Executive Director of the Federation of Hong Kong Hotel Owners Caspar Tsui is on Straight Talk this week.

Tsui has given us an update on the status of Hong Kong hotels and how the situation is actually not as bad as being portrayed. And he has also told us in what way the industry can improve going forward.

Check out the full transcript of TVB’s Straight Talk host Dr Eugene Chan’s interview with Caspar Tsui:

Chan: Welcome to Straight Talk. I'm Eugene Chan. Our guest this evening is Caspar Tsui, the executive director of the Federation of Hong Kong Hotel Owners. Tsui has 15 years of experience in public policies and governance, having served with our Hong Kong Special Administrative Region government in different positions, including undersecretary for labour and welfare, and secretary for home affairs until 2022. Prior to that, he also had nearly 10 years of management experience in the financial sector in both North America and Hong Kong. So, with Tsui here, as one of the leaders of the hospitality sector, we will explore the current state, recent challenges and future opportunities for Hong Kong's hotels industry. What is the key to their success? Welcome, Caspar!

Tsui: Hi, Eugene.

Chan: Caspar. You know, the hotel industry in Hong Kong was quite hardly hit in the last few years with first social unrest leading to riots, and of course COVID. But Hong Kong people are quite resilient and I'm sure the hotel industry is no exception. And since the travel restrictions, they're fully ... sort of, fully dropped over a year ago, the tourist numbers have finally rebounded significantly. And how are our hotels doing right now and what are the occupancy rates as compared to pre-COVID level?

Tsui: Well, I think we have to thank the central government for really helping Hong Kong adjusting to the recovery. Since the reopening of the borders, we've been recovering quite well. In 2023, we've gone back up to about 80 percent of occupancy. Of course, our peak is also close to 90 percent. So, we are still about a 10 percent drop from the peak. But then compared to the other retail F&B airlines, you know, we've been doing quite well. But there are a lot of challenges because you know, with the new way that people travel, how we spend, you know, we are all also adapting to the changes, especially with the new mainland travelers coming back to Hong Kong. We need to showcase what we always have to offer. There's a quite significant drop in overseas travelers, but that's due to probably the airline capacity not at the peak yet. But soon I think you know, we're going to see close to 80 percent, 90 percent at the end of this year. So that's very encouraging.

Chan: Right so Caspar, could you give our viewers … I'm sure a lot of people have been to hotels, but not very often, we get someone, an expert in the field telling us actually how many hotels do we have in Hong Kong and I'm sure you have different types of hotels and luxury and budget or even business hotels and actually how many percent of the people are being employed in the industry?

Tsui: Well, the Hong Kong tourism industry has always been one of the main pillars of the Hong Kong economy. In 2019, we have the entire tourism industry, we have over 230,000 jobs created, that's about 6 percent of the Hong Kong employment. In terms of GDP. I mean, we made up close to 3.6 percent of Hong Kong's economy. So, it's not small at all. We have close to 321 hotels, that's not counting the hostels that we have. We have a lot of mid-budget hotels. That's more than like 50 percent. But the beauty of what Hong Kong has to offer is we have different variety and options for tourists to choose from. So, you get the six, seven-stars hotels. We actually have two hotels that ranked in the top 50 in the world last year and like I said, we also have a long list of budget hotels, business hotels just to cater for different travelers’ needs. So, I think you know what Hong Kong has to offer is we have something for everyone.

Chan: That's very encouraging because often in the news people say, "Oh, Hong Kong hotels are very expensive." There's a reason why people are not coming but as you're saying, we have a range, something for everybody.

Tsui: Yes, that's true. I mean, if the tourists are not coming we won't see 80 percent occupancy rate just for last year. But of course we want to attract more travelers from different regions, different markets and we need to bring in the contents. People come to Hong Kong sometimes for meetings, because sometimes for events and sometimes for just leisure. So, I think this is something that Hong Kong's position is different from many other cities in the world.

Chan: So, do we have enough hotels? From what you're saying? Do we have any particular shortages, like the high end or even the low end?

