Hotel performance in Hong Kong this year tells a mixed story. Year to date, occupancy is up 4% compared to last year, but average daily rate is down 4%.
Speaking on the latest episode of the Hotel News Now podcast, Jesper Palmqvist, STR's senior director of Asia-Pacific, said the expectation is that demand will continue to grow slowly on an annual basis in the region.
Hong Kong is accustomed to high hotel occupancy levels.
Year to date, its occupancy stands at 84%, which is in line with levels back in 2015 and 2016. Palmqvist said even with an occupancy number that high, there's still room for growth in Hong Kong. Its peak occupancy came in 2018 at about 90%.
"We look at our forecast, historic highs like those — the last 5% is going to be hard, but we're forecasting to see those 90%, maybe year to date, by the end of the decade, 2028 or 2029," he said. "That's how slow that can take."
To make up that difference in occupancy, it's going to take growth in corporate travel, particularly early in the week, he said. Weekends have been strong in Hong Kong, but it's the Sunday through Wednesday period that is at a decline compared to previous years.
Another factor at play will be Hong Kong's ability to continue to bring major events to the region, such as concerts and big conferences, Palmqvist said.
"It's still a great market for business, for sure," he said. "A lot of foreign and Chinese companies from mainland China are in Hong Kong and driving business. ... It's proven in the last 12 to 18 months that it can have high demand levels that it continues to drive in Wednesday, Thursday, as strong weekdays."
Hong Kong is "a tight market" right now, with only four properties in the region's development pipeline with 1,250 rooms, he said.
"People are going for quality, for sure, just like in other asset classes over quantity, sustainability and tech investments or other trends," he said.
Also in this episode:
- China shows early signs of a turnaround.
- Trends and takeaways from Southeast Asia hotel performance over the past month, including in Singapore and Thailand.
- New Zealand and Australia prepare for the winter season.