Over many years, Hong Kong has been one of the leading commercial centres in Asia while the local hotel market is among the strongest in the region and globally.

In this article we highlight some of the historical trends and challenges that hotels will face in light of a global economic recession.

Overview

The Hong Kong Special Administrative Region (SAR), or commonly known as Hong Kong, is one of the two special administrative regions of the People's Republic of China, along with Macau.

Located at the southeast coast of China at the mouth of the Pearl River Delta (PRD), Hong Kong also borders Shenzhen Special Economic Zone in the north and faces the South China Sea in the east, west and south.

Hong Kong consists of four main areas, namely the New Territories, Kowloon Peninsula, Hong Kong Island and the Outlying Islands.

The Hong Kong SAR enjoys a favourable location within the Pearl River Delta region, excellent infrastructure, high literacy rate, respected rule of law and a wellestablished/ regulated financial market. The economic resilience of the territory is evident in the strong growth in financial services, logistics, tourism and professional services after the severe acute respiratory syndrome (SARS) outbreak in 2003.

With the launch of the Closer Economic Partnership Agreement (CEPA) II in 2005 and subsequent supplements, coupled with a highly flexible labour market and the vitality and innovation of the local business sector, Hong Kong is likely to continue to shift towards higher value-added services and knowledge-based economy, with an anticipated GDP growth of approximately 4.6% per annum between 2009 and 2011, according to the Economist Intelligence Unit.

While the current downturn in the financial and insurance sector has a strong impact on the local economy, the strategic location and access to mainland China provide positive fundamentals for a recovery as compared to most other countries.

The fallout in the PRD manufacturing sector has strained the regional economy and it remains doubtful whether it can provide significant positive momentum for recovery. Although global trade might be slowing in the short-term, companies continue to look for closer ties with their source markets.

For investors, Hong Kong provides a convenient location and environment to conduct business in mainland China. The pace of recovery will depend on the kind of policies implemented by the Central Government in accordance with the Sino-British Joint Declaration to maintain the well-being of Hong Kong.

Click on the link to read the entire article with charts and graphs:

http://www.hvs.com/Jump/?f=2748.pdf&c=3643