HONG KONG — Hong Kong hotels are slashing prices, selling “staycation” deals and asking staff to take unpaid leave, but their efforts are unlikely to reverse the tide ahead of gloomy Golden Holiday forecasts. Week and the rest of the year, experts said. .
Bookings for Golden Week in October, China’s biggest public holiday, had filled less than 30% of hotel rooms on average across the city, down from 60% at the same time in previous years, the lawmaker said. Yiu Si-wing, who represents the tourism sector.
This meant the actual occupancy rate could turn out to be as low as 60%, he said, compared to almost 100% in previous years during the seven-day holiday period from the National Day of the 1st October – which also marks the country’s 70th anniversary this year.
The grim forecasts came despite efforts by hoteliers to cope with the biggest drop in Hong Kong’s tourism sector since the Sars outbreak in 2003. In August, tourist arrivals to the city fell by around 40% . A total of 34 countries or regions have issued travel warnings or alerts to Hong Kong as of September 13.
Persistent street protests against the government, which often started peacefully but quickly turned violent, have driven visitors away since June.
“The outlook for hotels for the rest of the year remains very challenging,” said Mr. Jeff Yau Cheuk-man, research director at DBS Vickers Securities. He also did not believe that the measures taken by hotels would prove particularly effective.
Occupancy rates at hotels in the city fell to 64% in August from 85% in June, according to statistics from data analytics firm STR. Average room rates also fell to HK$1,075 (S$190) from HK$1,226 during the period.
Apart from reducing room rates, luxury hotels also offer special offers for local residents and promote dining options.
One of the city’s most iconic five-star hotels, the Mandarin Oriental in Central, recently unveiled a HK$2,800 package including one night in a room with a view of Statue Square and a free minibar for guests. Hong Kong ID card holders. The room was otherwise booked for HK$4000 a night.
InterContinental, located in Tsim Sha Tsui, is also offering guests from Hong Kong and Mainland China one night’s stay for HK$1,580 per night, which includes HK$300 dining credits, afternoon tea and buffet breakfast. The hotel was charging at least HK$1600 for a room per night.
Five-star hotels, which typically generate around 40% of revenue from food and beverages and 50% from room charges, offered every possible incentive to boost their business, Yau said.
Hoteliers are also cutting costs by asking staff to take unpaid leave. Up to 77% of hotel workers have had to take between one and three days of unpaid leave recently, according to a survey of workers at more than 40 three- to five-star hotels.
Promotions to stimulate demand from the MICE industry – meetings, incentives, conferences and exhibitions – and catering companies were also increasingly on offer, said Mr. Carlton Lai, director of equity research at Daiwa Capital. Markets.
“Our properties in Hong Kong, which are dependent on tourism, have been affected by the protests,” said Mr. Clement Kwok King-man, general manager of Hongkong and Shanghai Hotels, operator of the Peninsula Hotel in Tsim Sha Tsui.
But Mr Kwok said the company had not laid off any staff.
A Shangri-La Group spokesperson said the company had kept its staff engaged by stepping up internal training and holding more service improvement workshops.
InterContinental Hotels Group’s business in Hong Kong has seen “some impact” even though it represents only a small part of the company’s overall business, a spokesperson said.
But experts said the interventions were unlikely to move the needle for several reasons.
Mr Yau said local residents were unlikely to spend much amid social tensions.
“Residents will avoid going to shopping malls and tourist areas on weekends for fear of traffic disruptions, and most Hong Kong residents are also not in a good mood to spend.”
Any meaningful recovery in hotel profitability depended on tourists returning, he said. “Tourists will only gradually return when the protests stop.”
The latest official data shows retail sales in Hong Kong fell 11% in July this year from a year earlier.
“Hotel groups have reduced average daily rates to varying degrees. But we don’t think it will be very effective because the problem is not pricing but travel demand,” Lai said, adding that luxury hotels have been hit harder.
The biggest problem facing hotels is their fixed operating cost structure, including labor and utilities, Yau said.
“The cost structure of hotels is different from that of other industries – it is essentially fixed. It is therefore difficult to reduce costs in the short term,” he said.
But he said hotels were unlikely to lay off staff unless the protests dragged on for more than a year, as they would not have enough manpower to handle a recovery once that would happen.
Hong Kong’s tourism industry contributes just 5% of the local gross domestic product (GDP), but the sector employs some 257,100 people, covering 7% of the city’s total employment.
The city opened its doors to visitors from mainland China with the launch of the Individual Visitor Program in 2003, in an effort to cushion the economic impact of the Sars outbreak.
Since then, annual tourist arrivals from the continent have increased over the years – reaching 51 million last year from 8.5 million in 2003, to account for 79% of all arrivals.
When the hospitality industry was hit by the Sars outbreak, the crisis only lasted four months. The market recovered quickly thereafter, thanks in part to the individual visit program, Yau said.
“We don’t know how long the protests will last.” SOUTH CHINA MORNING POST