Tsui: I think there's always room for more hotels. Investors are interested in investing in Hong Kong. Just because we have a list of … I guess offering for different travelers, like I said, usually if you talk about leisure hotel, the peak season would be Christmas, Chinese New Year. We have the May Golden Labour Week, and then the summer and then we have October and on top of that we also have different months that will attract conferences, meetings, exhibitions, that's going to fill up the entire year. So, like I said, there's always room for more hotels, but we also need to have better coordination of lining up the different activities like what we had earlier in March. We have the financial mega week, followed by the Art Central and Art Basel events and then wrapping it up with the Rugby 7s. This is what we need to do more to attract more tourists staying more nights in Hong Kong and enjoying what we have to offer.

Chan: And, also viewers are often … they might actually use Airbnb. Overseas, it's very popular. I mean, how is that? How's it in Hong Kong? And does it affect the hotel industry at all?

Tsui: Well, that's actually the new way of travelling. People are not joining more tour groups as compared to before, people are going to online platforms, ordering a different list of packages, airline, high speed rail, a hotel and event tickets. That seems to be the new way of doing business, especially tourism nowadays. I'm not talking about specific online platforms. I think these can help us promote what we have to offer but also create problems as well. Because like a certain platform that you just mentioned, it also offered unlicensed hotels or rooms. And I don't think that's something that we want to see. That's probably some room that we can enhance, the government can enhance regulation to protect tourist's interests as well. I mean, tourists coming to Hong Kong and staying in unregulated accommodation spaces. This is not going to be good for tourists if something bad happens, you know an accident happens. So, yes, like I said, you know, this is the way to go. If you want to travel around the world, but I think there's some room that we can still improve.

Chan: Right, Caspar. Apart from that, I think a lot of viewers, as you mentioned about tourists, I'm sure the Hong Kong people we do go to hotels quite often.

Tsui: Yes.

Chan: So, how important is this part of this business to the hotel? So, you have conventions, you have weddings and parties, and many F&B outlets are very famous. So, how important is this part of the business to the hotel industry?

Tsui: Well, I think events are very important for tourists' experience in Hong Kong, and hotels, you know, are probably one of the first experiences. You know, guests come to Hong Kong, they come to our hotel and they get the first impression of our service and quality. So, yes, the hotel industry is very important. So, how do we continue to maintain that level of service and enhance travelers' experience? Now that is going to be a major challenge coming forward in the next 10, 20 years. Because we're competing with many different cities around the world as close by there are synergies, but then we are also competitors as well.

Chan: Right. Just want to ask you since you mentioned we have like over 300 hotels in Hong Kong, different ranges. And the COVID has been very tough. And I'm sure I mean, Hong Kong people have to be very … I mean appreciative to the hotel owners who turned them into quarantine hotels, but have any hotels actually facing so much difficulty, they actually closed down within the last few years?

Tsui: Fortunately, we haven't seen a lot of closure. Because, like you said, during the unrest, during the COVID, we have actually hung in there. And I think the first batch of people we need to appreciate is not just owners but our frontline staff as well. It's a very tough time during those years. They stuck with us and now it should be better days ahead. But we are also facing some challenges, like shortage of labor, as well. So, I think going forward, we are still seeing a very attractive industry for investors. And it's still a very, I guess, rewarding industry and we want to attract more young talents coming back to the industry to serve our guests as well.

Chan: Right, Caspar, also the term, staycation.

Tsui: Yes.

Chan: That's become very popular among the last few years, has that continued to be popular?

Tsui: Staycation is actually a way to ride out the COVID period. When we are opening up the borders, we're seeing a lot of Hong Kong residents travelling elsewhere as well. Staycation is something that actually we do not want to continue to promote. It's something that we're going to continue to have but hotels are here to serve overseas guests. That should be the new shift back to normality. Well you'll probably see, you know, more events for locals, like F&B. I mean a hotel is not just staying overnight or over the weekend. Hong Kong hotels, we have lots of F&B Michelin’s stars restaurants. You know, these are also offering that we can not only attract overseas tourists, but local residents as well.

Chan: Alright, let's take a break now. But viewers stay tuned. We will be right back for more discussion on what the future holds for our hotel industry.

Chan: Thank you for staying with us on Straight Talk. We have Caspar Tsui, the executive director of the Federation of Hong Kong Hotel Owners, with us this evening. He has given us a brief overview of the hotel industry and we have been talking about the challenges hoteliers are facing now post-COVID. So, Caspar, you have given us a very good future outlook for the hotels, and hopefully more people will join the industry because we do need good services. One point I wanted to raise is that you mentioned that the occupancy rate are now over 80 percent, because according to the Tourism Board, we see that the number of tourists have recovered to 52 percent compared to 2018. And we are anticipating that percentage will go up to 75 percent, meaning more people are coming back. As you said, airlines are going to support it better. Do we have enough hotels because we are already 80 percent occupancy?

