In 2018, Hong Kong was Asia’s fastest growing hotel market.
Hong Kong will be the fastest growing hotel market in Asia in 2018, according to JLL’s new hotel report. Hotel occupancy rates have reached all-time highs as a result of steadily rising visitor arrivals in Hong Kong, triggering a return in hotel room rate increase. qatar seal
In the first half of 2018, the Hong Kong Tourism Board recorded a 6.2 percent increase in overnight arrivals and a 13 percent increase in market-wide revenue per available room (“RevPAR”) to HKD1,214. With solid visitor demand fundamentals and few additions to hotel supply, JLL expects this growth pattern to continue throughout the year, with Hong Kong recording the highest RevPAR growth among Asia’s major hotel markets, estimated to be in excess of 10%. Looking beyond 2018, JLL is optimistic about tourist arrivals and RevPAR development, citing the completion of the Hong Kong-Zhuhai-Macao Bridge and the Guangzhou-Shenzhen-Hong Kong Express Rail Link this year as positive factors. The new transportation links would increase travel to Hong Kong and increase hotel demand.
JLL’s Hotels & Hospitality Group’s Senior Vice President, Corey Hamabata, says, “We saw market-wide hotel occupancy levels hit record highs in 2017, but average daily rate growth remained subdued until late in the year. We started seeing hotels with strong year-over-year growth in average daily rates in 2018, suggesting that market tightness was allowing hotel operators to demand higher prices. These two factors are now in sync, implying that the demand will continue to expand in the near and medium term.”
Currently, Hong Kong has nearly 80,000 hotel rooms. Between 2018 and 2022, the compound annual growth rate (CAGR) of new hotel supply in Hong Kong is forecast to be 2.4 percent, which is lower than the previous ten-year CAGR of 4.3 percent (2007–2017). The measured increase in supply greatly reduces the risk of a surplus of new hotel openings reversing the market’s recent upward trend.
JLL’s Hotels & Hospitality Group’s Senior Vice President, David Marriott, said, “The hotel industry in Hong Kong has a bright future. Since hotels have such high fixed costs, rises in sales usually result in even greater increases in profit. This is particularly true when revenue growth is driven by average rate growth rather than occupancy. As a result, we anticipate solid profit growth for hotel owners in the coming years.”
“While we expect growth in all segments, we anticipate that the budget/mid-scale segment will expand faster than the upscale/luxury segment at first. Hotel owners who want to take advantage of this growth should concentrate on active sales and channel management, as well as keeping their properties in good repair “Marriott came up with the idea.
Local investors have flocked to Hong Kong’s hotel market because of its investment potential. Since 2017, the industry has seen 17 hotel acquisitions with a cumulative transaction value of HKD15.72 billion. “While some investors have purchased hotel properties with the intention of converting them to other uses, the pattern of hotel fundamentals shows that owning hotels in Hong Kong is still a good investment thesis. As a result, we anticipate continued hotel investment in the coming year “Hamabata added.
