Hong Kong - Horwath HTL Austria

TM
Hotel, Tourism and Leisure
SpecialMarketReports
Issue34- Hong Kong
April 2015
4QFDJBM.BSLFU3FQPSUT
Hong Kong hotels hold
steady performance
*TTVF34 - Hong Kong
Historical Performance of Hong Kong Hotel
Market, 2005 – 2014
With Hong Kong’s steady hotel
performance, there is opportunity to
grow supply over the next five years
A major pillar of Hong Kong’s economy, the tourism
industry contributed to 4.9% of Hong Kong’s gross
domestic product and employed approximately
270,000 people in 2013. That represents 7.2% of the
city’s total employment, according to the Census and
Statistics Department of Hong Kong.
The latest statistics provided by the Hong Kong
Tourism Board revealed that in 2014 visitor arrivals
once again registered a double-digit growth of 12% to
60.8 million people over 2013. The growth came
largely from the 16% increase in mainland tourists.
Mainland China remained as the largest source market
for Hong Kong with 47.2 million arrivals in 2014,
accounting for about 77% of total visitor arrivals.
As of December 2014, as reported by the Hong Kong
Tourism Board, there were 244 hotels with 72,721
rooms in Hong Kong, an increase of 2,704 rooms or
3.9% over 2013. Notwithstanding the increase in
supply, the market-wide occupancy edged up from
89% in 2013 to 90% in 2014. With only a marginal
increase in supply and the booming demand, the hotel
market performance has been consistently outstanding
throughout the years.
Market data provided by the Hong Kong Hotels
Association indicates the market occupancy has always
exceeded 80% in the last decade, with the exception
of 2009 when the global financial crisis temporarily
weakened corporate travel to Hong Kong. Nonetheless,
we observe the market recovered fairly quickly after the
weighty drop and the occupancy level climbed back to
86% in 2010. Benefitting from a healthy occupancy
performance, the market saw room for rate increments.
The average daily rate recorded in the market was
1,453 Hong Kong dollars ($187.18) in 2014.
www.horwathhtl.com
Data Source: Hong Kong Hotel Association
The hidden challenges
Despite the outstanding past performance, many
Hong Kong hoteliers have a more subdued outlook
for the market this year, according to the results of
Horwath HTL’s “Global sentiment survey” conducted
in Hong Kong in the first quarter of 2015.
Since the introduction of the Individual Visit Scheme,
which allows residents of designated mainland cities
to visit Hong Kong as independent travelers without
joining a tour group in 2003, Mainland China has
become the major source market for Hong Kong.
However, of the 43.7 million Chinese visitors in
2014, less than half stayed overnight. Meanwhile,
arrivals from long-haul markets dropped, leading to
decreases in the number of overnight visitors and
the visitors’ average length of stay. As a result,
hoteliers argued the increase in arrivals might not
translate into a more prosperous hotel business
environment.
In addition, the heavy reliance on Chinese tourists,
which constituted 35.9% of hotel roomnight
demand in Hong Kong in 2013, raises concerns.
Based on the results of the “Hong Kong hotel
industry review 2013,” an annual study jointly
produced by the Hong Kong Tourism Board and
Horwath HTL, less than 30% of stays in top-tier
hotels (with an ADR above 2,000 Hong Kong dollars,
or $257, in 2014) are from Chinese tourists, while
the same figures for 4-star equivalent hotels (with an
ADR of around 1,200 Hong Kong dollars or $155)
and 3-star equivalent hotels (with an ADR of around
780 Hong Kong dollars or $100) are higher at 35%
and 44%, respectively. Mainland tourists
TM
Special Market Reports
primarily seek more inexpensive hotels in Hong
Kong, and many who can afford higher rates are
now going to alternative travel destinations in the
United States or Europe.
Furthermore, Mainland Chinese visitor arrivals to
Hong Kong might experience much slower growth in
the future, due to the more unstable economy of
China, affected by a credit squeeze, weakening
exports and the recent depreciation of the Chinese
yuan. The ongoing anti-corruption campaign in
China and the protests in Hong Kong against
mainland visitors are also likely to discourage Chinese
arrivals.
Issue 34 - Hong Kong
To diversify the tourist profile and increase tourists’
length of stay, there are endeavors to develop and
expand the meetings, incentives, conventions and
exhibitions; cruise; and other tourism attractions in
Hong Kong. Alongside these initiatives are the six
potential hotel projects near the Kai Tak Cruise
Terminal, a potential large-scale hotel adjacent to
the AsiaWorld Expo, as well as the two hotels
planned in Ocean Park and the third hotel to be
built at Hong Kong Disneyland.
Being in a well-established hotel market, most of
the future hotels in Hong Kong, especially those
converted from old buildings in the city center
should be mid-size, locally operated properties.
