Visitor surge boosts Hong Kong tourism, hotels lag behind

Hotels struggle with reduced performance and shifting traveller demographics.

The first half of 2024 brought 21.15 million visitors to Hong Kong, which is 64% higher compared from the same period last year. According to Shaman Chellaram, Senior Director, Asia, Valuation & Advisory Services at Colliers Hong Kong, while visitor arrivals have increased significantly, hotel performance remains below expectations.

“We actually had really strong inbound tourism numbers,” said Chellaram. “We had a total of 21.15 million visitors in the first half, and 16.5 million were from the mainland, and around 5 million or so from other markets.”

While the increase in visitor numbers is evident, with 3.9 million tourists arriving in July alone, a 9.3% year-on-year rise, the hotel sector has not enjoyed the same level of success. 

One of the key reasons for this lag in hotel performance is a shift in the nature of travellers entering Hong Kong. “We’re seeing an increase in more cost-conscious, experience-driven travellers coming into the market,” explained Chellaram. These tourists are opting for cheaper travel options, which is impacting hotels' ability to raise rates or fill rooms.

“The ease of transportation between Hong Kong and the mainland is making it easier for people to come in on day trips, and obviously that’s resulting in less spending in Hong Kong,” Chellaram added.

The cumulative effect of these factors has resulted in a drop in hotel performance. “Even though we had a strong January to February, we saw performance drop around five to 8% from March to June,” said Chellaram.

In response to these challenges, hoteliers are shifting their strategies to attract a wider demographic and boost occupancy. “Hoteliers are really having to curate very specific packages to target different demographics,” said Chellaram. 

Additionally, dynamic pricing strategies are being used to maximise room bookings. “We’re seeing a lot of clients have a dynamic rate pricing strategy to really drive occupancy at the front end over the first few months of bookings, and then as you come closer to the actual day of travel, they can start to boost rates to fill up that balance of occupancy,” explained Chellaram.