Experience to lead Hong Kong hospitality recovery

Hotels are facing rising occupancy but falling rates amidst cost pressures.

Success in Hong Kong’s hospitality sector will hinge on offering differentiated, experience-led stays and building a more resilient operating model, a report by Colliers said.

The report said Hong Kong’s hospitality sector began 2025 with strong momentum, driven by a packed events calendar and rising international arrivals.

Q1 welcomed 12.23 million visitors, with overseas growth offsetting a slight dip in mainland stays. Yet, hotels face a key challenge of rising occupancy but falling rates, as cautious spending and cost pressures squeeze margins.

The city saw average daily rate (ADR) falling 3.8% to $1,340.54 (US$171) whilst newer, more affordable destinations like Thailand and Japan saw strong ADR growth of 14.7% and 11.9%, respectively.

Collier said this reflects a shift in pricing dynamics as established destinations adapt to evolving travel patterns and guest expectations

Meanwhile, Revenue Per Available Room (RevPAR) growth across key Asia Pacific markets has moderated, reflecting a more cautious pace amidst shifting market dynamics. Hong Kong saw only a marginal gain of 0.4%, compared to the 15.7% RevPAR increase in Japan, which leads the segment.

In Hong Kong, Q1 occupancy rose to 88%, but ADR fell 13% to HK$ 1,265, pulling RevPAR down 7%. Luxury and upscale hotels saw moderate rate declines, whilst midscale properties were hit the hardest.

Labour shortages, rising costs and weak non-room revenue continue to pressure margins. Operators are streamlining services and repurposing underperforming outlets to stay agile.