Singapore vs. Hong Kong: Post-Pandemic Showdown in Asia’s Hotel Market

The Post-Pandemic Rivalry in Asia’s Hotel Market

Singapore and Hong Kong, two of Asia’s most influential hotel markets, are locked in an intense post-pandemic rivalry, each striving for dominance in a rapidly evolving travel landscape. The dynamics at play reflect significant shifts in visitor behavior, event hosting, and economic conditions that have emerged over the past few years.

Singapore’s Surge in Occupancy and Rates
As of early 2024, Singapore leads the region, boasting occupancy rates exceeding 83%. The nation’s recovery is largely driven by a robust calendar of international events, including headline concerts from global stars like Taylor Swift and Coldplay. These high-profile attractions have not only brought in tourists but have pushed Singapore’s average daily rate (ADR) to an impressive US$314. With hotel occupancy steadily approaching pre-pandemic levels, Singapore’s hospitality sector is riding high on renewed international travel and improved air traffic conditions.

Luxury hotels in Singapore, in particular, have been thriving. The sector recorded an all-time high of US$282 in revenue per available room (RevPAR) by 2023. Looking ahead to the rest of 2024, all signs point to yet another record year. For industry leaders like Kevin Croley, Senior VP of Development at Pan Pacific Hotels Group, the future of Singapore’s luxury sector looks bright: “The luxury sector in Singapore is performing well, and we remain bullish on future growth.”

Hong Kong’s Sluggish Recovery in Luxury Sector
Hong Kong, on the other hand, has struggled to keep pace, particularly within its luxury segment. With occupancy rates for upscale hotels languishing in the high 70% range, the city is facing headwinds. A key challenge is its currency peg to the US dollar, which has made Hong Kong a less attractive destination for high-spending visitors, particularly from Mainland China, where luxury goods are often cheaper. Moreover, the city has seen a shift in visitor demographics, with a larger proportion of budget-conscious travelers. Hotels in lower tariff categories have fared better, with mid-range hotels enjoying occupancy rates close to 88%.

However, Hong Kong is betting on major upcoming projects to reinvigorate its hospitality industry. The opening of a new 50,000-seat stadium in 2025 is expected to draw international attention, providing a much-needed boost to the local hotel sector. According to Dan Voellm, CEO of AP Hospitality Advisors, while the luxury market is sluggish, “the local government is being proactive in generating events, and we’re optimistic about 2025.”

New Supply and Renovations in Both Markets
Both Singapore and Hong Kong have seen limited new hotel inventory come online in recent years. In Singapore, the most significant transaction was the sale of the ParkRoyal on Kitchener Road. Although transaction volumes fell by 45% in 2023, totaling US$500 million, investment opportunities remain strong in the market. In Hong Kong, several established properties, such as the Regent, Lanson, and Le Meridien Cyberport, are undergoing significant renovations, but actual sales have been sparse. The elevated interest rates have put downward pressure on pricing, particularly for properties with high debt levels. As interest rates rise, there is growing interest in converting underperforming hotels into student accommodation to address a chronic undersupply in the sector.

Challenges and Opportunities
Both cities face labor shortages in their hospitality sectors, exacerbated by the challenges of attracting young talent post-COVID. In Singapore, this has led to dissatisfaction among guests, with many feeling that the high room rates are not matched by the level of service. Meanwhile, Hong Kong’s challenge lies in balancing the needs of international and Mainland Chinese visitors, particularly as the city becomes more expensive for inbound travelers. However, outbound travel from Hong Kong has surged, driven by the allure of weaker currencies in destinations like Japan and Mainland China.

Outlook for the Future
Looking ahead, the hotel markets in both Singapore and Hong Kong have reasons for optimism. Singapore, with its strong occupancy levels and ADR growth, is solidifying its position as the region’s leader in hospitality. Hong Kong, though facing a tougher road, has key infrastructure projects and government-backed initiatives aimed at revitalizing tourism. Both markets have the potential to thrive as flight capacities return to pre-pandemic levels, but they will need to navigate global economic uncertainties and shifting visitor trends carefully.

Ultimately, the future success of Singapore and Hong Kong’s hotel markets hinges on their ability to attract high-spending visitors, capitalize on major events, and continue adapting to the evolving needs of travelers in a post-pandemic world.