HIGH running costs and a drop in occupancy as squeezing profits in the territory hotel industry, according to a report by the German Business Association of Hong Kong.
The slowdown could be the result of the global economic decline, because many of the factors in an economic downturn worked against the hotel industry in the territory, according to the report.
The business association report said that high staff costs and lower plot ratios allowed by the Government for the construction of hotels put the industry at a disadvantage compared with other sectors.
Revenues generated by commercial buildings outstripped those of hotels by four times last year, the report said.
The recent closures of the Hilton Hotel and Hotel Victoria for conversion into office buildings were examples. According to the report, the number of hotels continued to fall - from 87 in 1993 to 84 in April this year. Room supply decreased from a high of 34,000 in 1993 to below 33,000 by April this year.
As incomes of Hong Kong workers increase, labour costs become an serious financial burden on the industry.
