STR Market Forecast: Hong Kong
Hong Kong
Hotels in Hong Kong recorded strong performance growth in the first half of 2017. RevPAR (revenue per available room) rose 4.3% to HKD 1,140, following consecutive declines since 2013. Performance was mainly driven by occupancy, up 4.6% to 86.4%, while ADR (average daily rate) declined slightly (-0.2%) to HKD 1,320.
The market benefitted from a recovery in the number of international arrivals in H1, especially from Mainland China. For January to May 2017, the Hong Kong Tourism Board reported a 6.4% increase in overnight visitors from Mainland China and a 1.5% increase in same-day visitors from Mainland China. This helped hotel demand grow 6.3% in the first half of the year, surpassing a 1.7% year-over-year growth in supply.
Hong Kong recorded growth in both transient and group (bookings of 10 or more at a time) business in H1. Transient demand increased 5.1%, indicating strong leisure business, while group demand rose 15.8%, a clear sign that corporate business has been the dominant force in driving demand so far this year. However, RevPAR rose 6.0% for the transient segment while it actually declined 3.9% for the group segment, indicating that transient performance is growing steadily, but rates have fallen in favour of occupancy levels for group business.
Hong Kong - ADR to pick up growth medium term
Historic 2011 - 2016, Forecast 2017 - 2021 (indexed to 2011), CNY, August 2017
Outlook
So far this year, Hong Kong’s performance has exceeded expectations. We project occupancy declines in 2018, as the market’s demand is expected to soften. However, ADR should pick up and start carrying performance forward. Hong Kong’s hotel market is heavily dependent on international visitors, with 86.7% of all visitors coming from abroad, according to Tourism Economics, STR’s forecast partner. Visitors from the Philippines and India are expected to be the top tourism source markets.
The next edition of STR’s Market Forecast for Hong Kong has been released in August. STR’s forecast reports provide in-depth analysis for monthly data through December 2018 and annual data through 2021. Projections are based on historical performance trends, economic insights and future supply development, making this report an essential tool during budgeting season.