The resurgence of Hong Kong’s hotel sector has been driven primarily by the return of international tourists, particularly those from mainland China, who accounted for over 79% of all inbound arrivals over the past year, according to a report by CBRE.
Data from the Hong Kong Hotels Association (HKHA) revealed that the average room occupancy rate reached 93.4%, with standard room rates averaging HK$1,715 (approximately $295.50). Both figures are at or above the levels recorded during the same period in 2019, highlighting a significant recovery in the hotel market as reported by CBRE on March 26.
Despite the strong operational recovery over the past 12 months, the investment market remains challenging. The report suggests that borrowing costs are expected to start declining by mid-2024, in line with actions by the Federal Reserve. This anticipated easing of borrowing costs is expected to stimulate investment activity. However, CBRE cautions that uncertainty about when these rates will begin to decrease could dampen the prospects for a significant increase in investment volume.
CBRE predicts that private investors will continue to make acquisitions in 2024, focusing on value-added and opportunistic strategies. The report also highlights the potential for growth in co-living spaces, student accommodations, and serviced apartments, as investors capitalize on the ongoing demand for such properties, especially in light of the Top Talent Pass Scheme (TTPS).
“With a considerable gap still existing between historical and current overnight guest numbers, CBRE remains optimistic about further operational growth in Hong Kong in 2024, driven by increased occupancy in well-managed properties,” the report states.
The hotel sector generated HK$29.2 million in revenue in 2023, matching 2019 levels. According to the Hong Kong Tourism Board (HKTB), average daily room rates in January 2024 reached HK$1,444, a 9% increase compared to January 2019, with overall revenue per available room (RevPAR) exceeding the same period in 2018 by 1%.
Inbound arrivals surged to approximately 34 million in 2023, with mainland Chinese visitors comprising over 79% of the total. During the Lunar New Year holidays in February 2024, more than 1.46 million tourists arrived, with Chinese visitors making up 85.6% of this number, surpassing the figures recorded for the same period in 2018.
Looking ahead, the performance of luxury and upscale hotels in Hong Kong is expected to improve in 2024, following a relatively slower rate of appreciation compared to other Tier 1 markets in the Asia Pacific region.
The HKTB forecasts a full recovery of international tourism by the end of 2025, largely driven by the continued influx of mainland Chinese tourists.