Tsui: We can always have more hotels. But I think the biggest challenge is not whether or not we can open more hotels, but whether or not we have sufficient services to offer. With the lack of manpower, that seems to be a very big challenge. Earlier last year, the hotel trade had mentioned we had lost close to 20 percent of our staff post-COVID. And the manpower is not coming back yet, mainly because it's actually a structural problem that we have in Hong Kong. We are close to full employment right now, unemployment is at 3 percent. Anybody who wishes to work can easily find a job. If they want to come to the hotels, we have many jobs still open. Yes, the government has done a great effort in trying to allow foreign labor coming to Hong Kong. But the time it takes is still very long. I mean imagine if a talk show, you need someone to work and the amount of time it takes to hire someone is about 9 months to a year, probably the show will get cancelled. So, yes, in Hong Kong, we have room for more hotels. Unfortunately, we need to resolve the manpower issue first.

Chan: Right. So, Caspar, you have repeatedly mentioned that we need more hotels.

Tsui: Yes.

Chan: However if you look at the trend now, as you just said, it is more authentic travel experiences and more affordable accommodation, including a need for more budget hotel for businesses. So, will our hotels need to lower their rates to adapt to this new trend? But we are over 80 percent, so what should we do?

Tsui: Well, I think when we look at the rates in Hong Kong, we are very competitive and comparable. Otherwise the government wouldn't raise the new hotel accommodation tax next year. But putting that aside, we compare to Singapore, we compare to Sanya, we compare to Shanghai, Tokyo, Beijing, we are not too far off. Actually our rates are sometimes in the lower, compared to Singapore, especially event weeks and holidays as well. The biggest challenge is the rising cost in operation. Lack of manpower, in order to find helpers, we need to raise the salary and benefits. With the new taxes, new regulations to support environmental policy, which we all support, these are some of the elements that is going to have difficulty lowering our rates. But I think Hong Kong, we always pride ourselves on service and quality, so we never compete on pricing.

Chan: Right.

Tsui: And like I said, you know, besides quality and service, we have a good variety to offer. We have hotels at the high end, we have low budget hotels as well. So, there are, like I said, if tourists are coming to Hong Kong, it's only 80 percent occupancy rate, we still have 20 percent left. So, there is always room for tourists to come to Hong Kong and find a good hotel to stay. And yes, if you ask me, there are still a lot of room for more hotels in Hong Kong.

Chan: Right. So, I think tonight, I think the viewers will get a very clear message from you that one, Hong Kong hotels are not so expensive that people don't come. As you said earlier, Singapore is more expensive. And we are very competitive, even amongst Macao and the mainland.

Tsui: Yes.

Chan: So, we need more hotels.

Tsui: We need more hotels.

Chan: Right. Also we looked at recent statistics that 2/3 of our visitors last year was from mainland, but 70 percent of them didn’t stay overnight. That is another new trend, they would just come and go. So, that is kind of a new way of seeing Hong Kong. So, how can hotels benefit on that part?

Tsui: Well, actually if we look at the numbers, not by percentage, at the peak, Hong Kong we have close to 65 million tourists coming to Hong Kong. So, if we look at the numbers last year, it is only 30 million. And when we look at the percentage again, 50 percent of those coming to Hong Kong are staying overnight. Actually the percentage is better than before. In the old days before COVID and the unrest, we have about 45 percent staying overnight. So, actually that has improved quite a bit. But then again, if you go back to the numbers again, there is still millions of tourists can come to Hong Kong. And that's why I said we need more hotel rooms and we need more events to attract them to come. Not just come to Hong Kong, but spend a few nights here.

Chan: Right. You have also mentioned a couple of times that the manpower shortages and also the rising cost on energy, or even the new tax from the government from Jan 1, 2025. So, how is the hotel going to face all these challenges while being, saying that we are more expensive than others?

