HICAP UPDATE – HONG KONG’S
RECOVERY ONE O’ ONE

Hong Kong is on its way to recovery after COVID-19, and the BHN Group took the first footstep to help, as even the largest venture starts with a first step. Hong Kong has not hosted a HICAP or an Investment Conference since 2019 at the recently totally renovated Regent Hotel. Hong Kong opened a year later than other countries in Southeast Asia after COVID, such as Singapore and Thailand. For that reason, their recovery has taken longer.

HICAP Update last week was the conference to highlight the recovery of Hong Kong. The get-together drew several hundred senior executives from around Asia, especially those in Hong Kong. Much of the discussion was on the recovery of Hong Kong and what it will take to make it glow as it was always considered the “Pearl of Southeast Asia.” Comments were made from several key Hong Kong executives like Kenneth Wong, the head of Hong Kong Tourist Bureau, who said, “Hong Kong is going to be  dynamic again.” He was quizzed on why they could not get a Taylor Swift concert and the fact that she filled a 65,000-seat stadium in Singapore for four nights in a row, bringing almost half a billion extra Singapore dollars into the economy. Kenneth said that Hong Kong would soon be getting a similar-sized convention center/stadium (3 of different sizes adjoining a new hotel) so they would be able to attract a Taylor Swift or similar high-profile entertainment, etc.

Discussions also revolved around opportunities in the Asia Pacific region, with sessions featuring top leaders sharing insights into market trends and growth prospects.

Daniel Aylmer, managing director and Senior Vice President of Greater China for IHG Hotels & Resorts, said China is performing very well and he is not sure if it is a result of revenge spending. “The challenge is Tier 1 cities are not back anywhere near where we want them to be,” he said. “Long haul flights are not there yet as it’s quite costly for U.S. and European travelers. Inbound travel, corporate and MICE to Tier 1 cities are key for RevPAR growth.” PS: Did you know why long-haul flights to Asia are so expensive? During COVID, the major Asian airlines like Cathy Pacific, Singapore Airlines, Thai Air, etc., mothballed almost 90% of their fleet and let go of many of their pilots and service personnel….  Now they have to get these planes serviced, but as they lost so many pilots (also service staff) that they cannot find enough pilots and there are not enough simulators to check any pilots out again.

Peng Sum Choe, CEO of the Pan Pacific Hotels Group, said he is excited by the development prospects in Japan and Jakarta – Japan because of the dip in the value of the yen and remaining low-interest rates. “Tourism is strong and which country can you find interest rates so low?” he said. “You can get a non-recourse loan for 0.55%. Even if you get a property yielding 4.5%, you still have a spread of 4%, which is really decent. Conversely, a hotel in Sydney is yielding 6.5% to 7%, but preferential interest is at 5.5%.” Peng Sum added that Jakarta is growing, and he sees occupancy stabilizing. “It’s the best-kept secret market and we want to get in there,” he said.

Dillip Rajakarier, CEO, Minor Hotels, and Group CEO, Minor International, said he is waiting for more inbound traffic to Asia Pacific, adding that China remains mostly a domestic market. More generally, he said Asia is performing very strong this year with continued softness in outbound Chinese travel. “Japanese, Saudis, Indians, and Europeans are making up for the shortfall of outbound Chinese travelers,” he added.

Jihong He, chief strategy officer, H World Group Limited, Shanghai. Among the high-profile sessions where panelists shared where their optimism lies was “Views from the Boardroom, Round One,” moderated by Matt Gebbie, director, Asia Pacific, for Horwath HTL.

With a promise of no talk about Taylor Swift and no self-promotion, Gebbie first asked the panelist about their performance outlooks and development focuses, starting with Jihong He, chief strategy officer, H World Group Limited, Shanghai.

Who said 2023 was a very strong recovery year in China, the average RevPAR for 2023 beat 2019 by 20%, driven by ADR gains because occupancy was not quite back to previous highs (81% in 2023 vs. 85% in 2019). Jihong added that there is increasingly strong demand from lower-tier cities in China. In fact, she said they were surprised by local activity and demand in cities that previously never saw a chain hotel. “Locals want to experience chain hotels,” she explained.

What I learned about remote workers and coffee at HICAP- badging & Hush trips

In addition to industry insights, the conference also shed light on emerging workplace trends, such as "coffee-badging," where workers briefly visit the office for amenities like coffee before continuing to work remotely, and "hush trips," secret holidays taken by remote workers to maintain work-life balance.

As bosses have won back power throughout 2023, many workers have found themselves returning to their desks, at least a few days a week. Many don't want to be there – an attitude that's given rise to "coffee-badging." Data from a June survey by video-conferencing company Owl Labs showed around 58% of hybrid workers admit to going into the office, swiping their work badges, grabbing their morning coffees and leaving to work from home for the rest of the day. Even as return-to-office policies are increasingly winning out, workers have made their preference for flexible work – and free coffee – abundantly clear. 'Hush trips' Many workers who have been able to stay remote are taking "hush trips" to maximize their work-life balance. These secret holidays involve working from a far-flung spot without informing your supervisor or team. Around 44% of Gen Z workers admit to the practice, per an August survey from Resume Builder.

Moreover I noted buzzwords prevalent during the conference, reflecting industry trends and sentiments. 

1.            Market in motion…… every occurrence
2.            Differentiate yourself through guest experience
3.            Cut through all the noise and get it done
4.            Drip rooms – Internship medical i.e. hangover cures
5.            Taylor Swift size stadium
6.            “No more Revenge Travel. Now Revenge spending” a phenomenon going on in China now
7.            No more neck ties and suits - be casual
8.            Hush trips and the big stay
9.            Our industry is super elastic - we rebound quickly. Our recovery periods
10.          Unique Class Assets - these are special assets; such as residences, time share and WeWork.
11.          Family emotional purchase - many Asian companies are managed by family members who purchase on a whim and not on analytics.
12.          Going Glocal - Attracting local community business.
13.          Augmented hospitality - Non-conventional real estate plays.
14.          Crystal Ball guys and predictors - speakers at the conference.
15.          Glamping Luxury Camping – Air-Conditioned Tents and Room Service
16.          SOE – A state-owned enterprise created by the Government to partake in commercial activities
17.          Frozen assets - ones either underwater or not sellable at this time.
18.          Rise of the conscience traveler - Very climate and environmentally concerned.
19.          Techceleration - Speed of technical growth in the hospitality industry.
20.          Adversity causes opportunity - Buy when everyone is selling …….sell when everyone is buying

Finaly…As Hong Kong and the broader hospitality industry continue on the path to recovery, such insights and initiatives gained at HICAP or similar industry gatherings  are instrumental in shaping the future landscape and ensuring sustained growth in the post-pandemic era.

With best regards,

At Renard, customer service is not a "Department" it's an "Attitude"!

Sincerely,
Stephen J. Renard 
President

RENARD INTERNATIONAL HOSPITALITY SEARCH CONSULTANTS 
121 Richmond Street West, Suite 500 
Toronto, Ontario, Canada, M5H 2K1 
Tel: (1) 416 364 8325, ext. 228
Mobile: (1) 416 890 0903 
Fax: (1) 416 364 4924 
Email: Steve@renardinternational.com 
Web site: www.renardinternational.com   www.renardglobalmanagement.com

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