Skip to main content Skip to footer

Unprecedented times to explore hotel opportunities as market sees potential in near-term investment

  • Hong Kong’s hotel sector has been challenged in the last 12 months with COVID-19 compounding the effects of city-wide social unrest
  • Hoteliers and investors with a long-term vision should take this opportunity to revisit strategies, and establish or expand their footprint in the city
  • Conversions from hotels into other uses provide viable options for owners and investors

HONG KONG, 14 MAY 2020 - The introduction of international travel restrictions and the closing of the border with Mainland China has had a major impact on tourism in Hong Kong. This has forced hoteliers and investors to consider whether to buy, sell or hold according to the latest report, unprecedented times to explore hotel opportunities from Colliers International (NASDAQ: CIGI; TSX: CIGI), a global leader in commercial real estate services and investment management firm.

The hotel sector is heavily dependent on tourism and business travel to generate revenue. While efforts have been made to create a ‘staycation’ market, 12-months of disruption has seen COVID-19 compound the negative impact of social unrest. The potential re-introduction of regular travel between Hong Kong and Mainland China provides optimism for recovery as pre-COVID-19 figures demonstrated cross-border travel contributed to 80% of the city’s inbound tourism.

Rosanna Tang, Colliers Head of Research for Hong Kong and Southern China, commented: “Tourist arrivals were down -81% YOY for Q1 2020 which has impacted the overall Hong Kong hotel occupancy rates, which dropped to 32% in March 2020. Taking positivity in the lessons learned from SARS in 2003, occupancy rates bounced back quickly to 88% in the first three months with support from government initiatives after borders were opened, creating optimism for the sector.”

Discussing current investment opportunities, Shaman Chellaram, Senior Director of Capital Markets suggested: “Hoteliers thinking longer-term could use the current market climate to expand their footprint, or even look to enter a traditionally competitive market. Opportunities could materialise as a result of other stakeholders with limited appetite looking to exit the sector.”

Currently, the investment sector is experiencing slow market momentum and a weaker number of overall investment of transactions. “While a wait-and-see attitude emerged in the first quarter of 2020 with limited hotel activity, we are seeing a surge in enquiries as investors start to look for hotel opportunities to deploy capital,” said Chellaram.

Pureanae Jang, Senior Manager of Colliers Valuation and Advisory Services said: “Now is a good time for owners and investors to revisit strategies. As the market goes through a downcycle, the uncertainty will impact investor’s returns and future vison. Although Hong Kong will recover, the unknown of how long this will take will play a major factor in the decision-making process.”

For independent hotel owners and operators, now could be a good opportunity to reposition assets, especially if they own aging stock. “Investment in alternative uses could be considered. Traditionally this would mean office space, but we are seeing growing interest in co-living or serviced apartments. We have recently witnessed transactions in the market and receiving an increased number of requests to support valuations and feasibility for related projects,” Jang added.

To learn more about our insights on Hong Kong’s hotel sector, click here to download the full report.

Related Experts

Shaman Chellaram

Senior Director | Asia

Valuation & Advisory Services

Hong Kong

As Senior Director Valuation & Advisory Services Asia at Colliers, I leverage my 18-years of strategic and investment advisory experience to work closely with my clients to maximize the potential of their hotel and commercial real estate assets in Hong Kong and across key regional and international markets.  This includes acquitistion and disposal advisory,  asset repositioning,  market entry, portfolio diversification, operator selection, hotel and mixed-used development, hotel tokenisation, ESG, transaction advisory and M&A.   

Advising from both an operational and investment perspective,  my clients include hotel and resort investors, hotel operators, serviced apartment groups, co-living groups, developers, PERE funds, REITs, family offices,  private investment groups and UHNWIs. 

By understanding my clients' needs, I draw on our Colliers global platform and capaibilities to provide solutions and accelerate our clients' success, whether in Hong Kong or overseas.   

View expert

Pureanae Jang

Senior Associate Director

Valuation & Advisory Services

Hong Kong

Pureanae Jang works as an Associate Director of Colliers' Valuation and Advisory Services in Hong Kong. Pureanae manages a team of eight, and her projects' geographic coverage spans across Asia Pacific, in particular Hong Kong, China and South Korea. She is commited to provide accurate and well-supported opinions of property value to assist her clients to reach their critical goal - to acquire the best asset, secure financing, close a sale, report to investors or identify unlocked potential of an asset.

Her specialisations include:

• Single-asset and Portfolio Valuations

• Appraisal Review / Management

• Discounted Cash Flow Analysis

• Feasibility Studies

• Highest and Best Use Studies

Having grown up in Mainland China and Hong Kong, Pureanae can speak, read and write in English, Japanese, Korean and Chinese. With her diverse background and effective cross-cultural communication skills, she is capable of delivering portfolio valuations on a global scale. She has completed various projects in Australia, Hong Kong, Indonesia, Japan, Korea, Mainland China, Mongolia, Northern Mariana Islands, Singapore, Taiwan and The United States.

View expert

Rosanna Tang

Head of Research, Hong Kong & Greater Bay Area

Research

Hong Kong

Rosanna Tang leads the research team in Hong Kong and South China in Colliers. Driving different research papers and client-orientated initiatives, Rosanna has a deep understanding of all property sectors, research products, and client requirements. Rosanna is also one of the spokespersons in the company, and she frequently speaks in different industry events and media interviews. 
 

View expert