No room at the inns

AS the handover of Hong Kong to China draws closer, curiosity over Britain's last major colony is growing as never before. But, while the historic event has spurred interest in people wanting to visit the territory, Hong Kong's reputation as an expensive city is fast preceding its allure.

This reputation is further compounded by the rapid increase in hotel room prices owing to the tightening of supply, as developers knock down hotels to be redeveloped into commercial buildings. Hotels in turn have been taking the opportunity of a tight market to raise room rates.

According to Nomura Research hotel analyst Gordon Crosby Walsh, average room rates for high tariff hotels are $1,450, an increase of 21 per cent over last year. For mid-priced hotels, average room rates are $850, 27 per cent higher than 1993.

Mr Walsh said, despite the price increases, Hong Kong is still a long way from seeing rates like Japan's.

But others sound a note of caution of the consequences for the tourism industry, Mr Thomas Axmacher - Hong Kong Hotels Association chairman and also general manager of The Regent Hotel in Tsim Sha Tsui - said the trend of knocking down hotels to be redeveloped into commercial and office buildings must be stopped.

'If we continue this way, we will soon run into a serious situation. Between now and the next two years, more hotels will close.' This year five hotels - a total of 1,256 rooms - were either earmarked for redevelopment or demolished to make way for commercial and office development. The number far exceeds the 543 new rooms made available this year, bringing the total room inventory to 33,576, down from last year's 34,044.

There was only one new hotel development this year - the Pearl Seaview Hotel in Kowloon - which supplied 253 rooms. The other new rooms were generated by the extension of The Peninsula and the YMCA International House extensions.