LCQ3: Measures to enhance reception capacity of hotel industry

On 01 Apr 2026, the Information Services Department released the response to Legislative Council Question No. 3 ("LCQ3") posed by Hon Alan Chan. The Secretary for Culture, Sports and Tourism, Miss Rosanna Law, outlined measures to enhance the reception capacity of the hotel industry.

Tourism Performance and Economic Contribution

The sector demonstrated robust performance in 2025, with annual visitor arrivals reaching nearly 50 million, representing a 12 per cent increase over 2024, while non-Mainland visitors rose by 15 per cent. In the first quarter of 2026, arrivals exceeded 14.31 million, a 17 per cent year-on-year increase, with total 2026 arrivals projected at approximately 53.8 million, an 8 per cent rise. In 2024, tourism contributed $86.4 billion in value added, accounting for 2.8 per cent of GDP, up from 2.6 per cent in 2023.

Hotel Capacity and Occupancy Statistics

As of late February 2026, Hong Kong operated 333 hotels providing 93,481 guest rooms, showing year-on-year growth. The average occupancy rate for 2025 stood at approximately 87 per cent, rising to 90 per cent during the Mainland Chinese New Year Golden Week in February.

Tax Allowances and Capital Expenditure

Under the Inland Revenue Ordinance (Cap. 112), hotel operators may claim an annual allowance of 4 per cent on capital expenditure, differing from the 20 per cent initial allowance available for industrial buildings. Commercial buildings similarly receive a 4 per cent annual allowance on residual expenditure without an initial 20 per cent component. Furthermore, capital expenditure on renovation or refurbishment is deductible in equal instalments over five years.

Plot Ratio and Planning Regulations

Hotels are classified as non-domestic buildings with higher permissible plot ratios than domestic structures. Facilities and vehicular setting down areas are excluded from gross floor area calculations. The Planning Department amended the Mong Kok and Yau Ma Tei Outline Zoning Plans in 2022 and 2023, removing the 12 per cent maximum plot ratio restriction for Commercial zones along Nathan Road. The Pay for What You Build Pilot Scheme applies for redevelopment, assessing land premium based on the full market value of the preferred use, allowing phased development where the initial phase accounts for at least 60 per cent of the total permissible maximum GFA.

Hotel Accommodation Tax ("HAT") Framework

Collection resumed in January 2025 at a rate of 3 per cent of the accommodation charge. For 2025, the average occupancy rate and overnight visitor numbers increased by approximately 2 per cent and 6 per cent respectively compared to 2024. A proposal to freeze HAT until demand exceeded supply, indicated by a year-on-year Revenue Per Available Room increase of over 3 per cent, was not adopted. Estimated revenue is $770 million for 2025-26 and $800 million for 2026-27, with no current plans to freeze the tax or adjust the rate.