Hotels get pricier as high-speed rail delivers more business

The low supply of hotel rooms will push prices up.

Visitors coming to Hong Kong may have to shell out more in accommodation fees as hotels are poised to charge more in response to easier travel links between Hong Kong and China, according to a blog post by JLL.

An expected 80,000 passengers will go in out and of Hong Kong with the opening of the US$11b high-speed rail network connecting 44 cities in the Mainland like Changsha, Wuhan and Zhengzhou.

Along with the sustained tourist influx could be million dollars in revenue opportunity for the hospitality industry who can expect more business in the near term, David Marriott, Senior Vice President of Strategic Advisory for JLL’s Hotels and Hospitality Group said in a statement. “Whilst the bullet train has made it easier and more accessible to enter Hong Kong, finding a place to stay at a decent rate might get tougher,” he added.

Hotels, particularly those in the budget and mid-level categories can cash in on this positive development over their luxury counterparts early on.

Also read: Local hotel market boosted by 1,000 new rooms in H1 

JLL also expects revenue per available room (RevPAR), a metric used to measure hotel performance, to grow by more than 12% in the latter half of the year to effectively extend 13% growth recorded in the first half of 2018, according to JLL.

With around 80,000 guest rooms overall, local hotels may be pushed to the limit as steadily growing tourism levels are fast snapping up limited room supply. 

“Hong Kong’s hotels already have occupancy rates in high-80s,” Corey Hamabata, Senior Vice President of Investment Sales for JLL’s Hotels and Hospitality Group said in a statement. “With the supply pipeline decreasing post 2019 together with several hotels also mooted for conversion to offices in the next few years, hotels are only expected to get busier and more expensive.”

Photo from WiNG - Own work, CC BY 3.0