of the Hong Kong Retail Management Association, told China Daily earlier this year.

She predicted that the city's retail industry in the first half of 2015 will see negative growth because of declining tourists from the mainland and rising costs.

Hong Kong-based Chow Tai Fook Jewellery Group reported a 7 percent decline in Lunar New Year same-store sales, a measurement that compares sales from the same self-operated shops and exclude sales through channels such as licensed shops or wholesale, according to the Wall Street Journal.

The company said last November in a statement that it is also planning to open new stores outside of its main markets of Hong Kong and mainland, saying the target is to "capture the spending power of the affluent outbound mainland tourists".

The expansion plan was released as the company said street protests held near its Hong Kong stores have curtailed mainland tourists.

Ctrip, China's largest online travel agency, said that during holidays there is usually a price increase for transportation to Hong Kong from the mainland as well as for accommodations, but prices have decreased by 20 percent from last year, the agency said.

More than 10,000 shopping malls, restaurants and scenic spots in Hong Kong have been

offering special promotions from April 27 to May 28 to attract more mainland travelers during the May Day holiday, said Yan Xin of Ctrip's public relations department.

China Central Television this week forecast that the number of mainland tourists heading to Hong Kong during the May Day holiday will plunge by 30 percent from the same period last year, noting that only 50 percent of rooms in more than 1,000 Hong Kong hotels have been booked despite discount offers from travel agencies and the hotels.

zhengxin@chinadaily.com.cn