The crowded Kowloon district of Yau Tsim Mong accounted for 70 per cent of all illegal guest houses uncovered last year.
That's according to official figures released yesterday in the wake of a fire that injured 25 people in North Point last month and as the government reviews the laws governing guest houses.
Secretary for Home Affairs Tsang Tak-sing provided the information in response to lawmaker Starry Lee Wai-king.
Among the 161 convictions related to unlicensed guest houses last year, 111 were linked to businesses operated in Yau Tsim Mong. Wan Chai came a distant second with 15 convictions, while Eastern and Kowloon City districts had eight each.
Tsang said the public would be consulted on the issue closer to the middle of the year.
But he emphasised that the review was unrelated to the fire, which occurred in a building containing several guest houses and has been classified as arson.
The hostels were licensed but they were said to have breached the building's deed of mutual covenant.
Lawmakers urged the government to tighten the licensing rules so flat owners had a say in screening applications.
"Before obtaining a licence to sell liquor, one has to advertise in three newspapers to consult public views," Christopher Chung Shu-kun, of the Democratic Alliance for the Betterment and Progress of Hong Kong said. "Will the guest-house regulatory mechanism make reference to this?"
The Home Affairs Bureau announced earlier that the Guest-house Accommodation Ordinance would be reviewed. The bureau will look into whether law enforcement officers should be able to search the premises of suspect guest houses and whether online advertisements could serve as legal evidence of illegal guest-house operation.
Claudia Mo Man-ching, of the Civic Party, said the deeds of covenant should be taken into consideration when the authorities decide whether to approve guest-house businesses.
Citing a case in Hung Hom, she said: "When owners bought their homes, they thought there would only be offices on the three lowest levels. But now a business is seeking the Town Planning Board's approval to run a hotel there," she said. "This is unfair to flat owners."
Tsang said each kind of licence was different and the Town Planning Board would consider a wide range of opinions when vetting applications.
The Home Affairs Department has stepped up inspections of suspected unlicensed guest houses in recent years. The annual conviction figure went up from 39 in 2011 to 110 in 2012, and further to 161 last year.