Giovanni Angelini, July 01, 2021

Hong Kong is well known for being home to some of the world’s finest hotels, with a flourishing hospitality industry driven by the rapid growth of international business and leisure travel and increased demand for accommodation at every price level (at least before the pandemic). 

The desire to work hard, progress, and succeed seems to be woven into the DNA of every Hong Kong professional. And this sophisticated city offers the ideal environment for them to thrive and stand out. Their creativity, drive, innovation and achievements have been vital to the success of Hong Kong’s hotel and tourism industry, and the results – which are clear to see – are admired by the industry at large. I, for one, applaud them for their incredible efforts. And I strongly encourage them to continue. 

For several decades, the Hong Kong hotel market has ranked among the strongest in the world, with high yield, overall performance, and profitability. The combination of domestically grown hotel brands with key global players, plus the wit and grit of local talent merged with the extensive experience and skills of the top foreign professionals, has made Hong Kong’s hospitality scene a very enterprising and industrious landscape. Direct competitors are no doubt envious.

With all that it offers, Hong Kong is a well-recognised international destination, attracting visitors from all over the world. However, with international borders closed due to the pandemic, that line of business has dried up, and the weak part of the Hong Kong hotel scene has been exposed – that is, limited demand from the domestic market. 

In this situation, hotels have had to become very creative in developing attractive staycation packages for the local market. We have seen many resilient Hong Kong hoteliers demonstrate much resourcefulness and entrepreneurship in this regard. However, the volume is not sufficient to cover basic operational expenses and the financial commitments of the properties – a clear situation of unbalanced supply and demand.

We all look forward to the reopening of borders to international travellers and returning to some kind of normality in the hospitality business. But we have to accept that returning to a virus-free situation may take years. In the meantime, human interaction will continue to be guided and shaped by safety measures and procedures. 

Unfortunately, it appears that the road to recovery will be a long one. The virus will continue to circulate in pockets of the global population – Hong Kong included – with sporadic small outbreaks experienced worldwide. The slow pace of voluntary vaccinations and the threat of the Delta variant are of concerns for Hong Kong.

As a species, we have learned to live with influenza, dengue fever, and other viruses in our midst. With COVID-19 becoming endemic, we now have to do the same with this virus too. 

Countries worldwide are trying to manage the pandemic by balancing economic and social demands while protecting the health of their citizens. And this applies to the travel and tourism industry too. 

It is a fact that travel will always include some element of risk, and this may increase in the next era of travel. Living with an endemic means we shouldn’t completely close the borders.  Global cities and the hospitality industry need essential supplies – including a constant flow of healthy/vaccinated travellers crossing borders with minimal fuss and maximum logic.

Hong Kong’s relative success in containing the virus so far, combined with its long-established reputation as one of the world’s top travel destinations, can provide a solid foundation for its revival and return to one of the most dynamic hospitality and tourism markets once the situation stabilises. 

As a major global city and destination, Hong Kong’s existing strengths in financial services, trade, transport, communications, the very best in culinary offerings, and tourist attractions and infrastructure remains strong. In addition, the beauty and the size of the country parks and coastal areas, a landscape from sandy beaches and rocky foreshores to heights of almost 1000 metres, is something that Hong Kong can be proud of and that it can be promoted to foreign visitors.

The destination will remain an appealing choice for business and leisure travellers, and demand will gradually increase. The integration of the Greater Bay Area is expected to be a major plus for the hospitality industry.

Of course Hong Kong cannot rely only on past glory, new facilities-products- services-attractions have to be developed. Among others, the destination could do with a much more attractive waterfront-harbour (a missed opportunity at present), with better facilities for international events and sports, additional boutique/locally relevant hotels/accommodation, unique malls vs the standard 101 model. And of course making the two major tourist attractions; the Disneyland and Ocean Parks, much more interesting to visit.

Following the great reset caused by Covid and by the pain of the social unrests of 2019, plus the geopolitical tensions and a number of wrong perceptions, it is essential for Hong Kong now to reaffirm itself as the place with unique identity creativity/competitiveness, and with a well established infrastructure/systems and innovative spirit. 

A strong/sophisticated/professional image campaign supported by adequate funds is simply a must for the Hong Kong authorities to embark on.

The bottom line is that the market will come back, mostly via China, and money still be made but Hong Kong hoteliers must realize that they may need to rethink pricing, and in most instances that means lower, if they want to compete with a myriad of other regional cities for the post Covid dollar.

The road to recovery will require hoteliers to adjust to an operational new normal, particularly regarding roles and responsibilities, staffing levels, efficiency, agility, technology, innovation, responding to market trends, and retaining the dominant position. There is strong confidence in the city’s innovative spirit and the ability of its hospitality professionals to adapt and progress.

In this environment, travel and tourism will become more purposeful, with great emphasis placed on safety and security, wellness, and sustainability. And hotels are expected to focus on providing experiences, authenticity, privacy, and space.  

Consumer behavior and eventually consumer/travellers spending have been and will continue to be altered and business plans/strategies need to be adapted to those new circumstances, and all countries/ destinations – including Hong Kong, for which travel and tourism are very important – will have to react to this. It is imperative for Hong Kong to retain its dominant position.

Change is inevitable and there’s no going back to the way things were before the pandemic. Hotels must accept the new reality, with new opportunities, new business models, and shifting consumer preferences.

Despite all this, the four basic rules of doing business will always apply – “Revenue-Cost-Risk-Profit.”