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Opportunities for partnerships and alternative offerings emerging in Hong Kong’s hotel sector

Colliers releases report exploring trends and opportunities in Hong Kong’s hotel environment

HONG KONG, 30 November 2021 – Leading diversified professional services and investment management company Colliers today released its Looking Beyond: Trends & Opportunities in Hong Kong’s Hotel Environment report, which reviews Hong Kong’s hotel performance and operating environment, and explores trends and opportunities for owners, operators and investors.

Shaman Chellaram, Senior Director, Valuation & Advisory Services | Asia, commented: “Even though Hong Kong’s hotel operating environment remains challenging, staycation demand, quarantine hotels and extended-stay offerings have helped boost performance.  Major infrastructure, commercial and leisure initiatives will elevate Hong Kong’s position as a global city and provide further long-term potential. New and existing operators can expand their presence in the market by partnering with existing owners or investors, while also considering the adoption of technology, asset enhancements and ESG initiatives.”

Hotel performance has improved moderately as a result of domestic demand

Lack of mainland and international visitors due to Hong Kong’s stringent quarantine measures and cross-border restrictions continue to weigh heavily on the sector. Average occupancy and RevPAR are up 49% and 57%, respectively, YTD but still significantly below 2018 highs. The luxury sector continues to lag in terms of occupancy, but the further easing of F&B and banqueting restrictions is starting to contribute to improved revenue. Midscale and upscale hotels are achieving higher occupancies, largely as a result of longer-stay guests and rate drops. While the anticipated partial opening of the border in December will be welcomed, the sector needs a wider opening to make a meaningful difference.

Opportunities for partnerships and flexible models emerging in sector

COVID-19 has provided some opportunities to enter the market, acquire, enhance or reposition assets with new and existing hotel brands. The adoption of technology will be key going forward as health and wellness become increasingly important to guests. Colliers also recommends partnerships with groups looking at flexi-stay, extended stay, and co-living models as a way to improve shorter-term performance, share risk and provide experiential offerings. Hotels and guesthouses may now be used as interim accommodation for those on the public rental housing waitlist as part of the government’s ‘Use of Hotels and Guesthouses for Transitional Housing’ pilot scheme, with over 150 hotels and guesthouses already on the initial list. Integrating ESG initiatives is also becoming a strategic priority for many hotel groups, with green financing and sustainability-linked loans already emerging in the sector.

Hotel outlook remains positive although recovery likely to be slow

Despite COVID-19 there have been over 10 new hotel openings in 2020-2021, with more hotels expected to open in 2022 and beyond. Transaction levels remain muted at HKD 1.7 billion as of Q3 2021; however, this is likely to approach HKD 3 billion by year-end. Comparatively, investment levels in 2020 were HKD 1.3 billion. Investment appetite for Hong Kong hotels remains strong, with ample capital from PERE funds and private investors waiting for the right opportunity, but underwriting, forecasting and differences in pricing expectations are key challenges. Aligning with the right partner is key.  Several infrastructure and leisure projects across Hong Kong provide a picture of how the city will evolve over the coming years; the improved connectivity with the Greater Bay Area and across the city will drive accessibility, and despite the current difficulties, the potential benefit for the hotel sector is evident.


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Shaman Chellaram

Senior Director | Asia

Valuation & Advisory Services

Hong Kong

As Senior Director within the Valuation & Advisory Services team in Asia,  I work closely with my clients to maximize the potential of their real estate assets across the region.  With a key focus on hotels & resorts, this includes asset repositioning,  portfolio optimisation, hotel/serviced apartment operator selection, strategic market entry/expansion, feasibility studies, ESG advisory, hotel tokenisation, transaction advisory and M&A.    Having also been part of our Capital Markets & Investment Services team,  my experience lends well  to advising our clients from both an operational and investment perspective across  Hong Kong and key international markets for  hotels and commercial real estate assets. My clients include hotel investment groups, hotel operators, serviced apartment groups, co-living operators, family offices, developers, PERE funds, REITs and private investment groups.  By understanding my clients' real estate needs, I am able to leverage off our Colliers global platform to provide solutions to accelerate our clients' success, whether in Hong Kong or overseas.

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Danielle Paterson

Associate Director, Content & Media | Asia

Marketing & Communications

Hong Kong

As the Content & Media lead for Asia, Danielle is responsible for developing and executing the communications strategy for the Asia region. Danielle works closely with the Asia service line marketers and national marketing teams to deliver  Colliers' multi-channel content to maximize visibility of the Colliers' brand and its market-leading experts in the region.

Danielle has more than 10 years of experience in marketing and communications in the financial, entertainment and real estate sectors. Prior to joining Colliers, Danielle held positions at Grosvenor, FOX Networks Group and Neuberger Berman.

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