Hong Kong hoteliers say market’s a ‘disaster’ as 90 per cent of rooms stay vacant amid viral outbreak
- A weak market in January ‘very quickly gave way to disaster’, according to Harbour Centre, a unit of Wharf REIC
- Market will adjust downwards further in 2020 amid unprecedented fallout, according to New World Development
Hong Kong’s luxury hoteliers are bracing for more losses in the coming months as a weak market last year gave way to a ‘disaster’ after the coronavirus epidemic spread globally, prompting companies and promoters to cancel a slew of events in the city.
The average occupancy rate has fallen below 10 per cent in the first two months of this year, according to some of the city’s biggest owners, as the hospitality industry suffered from the chain effects of global travel alerts, and a slump in tourist arrivals and consumer spending. The rate fell to 59 per cent in January from 92 per cent a year earlier, the government said.
The coronavirus outbreak is developing into the biggest public health crisis in decades as infection cases grow from Asia to Europe and the Americas, triggering panic buying in supermarkets and selling on stock markets. From the Standard Chartered Marathon to Art Basel and the Hong Kong Rugby Sevens, organisers have pulled numerous events from their Hong Kong calendars this year as hotel operators watched in dismay.
All of Hong Kong’s latest cancelled events
“You see all industries have seen a great chain effect,” Adrian Cheng, executive vice-chairman of New World Development, said in a briefing on Friday. “Be it tourism, retail, catering or services, there is an unprecedented fallout.”
The market expects the hotel sector in Hong Kong and mainland to continue to be affected by the epidemic in the short term, Cheng said, whose Rosewood Hotel under the NWD umbrella will not escape unscathed. “In 2020, it will adjust downwards further.”
A weak market in January “very quickly gave way to disaster”, Harbour Centre Development, owner of The Murray luxury hotel in Central, said in an exchange filing on Friday. “Hotel occupancy sank to below 10 per cent in spite of very competitive room rates. Shopping malls turned empty. Out-of-home dining went into hibernation.”
The damage has prompted the government to deliver this week a record budget deficit of HK$139 billion (US$17.8 billion) for the coming year to revive growth. The government has said the city’s economy could contract further this year, after shrinking last year for the first time since the global financial crisis.