Hospitality Industry in Hong Kong - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The hospitality industry in Hong Kong has recorded steady growth with the growing number of tourists from all over the world despite the uncertainty over the US-China trade war and Brexit. The total number of tourist arrivals to Hong Kong rose to a record high of 65.1 million in 2018 which was 11.4% more than the total arrivals it recorded in 2017. The average room rate grew by 9% with an average HK$1,310 per night, whereas the occupancy rate hit the highest of all-time with 92.05% compared with 90.74% in 2017. According to the Hong Kong Hotels Association, the first half of 2019 continued the trend with growing numbers but from the mid of July 2019, the scenario has changed with the rising number of protests all over the country that created Vandalism and disruptions to the major transport infrastructure which affected international conferences, exhibitions, events, etc and resulted in 13% year on year decline in revenue per available room which hit the worst in August 2019. August 2019 witnessed an almost 40% sharpest decline in occupancy rate since the 2003 SARS crisis. The COVID - 2019 is challenging the hospitality industry which greatly depends on the tourism sector. the tourist arrivals to Kong Hong recorded around 70% drop during the first quarter of 2020 amidst the pandemic situation.

Key Market Trends

The Competition between Domestically Grown and International Brands is Influencing the Supply Dynamics

The hospitality industry in Hong Kong is a combination of domestically grown brands and chain hotels and international brands and their chain hotels. According to the latest release by the Home Affairs Department of Hong Kong, the country has 299 registered hotels that belong to different hotel brands and market segments constituting 186 chain hotel properties that are spread across the country. The international brands and their chain hotels are occupying 57% of the total hotel properties whereas the domestically grown hotels constitute for 43% of the total hotel properties. Though the domestically grown brands and their hotel chains are occupying less share of the market in terms of total hotel properties, they are adding a high number to the total rooms/keys to the supply.

The Mid- and Upper Mid-scale Segment Hotels are Dominating the Market

The Mid and Upper Mid-scale hotel segment is dominating the market with around 79% of total registered hotels belongs to that category followed by approximately 18% of luxury hotels. The budget and economy segment hotels constitute just 0.1% of the total indicating the negligible demand for them. Though most chains of both international and domestic brands are less focusing on the budget and economy segment, the segment is largely covered by the individual hotel properties.

Competitive Landscape

The chain hotels are dominating the hotel market in terms of total room/keys supply and account for around 73% of total supply and the domestically grown brands are dominating the overall supply. Harbour Plaza and Regal Hotels International account for largest supply of total rooms/keys with 11 and 9 hotels, and around 7,500 and 4,900 rooms/keys respectively. Marriott International and IHG are the leading international brands with high presence rate in Hong Kong as Marriott has 9 hotels and around 4,500 rooms/keys and IHG has 12 hotels and around 3,700 rooms/keys.

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