Chinese Tourists Drive Hong Kong Hotel Boom

Hong Kong needs to nearly double the number of hotel rooms over the next decade to keep up with rising demand, according to a government task force. The special task force on convention and exhibition industries and tourism, part of an advisory panel set up recently by the city's leader, notes that the number of tourists visiting Hong Kong will rise substantially in the next 10 years, bolstered by a steady increase in tourists from mainland China, fuelling the need for many more hotel rooms. In 2012, Hong Kong received a record 48.6 million visitors, up 16% from a year earlier, according to the Hong Kong Tourism Commission. Of those visitors, 71.8% came from mainland China. The city's roughly 68,300 hotel rooms enjoyed an average occupancy rate of 89% last year. "If the Chinese economy continues to grow over the next few years and…earnings and income continue to rise, then mainland tourists will continue to be a main source of tourism arrival for Hong Kong," said Raymond Yeung, senior economist at ANZ. Analysts expect Hong Kong's tourism industry to grow further following the completion of major development projects including the Hong Kong-Zhuhai-Macau bridge and the high-speed railway linking Hong Kong to Shenzhen and Guangzhou. While the government has invested in exhibitions, marathon races and trade fairs, Mr. Yeung said the government will have to work harder to attract tourists as Hong Kong faces competition from cities in mainland China. Tourism accounts for around 5% of the city's gross domestic product, he says. Despite increases in visitors from China, growth in the Hong Kong hotel industry has been tempered by a decline in tourists from the U.S. and the rest of Asia. Tourism saw a temporary boon in 2011 as visitors from Japan switched to Hong Kong following the earthquake. Michael Li, executive director at the Federation of Hong Kong Hotel Owners, said he expects the number of hotel rooms in the city to rise to 76,000 from the current 68,300 by 2017 due to ongoing expansion projects. The call for more hotel capacity also comes at a time when Hong Kong's land shortage has increasingly caused outcry from residents, prompting the city's leader, Leung Chun-ying, to reiterate recently that the need for hotel rooms should be weighed against the demand for residential expansion. Even as tourist numbers rose last year, nearly 25 million of those were same-day visitors, and as a result the city's hotel occupancy rates remained unchanged for 2012. Mr. Li urges caution against overly rapid expansion of hotel capacity. He says hotel expansion requires very careful examination of tourist behavior and other economic trends. Investing in hotels is a long-term business that usually takes at least 10 years for a return, he notes. In addition, Mr. Li said increasing the number of hotel rooms would require a concurrent increase in frontline staff and executive management, something he's not sure Hong Kong's education system could accommodate. Source Wall Street Journal by Riva Gold from China Travel & Tourism News http://www.chinatraveltourismnews.com/

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