Hotel occupancy trails pre-pandemic levels despite 3% rise

CBRE says student housing conversions have helped ease pressure on occupancy.

Hong Kong’s hotel occupancy rose 3% year on year (YoY) as of July year-to-date (YTD), but remains below pre-pandemic levels, according to CBRE’s 2026 Asia Pacific Hotels & Hospitality Performance & Outlook report, published in September.

“The conversion of some upper-midscale hotels to student accommodation has helped ease pressure on occupancy,” the property services firm said.

Visitor arrivals grew 1% YoY as of July YTD, whilst investor interest in the living sector is also stimulating hotel acquisitions in the city.

Nine hotels totalling around 1,600 rooms traded in the first half (H1) of 2026, up from two deals in the same period of 2025, CBRE said.

The report described the city as the most prominent example of this trend, where hotels are being converted to student accommodation.

Across Asia-Pacific (APAC), hotel occupancy in most markets has yet to return to pre-pandemic levels, CBRE said.

Korea and Vietnam are the exceptions, where double-digit growth in visitor arrivals lifted occupancy by 7% and 8% YoY, respectively, as of July YTD.

On rates, Greater China markets are reporting stronger average daily rates YoY but have yet to return to 2019 levels.

“Further improvements to hotel occupancy will be limited due to constraints on flight capacity resulting from elevated fuel costs. This will encourage travellers to opt for domestic trips or cheaper alternative destinations,” CBRE said.

On supply, Hong Kong's average construction cost stood at $33,614 (US$4,282) per square metre in the first quarter of 2026, according to Turner & Townsend figures cited in the report.

CBRE said high construction costs are weighing on the hotel development pipeline across APAC, with Tokyo amongst the most vulnerable markets.

APAC hotel investment volume reached $62.8b (US$8.0b) in H1 2026, up 21% YoY, with Japan, Mainland China, and Korea leading transactions.

Strong hotel fundamentals will continue to support investment in the second half of 2026, whilst elevated borrowing costs in some markets may constrain returns and slow transaction growth compared with H1.

(US$1 = HK$7.85)