Golden Week

Hoteliers' anger at steep rises in property rates

Increase branded 'unreasonable' after sluggish 'golden week' points to testing times for industry

PUBLISHED : Wednesday, 08 May, 2013, 12:00am
UPDATED : Wednesday, 08 May, 2013, 5:46am

Hotel bosses say they face "unreasonable" increases in their government rates, with some being asked to pay as much as 50 per cent more than last year.

The Federation of Hong Kong Hotel Owners has demanded an explanation from the Rating and Valuation Department, saying the rises will add to pressure on the industry, especially after a sluggish "golden week" holiday.

"For a regular-sized hotel … the annual net profit margin may be as small as 10 per cent, and the economic outlook is not optimistic this year. But the government thinks the performance is as good as [an increase of] 50 per cent," said the federation's executive director, Michael Li Hon-shing.

For a regular-sized hotel … the annual net profit margin may be as small as 10 per cent, and the economic outlook is not optimistic this year

Hotels' property rates are assessed based on an undisclosed formula including gross receipts, profit and room rates and the outlook for tourism. Rates vary widely by hotel, but a typical four-star hotel with 400 rooms could pay more than HK$30,000 a quarter, said one hotelier.

Last year, the median rates for 2,000 hotels, hostels and guest houses were 30 per cent more than in 2011, Li said, with top hotels paying 36 per cent more.

The increases in hotels' property rates come after two bumper years for the industry.

A federation survey showed the average occupancy rate reached a record 88 per cent in 2011. The tourism board said the rate was 89 per cent. A global survey by online agency Hotels.com based on customer bookings showed average hotel room rates rose 46 per cent that year, the biggest increase in the world.

Li said the average room rate of about HK$1,400 a night rose by a further 10 per cent last year.

The federation, which represents more than 100 hotels, surveyed about 90 members recently and more than half said their property rates had increased by more than 40 per cent, while some top-class hotels paid 50 per cent more. In Tsim Sha Tsui, the property rates rises differed by more than 10 percentage points for hotels of similar quality and occupancy and with similar room tariffs and market share.

Tourism Board figures show that in the first three months this year, while there was a 14 per cent increase in the number of visitors, 53 per cent were day-trippers, up from 50.5 per cent a year earlier.

This indicated that hotels might not benefit as much as other businesses from the general tourism growth, Li argued.

The Rating and Valuation Department said a ratepayer could object to their assessment and a review would be conducted if necessary.