If there is one man well-placed to comment on how Hong Kong’s hotels are really doing and whether they have fully recovered from the economic crisis, then it’s James Lu, executive director of Hong Kong's Hotels Association.
HMA caught up with Lu during last month’s International Hotel Investment Forum in Macau to get his views on among other things rate raising, occupancy levels and regional hotel development.
How are hotels doing in Hong Kong at the moment?
Hotels are doing much better. We had a sort of recovery towards the second half of last year and we’re just riding on that recovery path. If you look at January to June this year, our occupancy numbers have been very healthy - about 85% compared to less than 80% last year, and we’re actually doing better than 2008 so that’s encouraging.
What about rates?
We were at one percentage point higher than 2008 for the first six months, but that came at a price. Room rates did not perform as well as 2008. Comparing 2009 is inappropriate …the rates are obviously better than 2009 but we really should be comparing with 2008. Things are looking up and with occupancies staying strong at about 85%, room rates are going to continue to stabilize. We’re looking towards the second half of the year in a stronger and stronger sentiment.
How long will it take to get rates back to the level of 2008?
I think by next year. People are already talking about 2011. People are saying MICE business will recover fully by 2011. People tend to believe European markets are going to be more active…the weaker euro has affected the growth rate of Europeans coming to this part of the world. I think 2011 will be a fully recovered year barring any unexpected happenings.
How are other sources of revenue such as F&B doing?
F&B has never been as strong as it is now even with more establishments opening. F&B is really encouraging. The local economy seems to be better – people are spending, local meetings are going well.
How badly did Hong Kong’s luxury industry suffer during the downturn?
In fact, the luxury hotels have recovered better. STR Global figures show [that for] the highest category of hotels, the improvement has been stronger than the mid-tier and lower tier hotels, which indicates that business travel is coming back.
How healthy is the Hong Kong hotel industry?
I think it is very healthy. Developers in Hong Kong are very rational. They have approvals to build hotels, but they are not building. The rational thinking of the developer has been a tradition of Hong Kong. They will not over build and it keeps the balance in proportion.
What’s your view on the growth in Macau?
The one thing we hate in the hotel industry is when there is a sudden increase in supply, and this sudden increase [in Macau] is not going to be 1,000 or 2,000 rooms, it’s going to be 4,000 or 5,000 rooms. The inventory in Macau is only about 16,000 so that’s a 30% increase. A 30% increase is more difficult to digest, because in a five-star hotel category you really are looking for a different kind of visitor to fill the room. Most of the arrivals are from China and Hong Kong. These are the two categories that probably could not sustain a sudden leap in room supply in Macau.
The Hong Kong Hotels Association
currently has 111 member hotels. The association serves as the official voice of Hong Kong’s hoteliers, and also performs a consultative view in proposed legislation arising from new government policies and measures. Its services include the offer of educational programmes to members through training courses and seminars, helping hotels to ensure consistency in service and quality standards, and introducing new technology and management techniques to members. Established in 1961, the association will celebrate its 50th anniversary next year.