APPD Market Report Article

Hong Kong

May 31, 2022


HKD 526


Inbound travel in 1Q22 remains muted due to quarantine

  • As at YTD February 2022, overall visitor arrivals contracted by 1.8% y-o-y to a total of 9,690 arrivals due to the ongoing COVID-19 pandemic and continued border restrictions.
  • However, Mainland China, Hong Kong’s top source market, grew by 13.8% y-o-y in February 2022, totalling 7,691 arrivals and accounting for 78.4% of all inbound arrivals, thanks to the implementation of the ‘Come2HK’ scheme which allows non-Hong Kong residents coming from Guangdong Province or Macau to enter Hong Kong without being subject to a quarantine period.

Supply pipeline slowing below long-term historical growth rate

  • There were no notable openings in 1Q22, due to continued local restrictions across Hong Kong. Some other scheduled openings such as The Silveri, MGallery by Sofitel has been delayed until later in 2022.
  • There were several hotel transactions in Hong Kong in 2021, and in the first quarter of 2022, leading to a reduction in existing room supply as the purchased hotels will be converted to co-living space.

Staycations remain the main source of demand

  • Revenue per available room (RevPAR) of luxury hotels remained the same at HKD 526, marking a stable trend as at YTD March 2022. Occupancy grew by 0.33 ppts to 21.8% whilst average daily rate (ADR) was down by 1.5% to HKD 2,418, as hotels continued to provide discounts to lure in local demand due to the lack of international demand.
  • Luxury hotels registered an ADR of HKD 2,185 in March, declining by 7.7% against the same time last year due to tight border restrictions combined with social distancing restrictions that prevented locals from utilising public facilities and dining in, resulting in larger discounts on rates.

Outlook: Recovery expected to be delayed further due to border controls

  • Due to the new Omicron variant, Mainland China appears to be reluctant in terms of opening the border with Hong Kong. While Hong Kong has now opened to other countries, the one-week quarantine requirement will likely hinder visitors from entering. As such, hotel performance is anticipated to be muted until Mainland Chinese tourists return and when all quarantine measures are completely lifted.
  • Given Hong Kong’s relatively huge reliance on a single market and people’s travel sentiment, we expect that a full recovery to pre-COVID-19 levels will take at least two to three years.

Note: Hong Kong Hotels refers to Hong Kong's luxury hotel market.

Talk to us 
about real estate markets.