Hong Kong hotelier hopes for restriction-free travel as industry slowly returns to pre-pandemic heyday across the world
- The rest of the world has opened up, and that is the way to go for Hong Kong, says Ovolo Hotels founder Girish Jhunjhnuwala
- Hotel rates in Hong Kong are about 35 per cent lower than in 2019, while they continue to rise in other parts of the world, according to data provider STR
With much of the world lifting tough Covid-19 travel restrictions, a Hong Kong-based hotelier is filled with a tinge of sadness as operators in Europe and Australia brim with an influx of guests that has pushed room rates back to pre-pandemic levels.
Founded in 2010, the family-run Ovolo owns and operates 13 hotels - eight in Australia, four in Hong Kong and one in Bali, Indonesia.
“You can see that the demand for hotels everywhere has gone up because the rest of the world has opened up,” Jhunjhnuwala told the Post in a phone interview recently while in quarantine at the Ovolo Southside in Wong Chuk Hang, adding that “returning to normalcy is the way to go”.
He pointed out that Ovolo’s hotels in Australia were busy again, with high occupancy rates of 80 to 90 per cent as the country had opened up to foreign visitors. “And in Europe the hotels are all running full, with high occupancies and high rates. This is the way forward,” he added.
Hotel rates in most parts of the world have been trending higher since the start of this year as countries removed Covid-19 related travel restrictions. The average daily rate in Europe from January to May stood at US$124.09, 4 per cent higher than in the same period in 2019, while in Australia it was 17.3 per cent higher at US$154.59 in the comparable period, figures from hotel data-tracking firm STR show.
Jhunjhnuwala corroborated the data, saying Ovolo’s room rates in Australia had risen by around a fifth compared with 2019 levels.
Although the measures have been hailed as a step in the right direction, the restrictions that are in place continue to hobble tourism and business in the city. Local and foreign business groups have repeatedly urged the government to drop all curbs, saying that it is the only way to repair the city’s standing as Asia’s top financial centre. The uncertainty over Hong Kong’s Covid policy is also making it difficult for businesses to recruit talent as well as map out future plans.
With the outlook for tourism brightening, Ovolo is seeking to raise capital to fund its expansion in Australia, New Zealand, Singapore, Vietnam, Thailand and Europe.
Selling a stake in its Australian hotel assets was one of the possible fundraising options, Jhunjhnuwala said.
Jhunjhnuwala said Ovolo hotels fit in the “boutique” category, which have between 40 and 190 rooms, so any new hotel from the group was likely to have between 100 and 200 rooms. The group also positions itself in the upper-mid market, where average room rates hover around A$300 (US$200) per night in Australia and HK$2,000 (US$255) in Hong Kong.
“It’s very hard to say how the [Hong Kong hotel industry] is going to evolve until we fully open up the economy,” Jhunjhnuwala said. “But once it’s opened up and international travel resumes, I think we will see a big bounce, [and] Hong Kong will come back stronger than ever.”
Meanwhile, other industry executives also remain sanguine about the prospects of the city’s hotel industry despite foreign visitors dwindling by as much as 90 per cent since the start of the pandemic in early 2020.
Hotels will survive and the Hong Kong’s tourism market will rebound quickly once travel restrictions are lifted, said Jing Dong Lai, CEO and chief investment officer of M&G Real Estate in Asia, which is looking to acquire distressed hotel assets that could be converted into co-living properties.
“The pricing [of Hong Kong hotels] isn’t real distress pricing, it’s just close to market pricing,” Lai said.