Hong Kong was until very recently the world’s most expensive housing market, featuring sky-high rents and cramped apartments as small as 100 square feet. But thanks to the pro-democracy protests that have disrupted the city-state’s economy and ushered in a new wave of political uncertainty and chaos, many of Hong Kong’s most critical industries have seen serious disruptions, especially tourism.
Earlier this month, Hong Kong’s financial secretary revealed that tourism had plunged more than 40% during the month of August, compared with August 2018, the biggest drop since the SARS epidemic of 2003.
As visitors dry up, hotels are being forced to slash rates to try and attract clientele. And some of these cuts have gotten pretty steep.
For example, a “new low” for a hotel booking has been spotted by the South China Morning Post: HK71 – or about $9.
At that price, living in that hotel would be less expensive than one of the city’s subdivided apartments.
At a new low of HK$71 (US$9.06) a night, some hotels are now cheaper than subdivided flats in the city. Winland 800 Hotel in protest-hit Tsing Yi, is offering that rate on weekdays through the Wing On Travel website. It represents a decline of 65.7 per cent from its lowest rate of HK$207 a night in March 2018.
In response, hoteliers and other business owners in the hospitality and tourism industry are asking the Hong Kong government for help in the form of rent and bank-loan interest waivers, arguing that their industries have been the hardest hit by the demonstrations. The city’s Housing Authority has already cut rent for the city’s retail tenants in public housing, while HSBC offered rebates on loans from small and medium-sized companies in the city that have been struggling because of the protests.
Jhunjhnuwala said the tourism industry had been hit hardest, and that the government should waive rents and rates for at least a year, set up a short-term fund to help the hotel industry, give visitors incentives, such as special rates, to stop over in Hong Kong for a day or two, and instruct banks to waive interest on loans borrowed by hotels.
“It’s devastating to see the effect the recent situation in our city has had on local businesses, particularly on those of us in the hospitality industry,” he said, adding that the occupancy rate of “most hotels in Hong Kong was down 30 per cent to 40 per cent” on year, with some even down to 20 per cent.
Jhunjhnuwala, whose company employs more than 190 people in Hong Kong, said frontline staff might unfortunately face reduced hours, reduced wages or, in some cases, even redundancies.
Hoteliers have made another unusual request: Asking the government to allow the hotels to sell or lease hotel room as if they were condos. Their argument is simple: The city is struggling with a housing shortage and an overhang of unoccupied hotel rooms.
“If the government recognizes there is a need for housing for the young, it ought to…relax the rules, [permitting] hotel rooms with kitchens, to be rented over 28 days, with hotel rooms saleable to individual buyers, like anywhere else in the world,” he said.
Cheng also said converting industrial buildings into hotels that can be leased or sold for residential use “can potentially supply more than 500,000 units speedily” and ease the housing crisis in Hong Kong, the world’s most expensive property market.
“Each traditional industrial location, such as Kwun Tong, Tsuen Wan, Kwai Chung, Tsing Yi island, Aberdeen, Yuen Long and Tuen Muen, must have more than 200 rundown industrial or warehouse buildings, making it a total of more than 1,000 buildings,” Cheng said.
“Each industrial or warehouse building is normally large and can be rebuilt, or renovated, to more than 500 rooms. Therefore, there is potential for more than 500,000 hotel rooms for accommodation if there is demand.”
If you’ve always wanted to visit Hong Kong, and wouldn’t mind a bit of ‘excitement’ in the form of street warfare between protesters and police, there has never been a better time than now to plan a trip to Hong Kong. If you move quickly, you just might be able to get there in time to watch the People’s Liberation Army forcefully suppress the protests before the Communist Party’s 70th birthday on Oct. 1.