APPD Market Report Article

Hong Kong

December 1, 2021

71.2%

HKD 726

RevPAR
Stable

Demand across all source markets remains severely impacted

  • As at YTD August 2021, overall visitor arrivals contracted by 98.8% y-o-y to a total of 42,415 arrivals. This was as a result of the ongoing COVID-19 pandemic and Hong Kong’s continued tight border restrictions.
  • Mainland China, Hong Kong’s top source market, declined by 98.9% y-o-y in August 2021, totalling 8,529 arrivals, displaying a m-o-m increase of 35.3% due to the launch of the quarantine-free Come2HK scheme for visitors from Mainland China.

Hotel room supply growth to remain steady over the medium term

  • Notable upcoming openings in 2021 include The Silveri, MGallery by Sofitel (200 rooms) and the extension of Sky City Marriott (342 rooms).
  • By end-2021, over 3,000 hotel rooms will be added to the market, with new openings spread across Hong Kong Island and Kowloon. Wan Chai and Tsim Sha Tsui areas are particular focal points for supply in the next few years. In light of COVID-19, we expect the future supply pipeline to potentially be delayed.

Trading performance driven by occupancy from domestic demand

  • As at YTD September 2021, revenue per available room (RevPAR) of luxury hotels in Hong Kong was up by 71.2% y-o-y to HKD 726, due to the increase in occupancy by 14.5 percentage points, driven by domestic demand. However, RevPAR growth was slightly offset by a decline in average daily rate (ADR) by 12.8% y-o-y.
  • The third quarter of 2021 displayed an increase in marketwide hotel trading performance as the market performed better than it did in the same period last year. Luxury hotels witnessed a notable RevPAR increase by 46.2% in the month of September, respectively, against 2020 levels, displaying further improvements.

Outlook: Growth will be reliant on the opening of Mainland China

  • Amidst uncertainties resulting from COVID-19, we expect Hong Kong’s luxury hotel trading performance to grow at a subdued level for the foreseeable future until a bilateral travel arrangement with Mainland China is established.
  • Moving forward, we expect that upon the safe containment of COVID-19, hotel performance will embark on a recovery phase for a period of up to two years.

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

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