Growing to higher heights

A new crop of luxury properties is shaking up Hong Kong’s hospitality scene, but the more crowded marketplace will also bring a mixed bag of benefits to the trade, finds Prudence Lui

The Murray Grand Room

Land-scarce Hong Kong will embrace a new wave of luxury five-star hotels starting later this year when The Murray, Hong Kong, a Niccolo Hotel opens later this year with 336 rooms, followed by the 398-room Rosewood Hong Kong and the 129-room St Regis Hong Kong next year, and the 460-room Fullerton Hong Kong Hotel Ocean Park in 2020.

The industry is watching the new properties in anticipation, as the last year that saw a luxury hotel opening was in 2011, when the Ritz-Carlton Hong Kong was launched.

Without any new supply until the launch of Kerry Hotel, Hong Kong in April this year, the city now has 27 luxury hotels as of June 2017, up from 26 in 2014 and 19 in 2007, according to STR.

The Murray Grand Room

Four Seasons Hotel’s general manager and regional vice president, Christoph Schmidinger, told TTG Asia: “After two years of stagnant growth, business from China is rebounding. The supply of luxury hotels will grow significantly in the months to come and we expect the demand to be buoyed by continued strong demand from business travel and increased travel from emerging markets and China.”

While there isn’t any threat of oversupply, Schmidinger believes occupancy growth in Hong Kong will be moderate until all new supply is absorbed. In the short term, he expects the city’s rates might be affected but will return to current levels soon thereafter.

With the booming growth of new luxury hotels across Asia, Harbour Plaza 8 Degrees’ general manager Christina Cheng thinks that the luxury hotel sector will come under pressure in terms of service and pricing strategy.

She said: “In Hong Kong, five-star guestrooms share 27 per cent of hotel supply YTD 2017 with average occupancy around 84 per cent, reflecting sufficient supply in the market. This new wave creates price competition that will spread from (within) same class hotels to lower ranking hotels, affecting the average rate over the whole industry.”

She added: “Luxury hotels are recording lower average rate compared to the same period last year for the first five months, which explained why upscale hotels have been reducing their prices for optimum yield to maximise the market share… mid-range hotels are still benefiting from tourists with less spending power looking for affordable lodging.”

With rates coming under pressure from the increase in luxury room supply, Swire Travel, managing director, Gloria Slethaug already observed a 5.4 percent drop in average room rate for Jan-May 2017, welcome news as the competitive rates help travel agents to roll out more attractive offers for Hong Kong.

“(Greater competition) should drive luxury hotels to differentiate products and services and create additional value for customers e.g. some hotels have short three-hour itineraries for hotel guests seeking bleisure. In addition, agents can also use this opportunity to develop bleisure programmes.

“Like Bangkok and Singapore in the region, an ample number of luxury hotels will help to drive the meetings and incentives sector and make Hong Kong more competitive as a MICE destinations,” she elaborated.

However, W Travel Services’ managing director Wing Wong does not think the new luxury hotels will benefit leisure agents much.

He explained: “As I focus on groups and leisure business, the luxury hotels are too expensive for our clients. It’s typical for VIP or high-end guests to book direct rather than via agents. Unless I am a corporate travel agent, I don’t think our service is needed.”

Sponsored Post