Hong Kong’s hotel market has finally made it back to performance levels comparable with the period prior to the Covid-19 pandemic.
In February 2024, occupancy during the Lunar New Year holiday averaged 93.4% at room rates averaging HKD2,725 which, report agents CBRE, are at or above levels previously enjoyed for the same holiday period in 2019. Mainland Chinese tourists are back travelling in good numbers, while international arrivals too saw positive growth.
The positive results from the holiday period now need to be replicated across regular months through the year, before Hong Kong hoteliers will feel renewed confidence about the future. But CBRE expect the visitor numbers to improve, and this will feed through to stronger rates and occupancy levels in coming months. The agents also expect luxury and upscale hotels to finally enjoy a return of their traditional guest numbers; but the Hong Kong Tourism Board expects it will not be before the end of 2025, for a full recovery in international tourism.
Challenging investment market
A combination of weaker performance over the last couple of years, combined with higher interest rates, have meant a depressed investment market for Hong Kong hotels, However, CBRE notes improving sentiment which, combined with expectations that debt costs will start to reduce in the coming months, should help to lift deal volume. Private investors are expected to drive the uplift, and many will be looking for value-add opportunities, and for the potential in markets allied to hotels, such as student accommodation and serviced apartments.
New supply in the Hong Kong hotel market is expected to remain muted over the medium term, say CBRE, calculating just 2,515 rooms, or 3.1% of total market size, will be added from now until the end of 2027. Most of this new supply will be in the upscale and upper upscale segments of the market.
Mondrian arrives
Already this year, the Hong Kong market has been boosted by the opening of the Mondrian Hong Kong, created by Accor’s Ennismore lifestyle hotel division and the brand’s first site in the Greater China region. The hotel was delivered by owner Peterson Group, and is located in Tsim Sha Tsui, ad includes a rooftop events space on the 40th floor.
Largest of the new hotel projects opening in 2024 is the 536 room Metropark Hotel Hung Horn, an economy hotel to be operated by China Tourism Group, followed by Kimpton Hong Kong Mariners Club, with the IHG branded hotel featuring 492 rooms; followed by the Dorsett Kai Tak, with 373 rooms.
In 2025, Hyatt will be launching its Andaz Hong Kong Central, while the massive Hopewell Hotel, an upper upscale segment property is expected to be completed, with no less than 1,000 rooms.
