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The Disneyland Report > Disney News > Hotel occupancy rates expected to rise with opening of Hong Kong Disneyland

Disney News

Hotel occupancy rates expected to rise with opening of Hong Kong Disneyland

A stronger economy and soaring tourist arrivals are expected to lift average room rates at Hong Kong hotels by as much as 20 per cent this year, according to analysts and industry sources.

Last year's record-breaking performance in visitor arrivals and room occupancy is expected to spill over to this year, further rejuvenating the sector and boosting rates close to the peaks set in 1996.

One milestone driving tourism is the imminent acquisition of Hong Kong permanent residency by United States media stars Mickey Mouse and Donald Duck, expected in September when Hong Kong Disneyland opens its gates on Lantau Island.

"This year will be a very good year, better than 2004," said Nigel Summers, the director of regional hotel consultant group Horwath Asia Pacific. "A key factor will be the opening of Disneyland, which will have a fantastic impact on tourist arrivals."

An increasing number of international trade fairs and conferences is also set to boost arrival numbers.

Mr Summers anticipated the new crowds of business and leisure travellers would fuel a 15 per cent increase in average room charges per night this year.

UBS analyst Eric Wong maintained a more aggressive nightly rate growth estimate of 20 per cent this year, noting that tourist arrivals and occupancy levels reached fresh highs during the seasonal low seasons of July and December last year.

"The outlook is one of tight capacity, with occupancy rising slightly and rates rising significantly more."

According to the Hong Kong Tourism Board's latest statistics, December arrivals hit a record 2.08 million, 16.3 per cent higher than the same period in 2003.

The tourism bull run closed out the year with 21.36 million visitors, 40.3 per cent higher than Sars-battered 2003, the worst season since the Asian financial crisis in 1998.

Even when compared with 2002, last year's tourist arrivals shot up almost 33 per cent, and all visitor markets except Taiwan posted marked growth in arrivals to Hong Kong.

The strong growth pushed average occupancy rates up to 88 per cent last year from 70 per cent in 2003.

The average room charge, at $ 803 per night, was 19 per cent above 2003 and 13 per cent above 2002.

Tourists are not the only group of visitors chasing hotel beds. Business was so brisk that some mainland-based Hong Kong businessmen were forced to "hotel -hop" on Hong Kong Island even for a brief stay back home.

However, the Hong Kong Hotels Association is setting a more cautious tone on the outlook of the sector.

Executive director James Lu Shien-kwai believed a 25 per cent rise in hotel inventory to 40,000 rooms this year could weaken growth in the average room rates.

Extra supply will come from the 396-room Four Seasons hotel at Hong Kong Station; the new 113-room Mandarin Oriental hotel at Landmark in Central; two hotels at Disneyland and numerous new three-star hotels around the city.

"Based on our experience in the past 20 years, a fair guess is 10 per cent growth in average room rates this year," Mr Lu said. "Even considering the growth rate, we are still more than 10 per cent below the peak in 1996."

Although the tourism and hospitality sector had been on a roller-coaster ride over the past few years and the industry appeared to be heading up again, the landscape had changed since its glory days, he said.

"Operating costs, such as labour and electricity tariffs, are much higher than in 1996, putting downward pressure on hoteliers' profitability," Mr Lu said.

There were swing factors, which might derail a full-scale recovery of the segment, he said.

He pointed to uncertainty about the outbound market trend of mainland tourists, the risk of another disease outbreak and the number of visitors to Disneyland.

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