Hong Kong hotels target staycations as the city’s tourism industry endures its worst slump since Sars

Hong Kong’s hotel operators are looking at new ways to beat seven months of downturn, including tapping the staycation market with hard to resist discount package deals.

Far East Consortium International, which operates nine hotels comprising 2,867 hotel rooms in Hong Kong, is among those pursuing staycationers.

“We felt the impact after October as mainland tourist arrivals dropped a lot,” said Winnie Chiu, executive director of Far East, adding that mainland tourists account for about 50 per cent of its guests.

In a bid to boost occupancy rates, Chiu said many operators are targeting families to spend their weekends in hotels in Hong Kong instead of travelling overseas. For example, its Dorsett Tsuen Wan has a 2,000 square foot kids zone and four kids themed rooms, aimed at children aged two to eight years old.

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“The facilities have attracted many families to stay at our hotels, especially during the Christmas holiday,” said Fion Wong, marketing communications manager at the Dorsett Tsuen Wan, which helped to boost the occupancy rate to as high as 80 per cent.

Room rates at the Dorsett Tsuen Wan on January 8 are 90 per cent lower at HK$189 than the regular price of HK$2,036, according to Wing On Travel and Agoda.

An aerial view of buses trapped between anti-government protesters in Tsim Sha Tsui, on October 20, 2019. Photo: May Tse
An aerial view of buses trapped between anti-government protesters in Tsim Sha Tsui, on October 20, 2019. Photo: May Tse

Hong Kong’s hospitality industry has been hit hard by a sharp fall in tourist arrivals because of seven months of mostly violent protests.

In November, the city’s tourism industry suffered its worst downturn since the Sars (severe acute respiratory syndrome) outbreak in 2003, as arrivals plunged 56 per cent year on year. The figures were no better during the Christmas period. The number of mainland package tours plunged 90 per cent to around 20 from 200 in 2018, according to the Travel Industry Council of Hong Kong.

In the third quarter of 2019, the average hotel room occupancy rate fell to 72 per cent from 91 per cent a year earlier, according to the Commerce and Economic Development Bureau. The average achieved hotel room rate likewise dropped by 16.2 per cent from a year earlier.

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Some five-star hotels like The Peninsula Hong Kong in Tsim Sha Tsui were hit harder. The hotel’s occupancy rate sank to 35 per cent for the three months to September, from 61 per cent in the second quarter, according to a filing to the Hong Kong stock exchange by Hong Kong and Shanghai Hotels, the owner of The Peninsula.

Sun Hung Kai Properties, the city’s biggest developer by market value and operator of some well-known hotel brands, said that it has put more emphasis on local demand. Its hotel portfolio includes Four Seasons at the IFC in Central, Ritz Carlton and W at the ICC in Kowloon and the newly opened Alva Hotel by Royal in Sha Tin.

“We have done some staycation business,” said Adam Kwok, executive director at SHKP.

He said that various SHKP hotels have been offering discounted packages and fun activities aimed at couples and families in the hope of keeping them in the city here during the weekends to offset the weak tourist demand.

For instance, Four Seasons has wine tasting, drawing and photography classes, Kwok said.

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A one-night family package at Alva Hotel by Royal for two adults and two children with breakfast and dinner buffet costs HK$1,888.

Excluding the buffet, “the room costs just about HK$400; [its] almost like giving [the room] for free,” Kwok said.

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Tourism legislator Yiu Si-wing noted that the hotels at Ocean Park and Disneyland have successfully adopted similar strategies to attract more locals in the summer.

Yiu, however, doubted the effectiveness of staycations in sustaining the hotel industry on weekdays.

“The effect is better in summer [and not on] regular weekdays,” added Yiu. “For resort or luxury hotels … if the hotel is very cheap, some people might be interested. Some people may stay a night [just] for the bargain and relaxing. But the market is mainly counting on tourists.”

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