【Epoch Times, July 20, 2024】After Hong Kong reopened fully early last year, the tourism industry market has not fully recovered, especially after the implementation of the “Hong Kong National Security Law,” with countries continuously updating travel warnings for Hong Kong, impacting the hotel industry. The Peninsula Hotel, known as the “Queen of the Far East,” had a rental rate of less than 50% in the first quarter of this year. The Hong Kong government plans to resume collecting a 3% hotel room tax starting next year, but industry experts say that with over 17,000 hotel rooms vacant daily in Hong Kong, the current situation is the worst for hotel bargaining power, and taxation will only worsen the market conditions.
The Chief Operating Officer of the Miramar Group, Chan Chung-yi, stated in a media interview on July 5 that there are over 17,000 vacant rooms in hotels throughout Hong Kong daily, necessitating more favorable strategies to maintain occupancy rates.
In fact, hotel vacancy rates in Hong Kong were even higher in May. A report from the Hong Kong Tourism website showed that in May of this year, out of a total of 91,046 hotel rooms in Hong Kong, the average hotel occupancy rate was 78%, a 4% decrease from the same period last year. This indicates that in May, there were 20,030 vacant hotel rooms in Hong Kong.
In May of this year, Lin Tin-chi, a senior director of the Valuation and Consultancy Services Department at CBRE Group Hong Kong, also told the media that hotel occupancy rates are declining. He mentioned that compared to the first quarter of 2018, 2024 showed a general downward trend. The occupancy rate of high-end Class A hotels decreased by 12% to 77%; Class B high-end hotels decreased by 5% to 87%; and mid-priced hotels saw a 4% decrease to 88%.
The Peninsula Hotel, with a 96-year history located in Tsim Sha Tsui, is one of the most iconic hotels globally, known for its reputation as the “Queen of the Far East” and as a preferred hotel for Queen Elizabeth II. Due to the recent Hong Kong environment and the full reopening of Hong Kong in February of last year, the hotel saw an occupancy rate of only 39% in the first quarter of 2023, which increased to 50% in the fourth quarter.
The Peninsula Hotel is the flagship store of the Hongkong & Shanghai Hotels, Ltd. (commonly known as “The Company”). The Managing Director and CEO of the Company, Clement Kwok, stated at the shareholder meeting on May 8 that due to the continued absence of long-haul European and American travelers, coupled with some of these travelers’ impressions of Hong Kong not turning positive, the business outlook for the second half of the year remains uncertain.
After the implementation of the “Hong Kong National Security Law” in July 2020, several countries globally issued heightened travel alerts for Hong Kong. For instance, in September 2020, the U.S. government raised the travel alert status for travel to Hong Kong to “Reconsider Travel.”
In March 2022, the U.S. government once again raised the travel alert status for Hong Kong to Level 4, urging its citizens not to travel to Hong Kong. Other countries and regions, including the UK, Australia, and Taiwan, have also subsequently raised their travel warnings for Hong Kong.
According to data from the Hong Kong Tourism Development Board, there were a total of 7.24 million non-mainland Chinese visitors to Hong Kong in 2023, showing a 31-fold increase compared to the same period in 2022 before full reopening, but a decrease of 40.41% (over 40%) compared to 12.15 million visitors during the same period in 2019.
Regarding overnight guests, statistics from the PartnerNet, a travel industry website provided by the Hong Kong Tourism Development Board, show that before the anti-extradition movement in 2019, the average monthly number of overnight visitors to Hong Kong was 2.32 million. After the protests, this number decreased to 1.58 million in 2019. From January 2020 to February 2023, it further plummeted to 80,000.
After the full reopening of Hong Kong in February 2023, the government vigorously promoted the “Hello Hong Kong” campaign globally, resulting in an increase in the average monthly number of overnight visitors to 1.46 million, but still only reaching 63% of the pre-protest levels in 2019.
To address the Hong Kong government’s fiscal deficit, they decided to reintroduce the “Hotel Accommodation Tax” that was abolished in 2008. In the “2024-25 Budget Proposal” issued in February of this year, there was a recommended adjustment of the “Hotel Accommodation Tax” rate to be reinstated at 3% starting from January 1, 2025.
The government mentioned that by resuming the collection of the hotel room tax, it is estimated to bring an additional income of HK$1.1 billion (US$140 million) annually to the government, providing a stable source of income without affecting the general public.
Authorities stressed that the tax accounts for less than 1% of the expenditure of overnight visitors in Hong Kong, believing it will not affect tourists’ choice of Hong Kong as a travel destination and their willingness to spend while in the city.
The Secretary for Financial Affairs and Treasury will propose a resolution in the Legislative Council on October 23; the resolution will be published in the Gazette on October 25.
In response, Miramar’s Chief Operating Officer, Chan Chung-yi, had a different opinion. He expressed that the industry often needs to discount prices to maintain hotel occupancy rates, leading to a continuous decline in hotel room rental prices over the past year. Additionally, the strong U.S. dollar against the Hong Kong dollar has made the city’s hotel room prices expensive compared to other currencies. “Now is a time when hotels have the least bargaining power. You cannot pass on these taxes. If the government increases your taxes, and you increase the rent, expecting guests to bear this 3% (is not feasible).”