Quarterly Hong Kong Hotel Market Update.
Thursday, 30th November 2017
Source : Christy Tung & Daniel J Voellm

The third quarter of 2017 recorded the highest number of mainland Chinese arrivals since the same period in 2015, which bodes well for Hong Kong tourism.

Safety concerns towards other destinations in the region and fewer headline-making news about Hong Kong are the key contributors to the increase in visitor arrivals from mainland China. Thus, the tourism and the retail sectors in Hong Kong enjoyed a steady recovery after a slump in mainland arrivals in 2016.

Hong Kong Visitor Arrivals

The robust 2.2% growth to 42.6 million visitor arrivals in Hong Kong during the first nine months of 2017 is a strong indicator of a recovery in the city’s tourism sector. According to Hong Kong Tourism Board (HKTB), in the third quarter of the year, Hong Kong registered an increase of 268,000 arrivals, a 1.8% rise over the same period in 2016.

Specifically, September contributed the largest growth rate to this quarter at a 4.8% year-on-year, followed by July at 2.4%, while August registered a 1.2% decline due to the Category-10 and Category-8 typhoons sweeping across the city at the end of August. The top five feeder markets (by order of size) are mainland China, Taiwan, Korea, Japan, and the United States. Mainland China and Japan registered a positive YoY change, while the other three demonstrated a decline in visitor arrivals in the third quarter, partly due to a higher competition from other Asian countries.

Accounting for 78.3% of arrivals in the third quarter of 2017, mainland Chinese visitors registered 2.7% year-on-year growth to 11.6 million. This is good news for Hong Kong as the city had lost out on attracting experienced Chinese travellers to more ‘flashy’ destinations, in Asia and Europe. Given that safety concern is a predominant criteria while making travel decisions, headlines of terrorist attacks in Europe and North America, the de facto ban on package tours to Korea, and the strained relations with Taiwan, helped to drive mainland Chinese travellers back to Hong Kong.

Furthermore, Hong Kong’s relatively calm political climate and reduced negative news in offical mainland media are recuperating its reputation for mainland Chinese travellers. The 20th handover anniversary celebration with President Xi Jingping’s visit to the city in July also helped to boost the modest growth of visitor arrivals in the third quarter of 2017, of which its newly appointed Chief Executive also benefits indirectly.

Among other non-mainland Chinese feeder markets, Japan recorded the highest year-on-year growth of visitor arrivals at 14.4% to 325,000 visitors in the third quarter of the year.

Aided by HKTB’s effective campaign at this year’s Tourism Expo Japan, Hong Kong had become a more popular destination among Japanese.

The improved tourism partnership between China and Japan also rejuvenated the growth of Japanese visitors, to some extent.

But the main factor to the increase was due to the rising flight capacity between Japan and Hong Kong. New flights added by both the legacy carriers and low-cost carriers, such as Hong Kong Express, Jet Star and Vanilla Air from Tokyo and Peach from Osaka, further improving lower-cost travelling options.

Taiwan and South Korea both experienced a slight decline by 2.3% and 0.9% to 516,000 and 334,000 arrivals, respectively. Surpassing Macau, the United States become the fifth largest visitor arrivals source market with 1.8% of market share, sending 267,000 Americans visitors to Hong Kong despite a minor 0.5% year-on-year decrease.

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About Christy Tung
Christy Tung Christy Tung joined HVS Hong Kong as an Analyst in August 2017. As her primary duties, Christy conducts market research and data analysis in Market Studies and Feasibility Studies in the Asia Pacific region.

Prior to joining, Christy has gained a wide array of hospitality experiences in Hotel Operations, Revenue Management, and Sales and Marketing from multiple international hotels, including Hilton Boston Back Bay, the Langham Sydney, and the Langham Boston.

For more information please contact, ctung@hvs.com

About Daniel J Voellm
Daniel J Voellm Daniel J Voellm, Managing Partner HVS Asia-Pacific, is based in Hong Kong is based in Hong Kong and has provided advice in all major markets across 18 countries in the region. Daniel Voellm started his career at HVS in the New York office; as Vice President at the global headquarters, he conducted a wide range of appraisals and market studies as well as underwriting due diligence services in 22 US states and in Canada.

Daniel 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 USA is complemented by an Honours Bachelor of Science degree from Ecole Hôtelière de Lausanne in Switzerland. 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.

For more information please contact, dvoellm@hvs.com 

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