Room with a View at the Top (At a Discount): What Hong Kong's Luxury Hotel Sector is Telling Investors
A deep dive into Hong Kong’s hotel sector reveals a luxury market in transition — discounted today, but not without hidden gems for the discerning investor.
Executive Summary
On a recent trip to Hong Kong — a city that still knows how to impress with its skyline, cuisine, and cosmopolitan charm — I was delighted to score a hefty discount at one of my favorite luxury hotels. But beneath the polished marble lobbies and signature service, there’s a deeper story unfolding. A longtime friend and seasoned investor, who’s called Hong Kong home for decades, offered this candid take over dim sum: “These days, luxury hotels are courting budget travelers just to fill rooms.”
That insight sent me down a rabbit hole. With my curiosity piqued and notebook in hand, I dove into the numbers behind Hong Kong’s listed Hotels and Resorts industry — roughly 40 companies strong. What I found was a story of resilience wrapped in realism: an industry still recovering from the pandemic, facing structural shifts, but not without pockets of quiet strength.
This report unpacks my findings, explains the market sentiment, and spotlights standout performers.
Market Mood: Cloudy With a Chance of Recovery
1-Year Market Value Change (May 2024 – May 2025): -11.6% ⬇️
3-Year Change: -4.6% ⬇️
5-Year Change: -12.6% ⬇️
Investors have clearly taken a cautious stance. Despite tourism’s gradual revival, the Hotels and Resorts sector has lagged broader indices. The industry’s Price-to-Sales (P/S) ratio of 1.6x, lower than the 10-year average of 1.8x, signals tempered investor expectations and doubts about long-term earnings growth.
It’s not hard to see why: revenues have fallen 21% over the past five years (HK$101.6 billion → HK$80.1 billion) and profits have remained elusive for many.
The Ghost of Lockdowns Past
The pandemic decimated global travel, and Hong Kong — long a crossroads of East and West — wasn’t spared.
Industry Profits (February 2020): HK$5.3 billion ⬆️
Industry Losses (March 2021): -HK$25.1 billion ⬇️
Industry Losses (May 2025): -HK$564 million ⬇️
Despite a 98% reduction in losses since March 2021, forecasts are cautiously optimistic, with losses expected to shrink a further 16.2% annually over the next three years. While the industry is still digging itself out of a deep hole, the shovel work is well underway.
The Rise of the Budget Explorer
Adding another layer to the story is the rise of a new kind of visitor: the budget-savvy mainland Chinese tourist. Forget luxury shopping sprees — today’s travelers are coming in droves via day trips from nearby Shenzhen, hunting for Instagrammable street food, not Louis Vuitton. Influenced by social media apps like Xiaohongshu, many are choosing cultural walks over chauffeur rides, and local eats over Michelin dining. This trend marks the democratization of Hong Kong tourism — less champagne, more cha chaan teng (tea restaurants). For the hotel industry, this shift is both a challenge and an opportunity: those who pivot to welcome experience-focused travelers with flexible pricing and accessible offerings could find themselves ahead of the pack.
Not All Hotels Sleep the Same
A closer look at individual players reveals nuance in the narrative. Let’s break it down:
Hongkong and Shanghai Hotels (The Peninsula)
2020 Net Loss: -HK$1.94 billion ⬇️
2024 Net Loss: -HK$943 million ⬇️
The Peninsula remains a crown jewel in Hong Kong’s hospitality crown, but even icons aren’t immune to macro pressures. While still in the red, the pace of recovery suggests long-term viability — especially if high-end travel rebounds fully.
Shangri-La Asia
2020 Net Loss: -HK$460 million ⬇️
2024 Net Profit: HK$161 million ⬆️
Shangri-La stands out as a phoenix among ashes. It returned to profitability in 2023 and remains in positive territory. Its pandemic playbook appears to have worked better than most.
Miramar Hotel and Investment Company (The Mira)
2020 Net Profit: HK$302 million ⬆️
2024 Net Profit: HK$747 million ⬆️
Quietly thriving, Miramar has defied the odds. By staying lean and catering to a mix of travelers, it avoided the deeper losses of its peers in 2020. It’s a quiet achiever in a noisy industry.
On the Ground: Fewer Shoppers, More Signs
While walking through Tsim Sha Tsui and Central, I noticed that the malls and shops weren’t as packed as they once were. The bustling, well-dressed crowds of yesteryear have thinned, and luxury retail seems to be pacing itself. Anecdotal, yes — but consistent with the data.
Still, this isn’t a Hong Kong-is-doomed narrative. The city remains resilient, layered, and globally relevant. But it is recalibrating. And for investors, that presents both challenge and opportunity.
Investor Takeaways
Recovery in Progress, but Uneven
Many hotels are still reporting losses, but the magnitude is shrinking. Some are profitable — and growing.
Valuations Reflect Skepticism
Lower P/S ratios suggest the market expects slower long-term growth, despite revenue recovery.
Look for Operators, Not Just Assets
Companies like Shangri-La and Miramar show that nimble operators outperform pure luxury plays in tough climates.
Cautious Optimism, Selective Bets
The sector isn’t for the faint of heart, but selective positions in profitable, growing operators could pay off.
Final Thoughts
The hefty discount on my luxury hotel stay wasn’t just a travel perk — it was a metaphor. Hong Kong’s hospitality industry is offering value, both to travelers and possibly to investors. But like any room upgrade, you’ll want to ask the right questions, read the fine print, and pick the right key.
For now, the “Room with a View at the Top” might come at a bargain. The real question is — who’s best positioned to raise rates again when the world comes knocking?