Asia World Expo To Open At Hong Kong Int'l Next Year
Construction is in the final phase on Asia World Expo, a 753,000-sq.-ft. convention center adjoining the year-old Hong Kong International Airport on Lantau Island. Scheduled to open in the fourth quarter of 2005, the facility is intended to position Hong Kong as the front door to mainland China for major expositions and conferences. Meanwhile, Starwood Hotels & Resorts Worldwide in July announced it would bring its lifestyle W Hotel brand to Hong Kong in 2008.
The new convention center on Lantau Island was designed with the international market in mind. "Asia World Expo's location adjoining the airport means that within minutes of arrival from destinations worldwide, conference attendees will be able to participate in sessions and trade exhibitions," said deputy CEO Allen Ha. The two-story structure includes 710,000 square feet of column- free space on the ground floor. An arena has seating for up to 13,500 people. China Sourcing Fairs, representing 64 of the world's largest retailers, has booked the facility for meetings starting in 2006. A smaller facility, the Hong Kong Convention Center, already is established near the downtown financial district, overlooking the harbor.
A 1,100-room hotel is planned for the Lantau Island site as well. "Invitations have been sent out for developers to bid on the project. The winning developer then will negotiate with a hotel company to manage the property," said James Lu, executive director of the Hong Kong Hotels Association. "The understanding is that it will be a major international chain." Until the hotel opens in 2006 or 2007, visitors to the expo can book the Regal Airport Hotel, which is similar in size to the planned hotel.
An airport express train services Lantau Island from downtown. Service will expand once the Asia World Expo opens to handle increased traffic. "The trip from downtown takes 22 minutes. Very few centers have direct train service to their front door. If attendees prefer, they could easily stay downtown and still be in easy access to their meetings," Lu said.
As international business travel rebounds and more time elapses since the end of the severe acute respiratory syndrome outbreak, Hong Kong hotels' occupancy and average daily rates have continued to climb. "A new landmark was reached in August when visitor arrivals exceeded 2 million in a single month for the first time," said Clara Chong, executive director of the Hong Kong Tourism Board. August arrivals from the United States were particularly strong, up 23.7 percent, compared with August 2003. This translated into a 2 percent jump in occupancy rates with upper upscale and deluxe hotels posting a very healthy 85 percent occupancy. By contrast, U.S. hotels in August at these price points had occupancy rates of 70.1 percent, according to Smith Travel Research.
Yet, the August jump in average daily rate was even more significant, increasing 29 percent, compared with the same month last year, reflecting Hong Kong's ability to command higher rates post-SARS.
The 383-room W Hotel will anchor a cultural and entertainment development on the waterfront of Kowloon Island across from downtown Hong Kong. Other components of the W project include office and retail development, though not condominiums or serviced apartments, which are popular in many mixed-use projects in Asia. The hotel will be the second W in Asia, following the opening in July of the W Seoul. A third has been announced for Shanghai. "We are firm believers in the importance of China in the world travel market for decades to come," said Starwood executive chairman Barry Sternlicht.
Like Four Seasons and Mandarin Oriental hotels currently under construction, the W will benefit from the synergies inherent in multi-use development, according to Lu. "We call them comprehensive projects because the developer is creating an environment where you have an assortment of elements present. In terms of the financing, the project also works better if it's comprehensive, since there's less pressure on the hotel management to provide all the funding," he said.
The huge potential of the mainland China market will continue to shape the Hong Kong hotel industry. By 2010, China will become the world's largest outbound market as Chinese business and leisure travelers are allowed to travel more freely outside their country.
"As the closest international gateway city to the mainland, Hong Kong is likely to be an initial beneficiary of this new freedom on the part of Chinese travelers," said Deloitte manager Mindi Green. A demand generator of this proportion is expected to impact availability and rates at hotels across the board, including at the upper-level price tiers frequented by Western business travelers.