Two major problems in Hong Kong’s tourism industry – creativity and land
The high-speed rail and the Hong Kong-Zhuhai-Macau Bridge were opened to traffic last year. It is widely expected that the “One Railway, One Bridge" will stimulate Hong Kong’s retail and tourism industries. After the opening of the Hong Kong section of the High Speed Rail, the immediate benefit will inevitably bring new opportunities to the tourism and hotel industry in Hong Kong. But is the long-term return as estimated? In the previous May Day holiday, a large number of mainland tourists entered Hong Kong at various control points, with nearly 600,000 people. Among them, the West Kowloon Station and the Hong Kong-Zhuhai-Macao Bridge were ushered in the first May 1 Golden Week after the opening, but not less. Visitors coming to Hong Kong during long holidays are pointing to Hong Kong’s hotel prices are high, choose to go back and forth.
According to data released by the Hong Kong Tourism Board, there were more than 18 million visits to Hong Kong from January to March 2019, an increase of about 17% over the same period last year. There were about 7.8 million and 10 million overnight and overnight visitors respectively. It is about 11% and 22% more than last year. To put it simply, the number of visitors to Hong Kong in the first quarter of this year has increased, mainly from non-overnight visitors. In the year of 2018, there were about 65 million visits to Hong Kong. The record number of tourists has become the driving force of Hong Kong’s tourism and hospitality industry.
Supply and demand are mainly from medium-sized hotels, the most notable of which include the newly opened five-star hotel – Hong Kong Murray Hotel. The hotel opened at the beginning of last year and offers 336 rooms. It is one of the eight highlights of the Hong Kong Conservation Central Initiative. It was actually restored and remodeled by the Murray Building, a government building in the 1960s. As of December 2018, the total stock of Grade A high-priced hotel rooms reached 18,839.
As the number of overnight visitors increased, hotel occupancy rates increased. In 2018, the occupancy rate of premium hotels increased by 3 percentage points year-on-year to 89%; at the same time, the occupancy rate of Grade B high-priced hotels rose to 91%. The increase in occupancy rate has caused the average daily rate of Grade A high-priced hotels to increase by 4% year-on-year to HK$2,152. Due to the high base effect, the growth of Grade A high-priced hotels is the lowest among all categories of hotels. The average daily rate of Grade B high-priced hotels and mid-priced hotels increased by 10% and 9% year-on-year to HK$1,178 and HK$797 respectively.
There are currently about 80,000 hotel rooms in Hong Kong. It is estimated that the supply of high-end hotels will increase in 2019. It is estimated that 14 hotels will be opened with a total of 2,650 rooms, one of which is the magnificent hotel in Hong Kong (413 rooms) in Tsim Sha Tsui. The total stock of star-rated hotel rooms will reach approximately 21,500 by the end of 2019.
As the number of overnight visitors continues to increase, especially for mainland tourists, the occupancy rate and house prices of Grade A high-priced hotels are expected to continue to rise in 2019. New tourist attractions such as the water park of Ocean Park and large infrastructure projects including the High Speed Rail and the Hong Kong-Zhuhai-Macao Bridge will attract more visitors to Hong Kong.
At the same time, under the escalation of the Sino-US trade war, the depreciation of the renminbi constitutes a downside risk, which may make the consumption of mainland tourists in Hong Kong more expensive. It is expected that the growth rate of mainland tourists will slow down. After 2015, due to the implementation of the “one-week" policy, the number of mainland visitors to Hong Kong decreased, and the tourism and hotel industry fell into a downturn. However, the number of passengers has finally picked up in the past year, and the tourism industry seems to have signs of recovery. The increase in tourists is certainly a good thing for the economy, such as retail stores that focus on mainland travellers’ businesses; at the same time, a large number of passengers, such as sardines, crowded into urban attractions, not only highlighting the lack of space in Hong Kong, but also reflecting Hong Kong’s Lack of more attractive attractions to divert visitors.
In all fairness, compared with other countries and regions, Hong Kong’s tourism projects are not new and lack land. In fact, Hong Kong is not without new tourist attractions in recent years, but these attractions are not effective. The core issue is that for most tourists, Hong Kong is only a shopping paradise. Therefore, if you want them to leave the city center and transfer to other areas, you must first get rid of the stereotype of “shopping paradise."
In general, Hong Kong needs more “creative" and “daring" tourism development projects, but it also needs land to build new tourism projects. At present, the land is very reluctant to meet the demand for local housing. Apart from the existing West Kowloon Cultural District and Kai Tak Development Area, it is difficult to develop land for tourism projects. To continue to develop Hong Kong’s tourism industry, we must solve the two major problems of “creative" and “land".