Research Korner: Hong Kong Hospitality Industry

Strategic Analysis of Hong Kong's Hotel Industry

STRATEGIC ANALYSIS OF A HOTEL             The hotel industry is heavily dependent on tourism. If there is a boom in the tourism industry, the hotel business will also experience a boom. Likewise, if there is a decline in tourism, so there will be in a hotel industry. Other factors that affect hotel commerce are the costs of living, image of the country, and the development of rival hotels near its vicinity, and  tourist attractions in the other regions.             Hotels in Hong Kong have grown mainly because of the flourishing and favorable business environment since its government [i]has adapted a policy of positive non-intervention. This makes the region a prime target of investors. It suffered a significant decline a few years ago when the SARS pestilence invaded the region but it has rebounded back since then.             One other problem the hotel industry is looking into is the declining impression of Hong Kong  as shoppers’ delight. Cost of living in Hong Kong rose significantly while hotel rates rose sky high. While Hong Kong competitiveness was declining, some neighboring countries as Malaysia, Singapore and Thailand took this opportunity to  overtake them in tourism.  Even nearby Macau is taking away tourists from Hong Kong with the establishment of their gaming and hotel industry. Macau is in the process of creating  new hotels.  Thus, the number of tourists and business middlemen that usually proliferates Hong Kong hotels and places fell significantly.                Nevertheless, the hotel industry is still a prime investment choice of investors as tourism has remained a top earner of the Hong Kong government.  Serving as an  entryway to various travels to China, it benefits from the vast travelers entering the region.  Hong Kong is also the main travel center of travelers to South East Asia.               In the Asian financial crisis, the hotel industry together with the tourism industry suffered a significant decline. Even after it experienced a rebound, it has not recovered back its revenue potential from before the crisis. Experts state that these are due to higher cost of living, lack of attractions for tourists, high amount of pollution, and Hong Kong is no longer the shoppers’ choice.                Even as other  countries like Japan, Taiwan, and South Korea increased their hotel accommodation rates to as much as thirty-eight percent, Hong Kong and China hotel rates declined by as much as thirty-one percent.             However, since properties in Hong Kong are major assets, businessmen still put their money on Hong Kong hotels. Tourism started climbing again by the year 2000. As consequence, hotel accommodations and rates  rose again to high levels as occupancy rates have also increased.             Hong Kong has more than six hundred hotels and guest houses with an approximate number of fifty-three thousand rooms, with an occupancy rate of less than ninety percent annually. More than fifty percent of its guests used the rooms for just a night or two trending the importance of Hong Kong as a travel center.             China has applied several courses to help the tourism and hotel industry of Hong Kong. A Disneyland rose in Hong Kong. Beijing has relaxed its regulations on its citizens allowing them to travel individually or by family and/or friends rather than in an arranged group. They also allowed the increase on the amount of currency a citizen can take with them during their travels.  China has also instituted additional and longer holidays to promote tourism starting with a five-day work week.  The launching in 1993 of a free visa for seven days provided favorable impacts for travelers to Hong Kong.  It attracted more foreign visitors. China also made the processing for visas  uncomplicated and trouble free for tour groups coming from Mainland China. Formalities on documents needed for travel was also relaxed further raising tourist count.             Not counting competitions from abroad, local competition within China are already severe. Choices are vastly wide and competitors are abundant. Hotels have already cropped up in other cities that give Hong Kong hotels a run for their money. The proliferation of hotels in China and the law of economics dictate that hoteliers be constantly on their feet to provide the highest and best hospitality standards to their customers.              Hong Kong must exhaust all possible areas where they can regain back their tourists. Competitive and attractive packages must be provided, and tourists must be afforded high standard of services and given favorable experiences while in Hong Kong. 	 	 		 		 		 		 		[i] Ivythesis.typepad.com

Strategic Analysis of Hong Kong's Hotel Industry

STRATEGIC ANALYSIS OF A HOTEL The hotel industry is heavily dependent on tourism. If there is a boom in the tourism indust...