Hong Kong hoteliers issue SOS as plunging rates reach US$9 a night and occupancy hits 20 per cent amid protests
- At monthly rate of HK$5,980, three-star Winland 800 Hotel in protest-hit Tsing Yi cheaper than subdivided flats
- Government should allow long-term leasing and sale of hotel rooms as this would also solve housing problem, Best Western owner says
Hong Kong hotel operators have called on the government to waive rents and even allow properties to offer empty rooms on long-term leases, or for sale, as a way of survival amid a steep decline in occupancy and rates brought on by 16 weeks of protests in the city.
At a new low of HK$71 (US$9.06) a night, some hotels are now cheaper than subdivided flats in the city. Winland 800 Hotel in protest-hit Tsing Yi, is offering that rate on weekdays through the Wing On Travel website. It represents a decline of 65.7 per cent from its lowest rate of HK$207 a night in March 2018.
“Certainly, this year has been far more challenging than any other time for any industry,” said Girish Jhunjhnuwala, founder and chief executive of Ovolo Group, who has called for help for the local hospitality industry “given the current economic downturn”, which has hit been “felt across all corners of the city”.
Jhunjhnuwala said the tourism industry had been hit hardest, and that the government should waive rents and rates for at least a year, set up a short-term fund to help the hotel industry, give visitors incentives, such as special rates, to stop over in Hong Kong for a day or two, and instruct banks to waive interest on loans borrowed by hotels.
Jhunjhnuwala, whose company employs more than 190 people in Hong Kong, said frontline staff might unfortunately face reduced hours, reduced wages or, in some cases, even redundancies.
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The government should relax rules so that converted industrial buildings and wasted hotels in industrial areas that are battered by a prolonged decline in cheap mainland Chinese package tours can be leased, or even sold, to locals for residential use, said William Cheng, chairman and chief executive of Magnificent Hotel Investments, which owns nine hotels, including Best Western in Hong Kong.
“If the government recognises there is a need for housing for the young, it ought to … relax the rules, [permitting] hotel rooms with kitchens, to be rented over 28 days, with hotel rooms saleable to individual buyers, like anywhere else in the world,” he said.
Cheng also said converting industrial buildings into hotels that can be leased or sold for residential use “can potentially supply more than 500,000 units speedily” and ease the housing crisis in Hong Kong, the world’s most expensive property market.
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“Each industrial or warehouse building is normally large and can be rebuilt, or renovated, to more than 500 rooms. Therefore, there is potential for more than 500,000 hotel rooms for accommodation if there is demand.”
Elsewhere, the programme to turn industrial buildings to transitional housing has failed without any application so far as “market players have signalled reservations about this initiative owing to the potentially high refurbishment and compliance costs”, said Peter Ho, partner of Mayer Brown's real estate group in finance and investment team.