Tsui: Well, first of all, we are not more expensive than others. But I think our quality as service are still top of the world. What we need is more showcase. I mean if we look at last year and this year, we have many mega events. That is the best promotion that we have. I mean people talk about how bad Hong Kong is, but when I talk to tourists who have been to Hong Kong, I talked to business sectors, executives who came to Hong Kong, they have only good things to say. I mean during the unrest, tourists were afraid to come to Hong Kong. During the COVID, people can’t travel. But when we look at the recovery effort, when we look at the mega events, like sporting events, concerts, big conferences in Hong Kong, you see floods of people coming to Hong Kong. And after they leave, they said Hong Kong is better than before.

Chan: Right.

Tsui: So, what we need is more of these showcases. It is probably best commercial that we can get the free air time.

Chan: Right.

Tsui: Earlier this year we have a golf event in Hong Kong, we have over a long weekend of golfers coming, and then sports channels all over the world are broadcasting what we have to offer. We got these golfers coming, and enjoying some of the cuisines that we have, going to the race courses. You know these are our best spokespersons. So, we need more of those.

Chan: I must say for our viewers who have been following our programs, we had a show on the Liv Golf event, as well as the recent Rugby 7s. And when I got the chance to talk to those overseas visitors, they were very impressed with Hong Kong, and it was very encouraging that Hong Kong is actually much better than we think locally.

Tsui: Yes, we do. I think even local politicians need to actually be more optimistic about what we have to offer. On top of that, we have many new opportunities. I mean in the past, before the COVID, before the social unrest, we didn't have the West Kowloon Cultural District. And next year, we are going to have the Kai Tak Sports Park. And then the National Games is going to be next year as well.

Chan: Yes.

Tsui: So, these are all new venues, new events that are going to attract more tourists coming to Hong Kong. We should grasp those opportunities to showcase what Hong Kong has to offer and what new things we can offer.

Chan: Right. Caspar, if you look at years ahead, I mean look at the last few decades, we have seen some significant changes in infrastructure. We have our High Speed Rail, we have the Zhuhai Bridge, and also more cross-boundary checkpoints. I mean Kenneth Wong from the Tourism Board said the GBA opportunity is a game changer for general tourism and business events. So, what opportunities has this created or opened up for our hotel industry?

Tsui: Well, I think we should grasp this opportunity to have more collaboration with the GBA cities. The Greater Bay Area creates a huge opportunity, especially for businesses as well. A lot of conferences, meetings, and overseas investors, or Middle East investors, come to Hong Kong, looking at the Greater Bay opportunities. So, we should have more collaboration and events coordination with the Greater Bay cities. Like Macao, they have concerts. We can have tourists coming to Hong Kong and then the next stop going to Macao. Most tourists, if you look at mainland or overseas cities, they can spend 3-5 days. On average, I know it's about 3.6, but you know, for the business deals, a lot of them are willing to travel for 5 to 7 days.

Chan: Right.

Tsui: Now Hong Kong probably can attract them to 3-4 nights.

Chan: Right.

Tsui: That is in line with the numbers that we have. They come to the Greater Bay, come to Hong Kong, and then they would make the next stop to Macao, Guangzhou, and Shenzhen. This is the package that we need to offer. And it's like people in Hong Kong going to Japan. If you go to Osaka, you probably take a next stop to Kyoto. So, this is the Bay Area concept that we need to embrace and adapt. We are not going to have 7 days of tourists staying in Hong Kong hotels alone. But you know, we do have enough offerings for them to come back in the next trip.

Chan: Right. Caspar, I am going to ask you the final two questions. One is, Xia Baolong said to our chief executive that we must look at the new situation every day, not with yesterday’s old eyes and old thinking to solve new problems. How do you see that we can apply that concept in in hotel industry, in short?

Tsui: We've been doing that all along. We've been adapting, offering new technology, new collaborations, new events. What we need is actually government’s help, resolving the problem that we face.

Chan: What would you want the government to do for you?

Tsui: Well, first of all, we have more room for hotels, we need labors. We need more promotions, so we need coordination.

Chan: All right. I am afraid that's all the time we have. Thank you, Caspar, we, the people of Hong Kong have always prided ourselves on becoming a welcoming destination, and our hotels have continued to sustain, even through the recent challenges. We look forward to even more innovations for the enjoyment of both locals and visitors. As John Rockefeller Jr. said, “The secret of success is to do the common thing but uncommonly well”. Have a good evening and see you next week!