The prolonged decline of total visitor arrivals and the plummeting of China hotel market performance left existing and newly introduced hotel rooms empty in most of the other markets.
Hong Kong
2015 continues to be a difficult year for Hong Kong as 13.9 million visitors passed through the arrival halls in the second quarter, reporting a weak, yet still positive, year-on-year (YoY) change of 0.5% compared to same period last year.
The majority of feeder markets posted a decrease in arrivals this quarter. As usual, Mainland Chinese visitors accounted for the lion share of the city’s arrivals at 76% of total with approximately 10.6 million travellers.
However, the continued decline in Chinese visitor arrivals negatively impacted the overall performance of the tourism sector. Part of the reason for this decline is the backlash to escalation of local resentment towards mainland Chinese. Recent protests in the city aggrevated the tensions between Hong Kong and mainland China.
To worsen the situation, other Asian destinations have become more attractive for mainland Chinese travellers as visa restrictions were loosened and currencies weakened. As a result, mainland Chinese are now looking elsewhere for their leisure travels.
While Hong Kong is slowly losing its foothold in the hearts of the mainland Chinese visitors, growing by 1.4% YoY, the city benefited from an increase in visitor arrivals especially from USA at 11.1% growth to 308,000.
Hong Kong remains a popular travel destination for Philippines and South Korea as the city received 191,000 Filipino visitors and 283,000 South Korean visitors this quarter, at 6.3% and 2.3% YoY growth respectively.
Overnight visitor arrivals experienced a decline from same quarter last year as well at a 4% decrease which is roughly 300,000 fewer visitors. Nonetheless, the share of overnight visitor arrivals to total visitor arrivals remained around the same proportion at 44%.
YoY growth in the second quarter softened as well. In fact, Hong Kong received 4.1% fewer overnight visitors compared to same period last year.
There was a significant decline of overnight visitor arrivals from Indonesia (-12.4%) and Singapore (-11.2%) due to exchange rate changes, Italy (-10.5%), and also Russia (-6.5%), compared to the second quarter in 2014.
Although Mainland China dominated the overnight visitor arrivals with a 65.5% of the total share, this market registered a 500,000 drop from 4.5 million last quarter. On the flip-side, South Korea developed healthily with 208,000 arrivals at a YoY growth of 10.4%.
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ABOUT HVS
HVS is the world’s leading consulting and services organisation focused on the hotel, mixed-use, shared ownership, gaming and leisure industries. Established in 1980, the company performs more than 4,500 assignments each year for hotel and real estate owners, operators and developers worldwide. HVS principals are regarded as the leading experts in their respective regions of the globe. Through a network of more than 30 offices and 450 professionals, HVS provides an unparalleled range of complementary services for the hospitality industry. www.HVS.com
The Hong Kong team has worked on a broad array of projects that include economic studies, hotel valuations, operator search and management contract negotiation, development strategies for new brands, asset management, research reports and investment advisory for hotels, resorts, serviced residences and branded residential development projects. HVS Hong Kong’s clients include New World Development, The Wharf, Sun Hung Kai, Samsung, SK, Lotte, Taj Hotels and Resorts, Agile Property Holdings, Citibank and LaSalle Investment Management, amongst others.
About the Authors
Larissa Lam A hospitality enthusiast, Larissa Lam joined HVS Hong Kong in 2015 as an analyst. Graduated with a Bachelor of Science degree Cum Laude from Boston University School of Hospitality Administration, Larissa seeks to facilitate HVS researches and market studies with her prior experience in Finance, Sales Revenue, and Operations with several properties in Boston and Hong Kong.
Before joining HVS, Steven Zhu worked with international real estate consulting firms and provided consultancy for more than 40 projects with 5-year experiences. Since joining HVS Shanghai in 2012, he provides consultancy on hotel and mix-use development projects. His main areas of competency includes: hotel market research, feasibility study, operator search, mix-use strategic consulting and real estate full service.
Daniel J Voellm, Managing Partner HVS Asia-Pacific, is based in Hong Kong and has provided advice in all major markets across 18 countries in the region. Daniel works closely with key institutional and private owners of hotel properties, financiers, developers and investors, and has gained a strong understanding of their investment requirements and approaches to assessing the market value of investment properties.
Daniel further advises on property and concept development and strategy.
