Quarterly hotel market update: Q3 - Hong Kong, Macau & China.
Monday, 1st October 2012
Source : Daniel J. Voellm & Cathy Luo ~ HVS Hong Kong
The knock-on effect of the global economic downturn has finally reached the region; most regional markets are seeing a slowdown in visitor arrival growth, and occupancy levels are under pressure.


4Hoteliers Image LibraryHong Kong received 11.1 million visitors in the second quarter of 2012, reflecting 15.4% year-on-year (YOY) growth.

Visitor arrivals from mainland China rose by 24.5% YOY, totalling 7.68 million visitor arrivals, and remain the key driving force behind this robust growth.

While demand from mainland China remained, tourist spending by mainland Chinese (particularly on luxury goods) has slipped. Visitor arrivals from Japan grew by 12.0% YOY, after the Tohoku earthquake adversely affected demand last year.

On the other hand, Hong Kong recorded a drop in visitor arrivals from most of the Southeast Asian markets. This is likely due to increased pricing levels of Hong Kong hotels displacing value-oriented demand from these markets. Taiwan, the second-largest source market for Hong Kong, registered an 8.9% decline YOY, likely due to its economic slowdown and thus decreased travel activities.

The US market is mature and showed steady growth at 1.2% growth YOY. Similarly, long-haul markets such as the UK, Germany and France recorded moderate growth in the second quarter, at 4.0%, 1.8% and 2.5%, respectively.

4Hoteliers Image LibraryDespite the increase in total visitor arrivals, the share of overnight visitor arrivals continued to decrease, falling to 49.0% in the second quarter of 2012.

This is attributable to increased same-day travel facilitated by the launch of e-channel services at various border control points. Growth of overnight visitor arrivals from mainland China was 9.5% YOY in quarter two, compared to 24.5% total visitor arrival growth.

Hong Kong is slowly feeling the impact of the uncertain global economy and the slowdown of China's economy. Taiwan, Singapore and South Korea saw overnight visitor arrivals drop by 15.7%, 10.3% and 4.6%, respectively.

In contrast, overnight visitor arrivals from Japan and the Philippines registered the strongest YOY growth in the second quarter, at 17.9% and 16.8% respectively.

Hong Kong launched an e-visa application process for Taiwanese citizens on 1 September 2012 aiming to attract visitors from Taiwan. Currently Taiwanese citizens are required to apply for an entry permit with registered airlines. The e-visa arrangement will allow Taiwanese visitors to apply for the permit online, where the current HK$160 visa application fee will be waived.

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About the Authors

4Hoteliers Image LibraryDaniel J. Voellm
is Managing Director of HVS Hong Kong, has provided advice in major markets across Asia-Pacific. Prior to heading the Hong Kong office, Dan was Vice President at HVS' global headquarters in New York conducting a wide range of appraisals, market studies and underwriting due diligence services.

Dan brings a strong understanding of the hospitality industry to HVS. His experience in hotel and food and beverage operations in Germany, Switzerland, England and the United States is complemented by an Honours Bachelor of Science Degree from Ecole hôtelière de Lausanne in Switzerland. Dan works closely with key institutional and private owners of hotel properties, financiers, developers and investors. Dan further advises on property and concept development and strategy.

4Hoteliers Image LibraryCathy Luo is an analyst of HVS Hong Kong, working primarily on hotel consulting assignments including Market Studies and Feasibility Studies in the Asia Pacific region. Prior to joining HVS, Cathy worked in Revenue Management with Marriott Hotels in Dubai performing analysis and providing recommendations to support hotel strategy.

Graduating with a an Honours Bachelor of Arts degree from Glion Institute of Higher Education and with previous working experiences in hotel operations, Cathy brings a comprehensive knowledge of the hospitality industry. Cathy has advised on projects in China, Singapore and Cambodia.

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