Future hotel supply
There is limited land for hotel developments in Hong
Kong. Therefore, we expect future hotel
developments to occur in the redeveloped old
districts under the city’s Urban Renewal Scheme or at
more decentralized locations.
According to the Hong Kong Tourism Board, the
hotel supply in Hong Kong would increase at a
compound-average-annual-growth rate of 4% in the
next five years, reaching a total of 303 hotels with
83,408 rooms in 2019. The majority of the new
supplies will be in Kowloon, especially in the Yau
Tsim Mong and Sham Shui Po districts where largescale urban redevelopments have been taking place.
There also are initiatives to allow conversions of old
industrial buildings and revitalization of heritage
buildings into hotels. Examples of the former
include the Dorsett Hotels in Mong Kok, Tsuen
Wan and Kwai Chung, while examples of the latter
are namely the Hullett House Hotel and the Tai O
Heritage Hotel. Other heritage buildings that are
to be converted into hotels in the future include
the historic police station in Wanchai, a historic
shop house in Mong Kok, a building in Stanley and
also the Murray Building in Central.
www.horwathhtl.com
WRITTEN BY:
GLORIA CHAN
Consultant
HorwathHTL Hong Kong
email:kychan@horwathhtl.com
Gloria Chan is a consultant of Horwath HTL Asia Pacific. Based
in Hong Kong, she specializes in hotel market and financial
feasibility studies as well as tourist destination master planning
in China and Southeast Asia. Her research experience prior to
joining Horwath HTL covers the Central Asian region.
)038"5))5-HONG KONG
Suite 2006, 20th Floor Central Plaza
18 Harbour Road Wanchai, Hong
Kong T +852 2524 6073
www.horwathhtl.asia
TM
TM
ASIA PACIFIC
AUCKLAND, NEW ZEALAND
auckland@horwathhtl.com
EUROPE
AMSTERDAM, NETHERLANDS
amsterdam@horwathhtl.com
LATIN AMERICA
BUENOS AIRES, ARGENTINA
cspinelli@horwathhtl.com
BANGKOK, THAILAND
ischweder@horwathhtl.com
ANDORRA LA VELLA, ANDORRA
vmarti@horwathhtl.com
SÃO PAULO, BRAZIL
mcarrizo@horwathhtl.com
BEIJING, CHINA
beijing@horwathhtl.com
BARCELONA, SPAIN
vmarti@horwathhtl.com
MEXICO CITY, MEXICO
mjgutierrez@horwathhtl.com
HONG KONG, SAR
hongkong@horwathhtl.com
BUDAPEST, HUNGARY
mgomola@horwathhtl.com
DOMINICAN REPUBLIC
speralta@horwathhtl.com
JAKARTA, INDONESIA
jakarta@horwathhtl.com
DUBLIN, IRELAND
ireland@horwathhtl.com
SANTIAGO, CHILE
cspinelli@horwathhtl.com
KUALA LUMPUR, MALAYSIA
kl@horwathhtl.com
FRANKFURT, GERMANY
frankfurt@horwathhtl.com
BOGOTA, COLOMBIA
mjgutierrez@horwathhtl.com
MUMBAI, INDIA
vthacker@horwathhtl.com
ISTANBUL, TURKEY
merdogdu@horwathhtl.com
SHANGHAI, CHINA
shanghai@horwathhtl.com
LISBON, PORTUGAL
vmarti@horwathhtl.com
NORTH AMERICA
ATLANTA, USA
pbreslin@horwathhtl.com
SINGAPORE, SINGAPORE
singapore@horwathhtl.com
LIMASSOL, CYPRUS
cmichaelides@horwathhtl.com
CHICAGO, USA
tmandigo@horwathhtl.com
SYDNEY, AUSTRALIA
jsmith@horwathhtl.com.au
LONDON, UK
eheiberg@horwathhtl.com
DENVER, USA
jmontgomery@horwathhtl.com
TOKYO, JAPAN
tokyo@horwathhtl.com
MADRID, SPAIN
vmarti@horwathhtl.com
MONTREAL, CANADA
pgaudet@horwathhtl.com
MOSCOW, RUSSIA
mohare@horwathhtl.com
NEW YORK, USA
pbreslin@horwathhtl.com
AFRICA
CAPE TOWN, SOUTH AFRICA
capetown@horwathhtl.com
DAKAR, SENEGAL
bmontagnier@horwathhtl.com
OSLO, NORWAY
oslo@horwathhtl.com
PARIS, FRANCE
pdoizelet@horwathhtl.com
ROME, ITALY
zbacic@horwathhtl.com
SALZBURG, AUSTRIA
austria@horwathhtl.com
WARSAW, POLAND
jmitulski@horwathhtl.com
ZAGREB, CROATIA
scizmar@horwathhtl.com
ZUG, SWITZERLAND
hwehrle@horwathhtl.com
www.horwathhtl.com
TORONTO, CANADA
pgaudet@horwathhtl.com