Hong Kong’s guest houses happy to join government’s transitional homes scheme to stay afloat during Covid-19 crisis

Pilot scheme aims to subsidise rooms rented in hotels and guest houses by NGOs for transitional housing
Plan will provide stable income for the next two years at least, Tsim Sha Tsui guest house owner says

Hong Kong property

Sandy Li

Published: 8:30am, 9 Dec 2020

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Steve Chan is keen on offering his guest houses in Hong Kong’s Tsim Sha Tsui tourist district to the city as transitional housing to overcome the biggest crisis he has ever faced in 35 years of business.

His company, Man Hing Lung Hotel, owns and operates 30 rooms across six guest houses in Mirador Mansion. The rooms are usually full, taken up by tourists looking for cheap accommodation.

There are about 100 guest houses in Mirador Mansion offering 1,000 rooms. “On this floor alone, there are 100 rooms available from different operators. Between January and June, all these rooms were empty – we did not have a single guest,” said Chan, 52, during an interview at his offices on the building’s 12th floor.

The government scheme will provide stable income for the next two years at least, he said, adding that he was looking to offer 24 of his rooms.

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Hong Kong’s guest houses have been hit hard by a sharp decline in tourism, which started last year with the city’s anti-government protests, and has since worsened because of the coronavirus pandemic. Many have been forced to shut down, and those that have survived are now pinning their hopes on the transitional homes scheme.

The scheme, a pilot introduced by Carrie Lam Cheng Yuet-ngor, the city’s leader, in her policy address last month, will aim to subsidise rooms rented in hotels and guest houses by non-governmental organisations for use as transitional housing. The subsidy will be financed from the Community Care Fund.

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The average waiting time for public housing has risen to about six years in Hong Kong, while the number of applicants has grown to 156,400, many of whom are forced to live in poorly maintained subdivided flats in rundown urban buildings during their long wait. The transitional housing will benefit this group of people.

Chan said he had heard the government could pay between HK$4,000 and HK$5,000 per room per month for about two years. He has applied for 24 of his rooms, ranging in size from 40 sq ft to 80 sq ft, to be used as temporary homes under the government scheme.

Hong Kong’s tourism sector has been paralysed by the pandemic since January. Tourist arrivals dropped 99.8 per cent year on year to just 7,817 in October, according Hong Kong Tourism Board data. For the 10-month period, such arrivals fell by 92.9 per cent to 3.56 million from 50.07 million a year ago.

Chan has been able to survive this long because he owns his properties. Photo: May Tse

In this operating environment, Chan was forced to cut rents to as low as HK$2,000 a month, or HK$66 a night, per room, compared with a normal rate of HK$200 to HK$300 a night last year, before the city’s anti-government protests and the coronavirus took hold. Of late, he has been able to charge HK$3,000 a month.

“Some people have homes in mainland China, but work in Hong Kong. Because of quarantine measures, they cannot cross the border every day. They just rent a room here,” he said. Some of his tenants had also lost their jobs and were not paying rent altogether. “They, in fact, borrow money from me!” he said.

Chan has been able to survive this long because he owns his properties. Most guest house operators that rented premises for their business had already closed down, he said. Of course, he has had to cut costs, and has had to let go of staff, keeping only one where he had four.

There are about 100 guest houses in Mirador Mansion offering 1,000 rooms. Photo: Google Map

About 500 guest houses have been shut down in the past six months, said Vincent Cheng, a legislator. He added that about 50 per cent of around 1,000 guest houses in Hong Kong had expressed interest in joining the scheme, according surveys by industry bodies.

“These 500 operators will have about 2,500 guest rooms available. Hotels are also willing to join the pilot scheme,” he said.

The city’s Transport and Housing Bureau said that since it was a pilot scheme, the government had not yet specified how many rooms it would cover. “We are liaising with some hotel and guest house operators with a view to implementing the pilot scheme as soon as possible,” it said. Sources with knowledge of the matter, however, said that 10 hotels and guest houses had already held talks with officials about the plan.

David Leung Tai-wai, the founder chairman of Hong Kong Guest Houses Association, said he had heard that the scheme might start in the middle of next year. He, however, hoped the government would start the scheme as early as possible: “The government needs to take quick action to help our industry – it is being bled dry.”

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