Shortage benefits top hotels

IT has been a year of bounty for Hong Kong's hotel industry as tourist arrivals increased while the supply of hotel rooms shrunk. The loss of several hotels through redevelopment into commercial buildings became the gains for remaining hotels as the tight room supply gave them the opportunity to raise their rates.

According to Sassoon Securities, the hotel industry in Hong Kong is on the brink of a high growth era given the decrease in the number of new hotel rooms available and the increasing demand from visitors to Hong Kong - from business travellers in particular.

Statistics from the Hong Kong Tourists' Association reveal that average room occupancy in high-tariff hotels for the first seven months of this year stood at 81 per cent, an increase of four percentage points over 1993.

Luxury hotels, in particular, enjoyed a good year following the recovery in long-haul markets which saw a strong return of western Europeans, Americans and Japanese who are regular patrons of high-tariff hotels.

For the first seven months of this year, Japanese visitors rebounded by a striking 17.2 per cent to 798,602, while western Europe visitors rose 11.2 per cent to 615,766.

Visitors from the United States and Canada rose five per cent to 555,635.

Japanese visitors are important as they not only stay at top-end hotels, they are big spenders who help boost retail sales.

Business travellers continued to provide strong support for the medium-and high-tariff hotels which was mainly driven by investors' interest in China.

Sassoon Securities believed business travellers coming to and through Hong Kong played a crucial role in the welfare of the luxury hotel segment.

As long as Hong Kong remained the major transit point to the mainland, China-bound business travellers would support Hong Kong's tourism growth.

Despite the turbulence in the 1980s, business travellers continue to travel to and through Hong Kong at an average growth of 10 per cent a year, which is much higher than the rate for non-business travellers which grew at 4.6 per cent.

The only casualties of the year were medium-tariff hotels which suffered a fall in average room occupancy owing to a drop in Taiwanese and Southeast Asian visitors who are the major patrons of the mid-market hotels.

Taiwanese visitors were affected by the country's ban on tour groups to China in March following the murder of 24 Taiwanese on the mainland's Qiandoa Lake.

The ban, which was lifted in May, badly affected arrivals to Hong Kong as the majority of Taiwanese going to China pass through the territory.

The decline in Southeast Asian visitors, on the other hand, is believed to be largely due to rising costs in Hong Kong which have rendered the territory an expensive destination.

As such, Southeast Asian traffic has been diverted to other destinations like Australia.

Sassoon Securities estimated that total visitor arrivals would reach 7.78 million this year, up eight per cent over 1993.

The outlook for next year is expected to be just as bright for the hotel industry. W.I. Carr hotel analyst Lesley McGregor forecast high-tariff hotels to record average room occupancy of more than 80 per cent next year.

She said luxury hotels would generate more business owing to the constant supply in hotel rooms and increasing demand as well as a further rebound in long-haul passengers who stayed at top end hotels.

She also expected Taiwanese visitors to return next year as the market recovered from the effects of the Government's ban on tour groups to China.