HK’s hotel rates to hold, even as social tensions prevail

Despite political tensions

Hong Kong’s hospitality and tourism industry has taken a beating as social unrest continues, and while hoteliers don’t think that business in 1Q2020 will pick up anytime soon, they have indicated their willingness to hold, or slightly increase, their rates for 2Q2020.

According to Wharf Hotels, president, Jennifer Cronin, the city continues to be a major global business hub and is still very important regionally – evident from the recent Alibaba Hong Kong listing, reportedly the world’s biggest stock offering this year.

Despite political tensions, hoteliers in Hong Kong remain cautiously hopeful that business will slowly but surely return to the destination

She added that throughout the RFP process for 2020, corporate accounts and procurement managers “remain relatively optimistic” that “regular travel patterns to Hong Kong will bounce back”.

“Our corporate accounts also understand that with the CPI increases there will be some minor increases in our corporate rates for 2020. Also, our hotels are not in the main affected areas of protest activity, hence it is business as usual.

“We will therefore moderately increase our rates for 2020 after reviewing the performance and expectation from our corporate accounts, as these are based on the volumes and travel pattens, together with market intelligence,” Cronin elaborated.

Cronin shared that Wharf Hotels have group bookings confirmed for 2020, although enquiries for 1Q2020 has softened.

“Some customers for 1Q2020 are taking a wait-and-see approach before they commit, although major events such as Rugby Sevens in April 2020 have announced they are proceeding,” she said.

Elsewhere in the city, sales managers from a homegrown hotel chain who declined to be named, cited that the first quarter is typically a low season for business travel, and therefore, rates will be slightly raised – albeit below 10 per cent – for 2Q2020 given the usual peak season.

Holiday Inn Golden Mile’s general manager Gerhard Aicher, who expects a challenging year ahead due to the ongoing situation, said rates for the year ahead will be impacted but gave no clear indication how.

Meanwhile, Destination China’s general manager, Gunther Homerlain commented: “What we are seeing for 2H2020, are that rates are unrealistically high, but short-term rates are based on a we-will-take-anything attitude. Hotels are desperate for business now, and are throwing out all sorts of crazy rates; this is very unrealistic, and driven more by owners and revenue manager than market information and experience.”

Homerlain noted that if troubles stop now, within six to eight months, business might return to normal, but this normal will be in mid-summer which is traditionally slow business season anyway. Hence, he opined that corporate market will not pick up until 3Q or 4Q2020.

A similar sense of cautious hope has also been adopted by CWT’s general manager South-east Asia and Hong Kong, Sim Kian Peng. He said: “For 2020, companies are in a wait-and-see mode, but given Hong Kong’s importance as a business destination, there is a high degree of hope that tensions will de-escalate.”

Regardless, Aicher said that the Hong Kong Tourism Board (HKTB) has their work cut out for them to bring cancelled events back to the city in 2020.

“(A lot of) support for the MICE sector, to compete with other destinations and reestablish confidence in the Hong Kong market, will also be crucial,” he opined.

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