Hong Kong, as a Special Administrative Region of China, is a popular destination for travelers from Mainland China and also other countries (Tasci, & Denizci, 2010). Tourism is one of the pillar industries of Hong Kong’s economy, and has made significant contribution in recent decades. One of the main elements of this rapidly growing industry is the hotel industry, which is also flourishing in Hong Kong with plenty of hotels for visitors. However, with the changing traveling patterns of the tourists, the hotels especially the luxury ones are being presented with great challenges.
This essay analyses the current situation of Hong Kong’s hotel industry and points out the challenges that the high tariff hotels facing today. Hotel selection of the majority of overnight visitors. Statistical review of Hong Kong tourism 2012 shows that overnight visitor per capita spending in 2012 is 7,818 HKD (HKTB 2013a). Among the spending during their visit, 47. 5% is on hotel bills. However, as the policy that permit the visitors from some cities in Chinese mainland to travel to Hong Kong and have DIY(Do-it-yourself) itineraries, Hong Kong is facing a larger market of mainland visitors, as the table below shown.
2012 Vs 2011 Total* 48,615,113 +16. 0% Mainland China 34,911,395 +24. 2% Taiwan 2,088,745 -2. 8% Other Short-haul Markets 6,385,187 +1. 0% Long-haul Markets 4,273,750 -1. 4% New Markets** 956,036 -6. 0% *Total figure includes arrivals from Macau SAR **New markets include India, the Middle East, the Netherlands, Russia and Vietnam HKTB (2013b). OVERNIGHT VISITORS TO HONG KONG UP 6. 5% IN 2012. Most of these visitors are with the main purpose of shopping in Hong Kong. As Hobson and Ko(1994) states, they may not be able to afford either Hong Kong luxury and upscale hotel prices.
Even if they are getting wealthier these decades, according to Andreu (2013), they prefer to spend as little as possible on their hotel bills and save their money for shopping. As a result, what they may choose are the middle-class hotels or even economy ones. For better development, the tendency of hotel selection of visitors and the hotels’ strategies to response to the changing situation should be taken into consideration. Different generations’ preferences and characteristics
The hospitality industry in Hong Kong is now facing guests of different generations. The growing generation, Generation Y, represents the young people and the majority of the consumers. This generation, known as the “net generation”(Sheahan, 2009), is different from Baby Boomers and Generation X. They have a new concept of consumption, with high expectation and are more demanding (Palmer, 2009). As Barsky and Nash (2011) state, Generation Y stands for most emotional, the least loyal, and least satisfied customers.
Also, their key word of consumption is “value”, with perceptions about price changing and not willing to pay more (Barsky & Nash, 2011). Moreover, while the previous generations may still regard good interpersonal service a necessity, younger guests may weigh the face-to-face service less. As Palmer(2009) believes, Gen Y “grew up with” technology. They prefer high-technology related service such as automatic check in and free wifi access. In this situation, in order to reach a higher customer satisfaction, offering services according to different guests should be paid more
attention to. For high tariff hotels, it is even more important to fulfill guests’ value of spending more on accommodation so as to maintain customer loyalty. High costs and server competition As Hobson and Ko(1994) believe, High Tariff hotels are facing a limit of future development. They state that compared with Medium Tariff hotels, luxury hotels have higher fixed charges. More specifically, the labor costs are rapidly increasing (Hobson & Ko, 1994). Luxury hotels, which offer better services to customers, require experienced and well-trained employees.
As the hotel industry is facing an over capacity, gathering talented elites can be a challenging task. Moreover, because hotel industry is labor-intensive, it is equally important to put in more cost to provide better treatment for the employees so as to enhance their motivation. Additionally, there are different kinds of luxury hotels in Hong Kong, providing the overnight visitors a wide range of choices. To survive and stand out in the severe competition, the hotels should develop their own distinguishing features in order to attract customers.
Being environmentally sustainable Nowadays, with the rapid development of high technology and the awareness of protecting the environment, the concept of building a sustainable society has become more popular. Carbon dioxide (CO2), which accounts for the worsening green house effect, contributes to unprecedented rises in average temperatures globally as well as the destruction of the natural climate cycle and negative effects on human sustainability, as Cheung and Fan (2013) states.
Hotels, one of the large consumers of CO2, especially the luxury ones which need to consumer more energy because of the lighting and air-conditioning systems, are therefore expected to reduce their CO2 emission to be environmental friendly and maintain higher energy consumption efficiency to fit in the situation. The case of Langham Place Hotel Mongkok Hong Kong (LPHKG) in carbon reduction (Cheung & Fan, 2013) reveals that sustainability design strategies are needed.
This can be a great challenge to the hotels because investments in high technology are required and a recycling system should be established. However, in the long run, the cost saving can be significant, as Cheung and Fan(2013) point out, and can contribute to a hotel’s overall image. The essay has examined the challenges facing Hong Kong luxury hotels in nowadays’ situation. Hotel managers should pay more attention to tourism trends, because trends “can provide business managers with further valuable information and prediction capability for long-term business planning” (Li et al.
, 2013, p. 329). Understanding the trends in hospitality, for example, technology, price-value and service (Walker, 2013) can help to face the challenges more confidently. In addition, analyzing the present strong points as well as the weakness of luxury hotels themselves is also important. Though challenges are unavoidable, the prospect of luxury hotels is still cheerful, as Hong Kong is an attracting destination for travelers. With a clear view of future trends and an empirical plan, luxury hotels can still be the first choice of many tourists and have long-term development.