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Hong Kong average room rates surpass pre-Covid period in 2019: CBRE

By Nur Hikmah Md Ali

/ EdgeProp Singapore |

March 28, 2024 3:13 PM SGT

Hong Kong skyline (Source: CBRE)

The Hong Kong Hotels Association (HKHA) reported average room occupancy rates of 93.4% and average room rates of HK$1,715 ($295.50), both of which are at or above the levels measured for the same holiday period in 2019, says a CBRE report on the Hong Kong hotel market update on March 26.

The upturn in hotel performance has been driven by the return of global travellers, mainly mainland Chinese tourists, who account for over 79% of all inbound arrivals over the past 12 months, says CBRE.

Operating performance for the luxury and upscale segments in Hong Kong is expected to improve in 2024, with these assets having seen relatively slower price appreciation compared to other tier 1 markets in the Asia Pacific region.

"With a considerable margin still existing between historical and current overnight visitor numbers, CBRE is confident that there will be further operational growth in Hong Kong SAR in 2024, driven by a recovery in occupancy in well-managed assets," says the report.

While hotel operations have improved markedly over the past 12 months, the investment market remains challenging. "Expectations are that borrowing costs will begin to decline in mid-2024 in tandem with the Federal Reserve," notes the report. Hence, it is expected to promote investment activity. However, CBRE notes that a negative carry and uncertainty over when these rates will begin to move could limit the chances of a strong uptick in investment volume.

According to CBRE, private investors will continue to drive acquisitions in 2024, with a value-add and opportunistic strategy as their primary focus. Co-living, student accommodation, and serviced residence operators are expected to continue expanding their footprint by capitalising on the overall shortage of such properties in the living sector and the demand presented by the Top Talent Pass Scheme (TTPS).

Inbound arrivals increased to about 34 million, with mainland Chinese visitors accounting for over 79% of all arrivals in 2023. Over 1.46 million tourist arrivals were recorded during the Lunar New Year holidays in February 2024, of which Chinese made up 1.25 million (85.6%). The figures have surpassed the levels recorded over the same period in 2018.

The hotel industry generated HK$29.2 million in revenue in 2023, on par with 2019 figures. According to the Hong Kong Tourism Board (HKTB), average daily rates of HK$1,444 in January 2024 were 9% higher than in January 2019, and overall RevPAR (revenue per available room) was 1% higher than in the same period in 2018.

HKTB expects a full recovery of international tourism by the end of 2025, fuelled by a continued influx of mainland Chinese travellers.