Billionaire Robert Ng Chee Siong said his hotels saw their occupancy rates fall to as low as a third as Hong Kong's hotel industry was hit by a huge drop in tourist arrivals amid the outbreak of Covid-19.
Average occupancy rates at the tycoon's Sino Hotels (Holdings), which owns three properties in the city including the Conrad Hong Kong in Admiralty, dropped to as little as 34 per cent as the pandemic crippled international travel. Average room rates plunged by 43 per cent in the year ended June, Ng said in a filing to the Hong Kong stock exchange on Wednesday.
Sino Hotels reported a net loss of HK$76.3 million (US$9.8 million) for the year ended June, a far cry from the net profit of HK$196.3 million it posted a year earlier. Revenue dropped by a half to HK$160.74 million. No final dividend was given, versus 5 HK cents a year earlier.
"We are introducing marketing and sales recovery strategies to target the domestic market [staycations] and at the same time, taking decisive decision to reduce operating costs," he said.
"While the uncertainty remains about the duration of the pandemic and the effect it will have on economies, management is mindful of the current situation and considers that this is an opportunity to learn and improve."
The shift of focus towards the domestic market comes after Hong Kong tourist arrivals plunged 99.7 per cent to just 14,606 in June, from 14.6 million a year ago, according to data from the city's tourism board.
In the first half of this year, the number of visitor arrivals fell 89.9 per cent to 3.5 million from 34.87 million in the same period of 2019.
"The hotel sector has been hit hardest," according to the latest report by Savills, which said Hong Kong room rates dropped 34.1 per cent in the first six months of the year.
In the second quarter, the volume of Asia-Pacific hotel investment totalled US$1.05 billion through 30 transactions, the lowest since the forth quarter of 2012 and reflecting a 77 per cent year-on-year decline in terms of volume, said Savills.
Magnificent Hotel Investments, which owns eight properties in Hong Kong, Shanghai and London, announced a loss of HK$154 million for the six months to June, compared with profit of HK$58 million a year ago. Its hotel portfolio, which includes the Best Western in Causeway Bay and Best Western Grand in Tsim Sha Tsui.
"It is the management's view that for the remaining months of this financial year, because of the continuous Covid-19 effect and unstable US-China relationship, it is quite unlikely overseas or mainland Chinese visitors will return to Hong Kong in significant volume," said Magnificent's chairman William Cheng kai-man in a company statement.
"Hotels and retail stores will continue to suffer from low occupancies and high operating costs. The management will continue to try to maintain high hotel occupancies and to control hotel operating costs."
Sino Land, which will be removed as a constituent stock of the Hang Seng Index from September 7, reported underlying profit of HK$4.55 billion, down 2.56 per cent from a year ago.
Revenue dropped 26.5 per cent to HK$5.88 billion for the year ended June. A final dividend of 41 HK cents was declared, the same as a year ago.
Its parent Tsim Sha Tsui Properties reported core earnings were down 1.2 per cent from a year earlier to HK$2.47 billion.
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