Inbound arrivals continue to rise as pandemic restrictions ease

• As of YTD November 2022, Hong Kong welcomed 443,986 arrivals, representing a 441.8% y-o-y increase, primarily fuelled by the border reopening and the easing of pandemic restrictions within the city.
• For the same period, arrivals from mainland China, Hong Kong’s top source market, increased by 419.9% y-o-y, totalling 307,886 and accounting for 69.3% of all inbound arrivals.

Supply pipeline remains low

• Notable openings during the fourth quarter consisted of the Hotel Ease Access (119 keys) in Lai Chi Kok and the Urbanwood (250 keys) in Hung Hom, both located in the Kowloon peninsula.
• Upcoming supply for the near future remains relatively muted, with merely five properties slated to enter the market in 2023, adding a total of 1,516 keys.

Demand is cautiously improving

• As of YTD December 2022, revenue per available room (RevPAR) of luxury hotels increased by 26.8% y-o-y to reach HKD 993. As travel restrictions ease, this improvement was predominantly occupancy driven, with the occupancy level registering a 13.2% growth from the same time last year.
• Luxury hotels registered an average daily rate (ADR) of HKD 3,035 for the month of December, representing a mere 1% increase against December 2021. Occupancy however increased by 7.8 percentage points to 46.1%.

Outlook: Full recovery likely in medium term with China reopening

• On December 15, Hong Kong fully opened its borders to other countries with the removal of the ‘0+3’ self-monitoring requirement, which hindered short-term leisure and business visitors from entering. As this occurred late in the quarter, the city has yet to witness the tangible outcome of quarantine-free travel.
• Given Hong Kong’s strong reliance on mainland China and the current situation within the country with infection rates on the rise coupled with a lack of flight connections, significant rebound travel is expected no earlier than Q2 2023.