APPD Market Report Article

Hong Kong

May 26, 2024

Nihat Ercan, CEO - Hotels & Hospitality Group, Asia Pacific

13.4%

HKD 2,422

RevPAR
Rising

Modest recovery in tourism; pre-pandemic levels unmet

  • In the first two months of 2024, Hong Kong welcomed approximately 7.8 million international tourists, marking an almost threefold surge compared to the corresponding period in 2023. However, despite this significant growth, the number of visitors still falls considerably short of pre-COVID-19 levels.
  • The primary source market was still Mainland China, accounting for around 80% of the market share. Other source markets included Taiwan, Philippines, the USA and Thailand.

Growing pressure on existing supply as multiple openings expected

  • In the first quarter of 2024, Hong Kong hospitality market registered one new hotel opening. The Mondrian Hong Kong, located in Tsim Sha Tsui, opened its doors in January 2024, adding 324 rooms to the existing luxury hotel supply.
  • Several hotel openings are expected for the remainder of the year. Notable future openings include Hopewell Hotel (1,000 rooms), Dorsett Kai Tak (373 rooms) and Motto by Hilton (274 rooms).

Positive growth; Hong Kong hotels show encouraging results

  • As of YTD March 2024, luxury hotels’ revenue per available room (RevPAR) reached HKD 2,422, representing a 13.4% growth y-o-y. The upscale and midscale & economy hotels experienced a stronger improvement in trading performance compared to the same period last year, with growth rates of 44.4% and 44.8%, respectively.
  • In January 2024, the 56-key Sheung Wan by Ovolo transacted for HKD 320 million which is expected to be converted into co-living apartments. The property was acquired by a joint venture formed by co-living operator Dash Living and PGIM.

Outlook: Hong Kong hospitality market showing steady growth

  • Hong Kong’s recovery is picking up, as visitor arrivals continue to increase. Moreover, performance across all market segments continues to show improvement. The presence of Art Basel in March 2024 further bolstered this trend. Additionally, several major events scheduled for Q2 2024, such as the renowned Rugby Sevens, are anticipated to attract a significant influx of international travellers.
  • Despite a gradual path to recovery, Hong Kong has demonstrated remarkable resilience, and ongoing enhancements in the performance of the lodging and tourism sectors throughout 2024 are likely to happen. However, a full recovery is anticipated by the end of 2025.

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

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