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SCMP Reporter

AS the territory's hotels are converted to more valuable office premises, hotels will overprice themselves in the next two years and effectively drive tourists away if the Government does not act immediately, says Hong Kong Hotel Association (HKHA) chairman Thomas Axmacher.

  But Martin Barrow, chairman of the Hong Kong Tourist Association (HKTA), played down fears of a shortage of hotels, saying nine new hotels along the airport railway and in Wan Chai and Hunghom would meet growing demand.

  The number of tourists who will visit the territory in the next few years is disputed, making it difficult to gauge the necessary number of rooms.

  Analysts say room supply is expected to be tight, while hoteliers think it is well balanced following a drop in the number of arrivals between 1989 and 1992.

  Ten million tourists are expected by the turn of the century, according to figures from the HKTA based on two to five per cent growth on last year's 8.9 million arrivals.

   However, analyst Jana Tong from Peregrine predicts much higher levels of tourist arrivals. Peregrine expects 9.2 million arrivals this year, increasing to 9.9 million in 1995 and to more than 10.6 million by 1996.

  The Peregrine estimates are based on a four per cent increase in 1994, a seven per cent in 1995 and an eight per cent increase in 1996.

  Mr Axmacher said tightening room supply would raise levels of occupancy and room rates over the next two years. Tourists seeking lower room rates would be driven away, he said.

   Hong Kong already had a reputation as an expensive destination and he warned that hotels were closing and that none was being built to replace them.

  He also said that unless action was taken tourists would go to other destinations such as Singapore.

   Mr Axmacher said that Hong Kong offered better quality service for comparable prices than Paris, London and New York.

   But he warned that hoteliers could exceed the room rates of other major cities, if the Government did not take immediate action to change the 'unfair' plot-ratio which favoured office development over hotels.

  A spokesman for Omni Hotels Asia-Pacific agreed that room rates were expected to increase over the next two years because of increasing demand and occupancy levels. Growing numbers of tourists were also expected from the United States and Europe.

   Mr Axmacher warned that a drop in tourist arrivals would hurt both the hotel industry and Hong Kong's shops and restaurants.

  But he added that the solution was not to replace prime hotels like the Hilton and the Victoria with new hotels outside the central districts of the territory.

  'You don't have to develop in remote places like the New Territories. It's not a favourable place to be,' Mr Axmacher said.

  He said the Government should recognise the urgency of halting the closure of more hotels in the central districts and launching the development of new hotels.

  However, Mr Barrow said Hong Kong was luckier than most cities in having so many hotels in the central districts. He added that more hotel development should take place further afield.

  While there was enough hotels, he conceded: 'We will see a tightness in [the] market in the next year or two.'   With no new supply of hotel rooms expected until 1998, Peregrine predicts occupancy rates of 86 per cent in 1994, 90 per cent in 1995, and 96 per cent in 1996.

  The HKHA, however, predicts that rates will fall next year from 87 per cent last year and 85 per cent this year.

  Paul Bush, managing director of Shangri-La Asia, was more cautious about the possibility of a future imbalance between supply and demand.

   'I think hoteliers will welcome the opportunity to participate in new hotel developments,' he said.

  He said room supply would depend upon the pace of reclamation.

      Another hotelier was also wary about predicting levels of occupancy and room rates.

   Mac Ma, marketing executive director of New World Hotels International, said his company had no plans to develop new hotels in Hong Kong or Guangzhou over the next few years because supply and demand in the industry was well balanced.



HKHA calls for action as rooms shortage looms