Battered hotels send out signals of distress

With peak-season occupancy rates as low as 8pc, the industry is seeking emergency government aid

Hong Kong's reeling hotel industry has launched a crisis survey to assess the extent of financial losses suffered in the wake of the Sars outbreak.

Overall hotel occupancy figures have fallen to 20 per cent, with some hotels reporting single-digit occupancy rates of below 8 per cent in the first two weeks of this month.

Fears and safety precautions in the face of the severe acute respiratory syndrome (Sars) outbreak have already prompted the cancellation or postponement of major exhibitions and conferences.

Among a list of drastic cost-cutting measures to cope with the crisis, hotel staff are increasingly being asked either to take a pay cut, typically of 20 per cent, or to take three months of unpaid leave.

Despite the government allocation of $11.8 billion to help boost the economy, which includes a $1 million loan scheme for each hotel, the Federation of Hong Kong Hotel Owners says the upper limit of the loan is too small to bail them out.

The survey, commissioned by the Hong Kong Hotels Association, will assess the damage - both short- and long-term - caused by Sars.

Association chairman Mark Lettenbitcher said it had engaged a public relations firm to conduct the survey, which should be completed next week.

Asked to predict what would happen to the industry if the Sars problem dragged on for three more months, he said: 'We are taking the situation week by week.'

He said occupancy rates had dropped to between 18 and 20 per cent in hotels across the city.

With regard to the pay-cut and unpaid leave requested of staff, he said: 'Hotel managements have been extremely generous. We want to keep our employees.' The federation will hold an emergency general meeting early this week to solicit members' views on further cost-saving initiatives, and what steps to take beyond the government's rescue plan, assistant executive director Chan Shuk-fong said.

Ms Chan said hotel owners were facing the worst economic crisis in memory. 'The impact is far worse than the 1997 economy downturn,' she added.

Ms Chan said March and April were the peak tourist season and with the cancellation of the week-long Labour Day holiday next month, the financial loss would be tremendous.

She explained that during the high season, the occupancy rate was often as high as 90 per cent, with mainland customers accounting for 50 per cent of trade for many hotels.

Ms Chan said all trade functions and exhibitions had either been cancelled or postponed to October or November.

Cost-cutting initiatives include staff being ordered to take annual leave immediately, no pay leave ranging from one day per month to four days, terminating probationers and temporary contracts, and stopping all overtime payments.

Some hotels have closed swimming pools, health and fitness centres, and reduced operating hours of restaurants. The number of lifts and escalators in use has been reduced to save on power. The federation has asked the government to waive this year's restaurant and bar licence fees and the effluent surcharge, and to temporarily suspend hotel licence fees. It also wants reduced power charges.

The federation also called for suspension of mandatory provident fund contributions by employee and employers for one year, plus access to low interest government loans for staff.