Hong Kong hotel sector recovery elusive for unprepared investors
Signs of recovery in Hong Kong’s real estate industry are becoming more apparent, so much so that key indicators in parts of the sector are experiencing some of the fastest growth rates in the Asia-Pacific. In the hotel market, average daily rates, which were declining in annualised terms for most of 2025, grew 9.5 per cent in the first half of this year. This was the third-fastest growth rate…
Despite signs of recovery in Hong Kong's real estate market, the hotel sector remains elusive for many investors. The hotel market's average daily rates have grown by 9.5 percent in the first half of 2025, making it the third-fastest growing market among 14 leading regional markets according to CBRE data. The number of tourist arrivals is also expected to reach 55 million this year, almost equalling the 2019 number, although still lower than 2018.
Luxury and upper upscale hotels are performing particularly well, with rates 1.3 percent higher than in 2018. Key drivers for this recovery include Hong Kong's revived capital markets and its continued role as a hub for major events. However, the sector's recovery is uneven, with only prime hotels in prime locations benefiting the most.
This is due to their better ability to cater to high-end market segments and the shrinking supply of new hotels since the Covid-19 pandemic. The limited competition from new hotels increases the value and pricing power of existing properties. Despite this, the high barriers to entry, including the lack of investible opportunities and the need for repositioning and repurposing expertise, make it difficult for many investors.
While the hotel market is recovering, it is not a high-liquidity environment and the lack of available prime properties in core locations further restricts access. Nevertheless, investors who can enhance or repurpose hotel assets may find lucrative opportunities in the sector.
Written by urgent.news from South China Morning Post's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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