HOS Housing As Hostels: Flawed
Zeppelin Real Estate Analysis Limited
of increased tourists from Mainland China, the government authorities
have recently suggested turning portions of the still unoccupied
(government-assisted) Home Ownership Scheme housing into hostels for
travelers. Many tourism-related industries supported the idea while most
of the hoteliers opposed it. Both seemed to have their own reasons and
viewpoints. It is not the intention here to find out who has the better
argument, and at the time of writing this article the idea seems to have
been withdrawn, at least for the while. Nonetheless, your humble author
had thought of several points listed below:
(net income) is really earned by Hong Kong from tourism?
= Net income here is defined as (A) the value or price of the services /
products / goods / merchandize sold to tourists LESS (B) the services /
products / goods / merchandize (and factors of production) that are
imported in order to deliver the ones sold to the tourists. If A is >
than B, we will have made a profit. If not, we will have a loss. Also,
the higher the value-added A ¡V B is, the more money we earn. However,
many activities related to tourism do not seem to be of high
value-added, being mostly food-restaurant, transport, entertainment,
shopping, and the like. Perhaps the contribution of tourism lies more in
creating and maintaining many labor-intensive but low-wage employment
opportunities rather than bringing in a high net income for Hong Kong.
Views from seasoned tourism professionals are welcomed.
Ownership Scheme housing is a public asset
they are disposed of (the original intent was to sell these units at
discounted prices to households who cannot afford a private market
unit), they remain a public asset. As such, any other uses for them
require among other things consideration of their financial viability.
Also, turning them into hostels would likely require some building
remodeling, and budgets will have to be allowed for latter day
restoration. Whether these hostels are profitable remain to be seen.
investments will be affected
= while hoteliers and hotel owners may oppose the idea out of defending
their own interest, hotel investments will be affected if authorities
can turn otherwise unused properties into competing premises.
Consistency of policies is lost, perceived risks become higher, and
in the extreme case investments are cancelled altogether. This leads
to another important consideration = our free market capitalistic system
rewards the risk takers, especially those with a good business acumen
and vision. A smart investor might have estimated that hotels make good
investments because of such anticipated influx of tourists, and might
have poured millions if not billions into the sector, hoping when the
demand actually arises he / she can profit immensely (at least for a few
years). Turning HOS into hostels affects his / her scheme, dampens
market visionaries¡¦ enthusiasm, and is not entirely a fair thing to
number of tourists-visits may not increase significantly
= Given China¡¦s economic growth, the number of people wishing to visit
Hong Kong should be huge and increasing day by day. Yet, turning HOS
into hostels may only, at any point in time, enable ¡¥some¡¦ of these
potential tourists to come earlier, but not necessarily a few more
times. Studies need to be done to ascertain the tourist-visit patterns
and behaviors, and should differentiate those real tourists from those
seeking business, jobs, or permanent residence in Hong Kong.
about tourism, not social welfare or assistance for the poor
people seem to want to go heads over heels to let in as many tourists as
possible into Hong Kong. Yet, first, whether such is the optimal level
is something to be contemplated and normally, given all things being
equal, the optimal level is unlikely to be the maximum level (just as
driving a car at top maximum speed all the time will lead to ruin and
accident). Second, while we should welcome them and be friendly,
satisfying and letting in everyone or anyone from the Mainland who
wishes to come and visit is impossible. One option is to use the ¡§price
mechanism¡¨ to determine who can afford to come and who cannot. For
instance, your humble author does not see a lot of world-class cities
bringing prices down just to let the poorest of tourists to visit them.
Third, people from China who cannot afford to visit Hong Kong, or
frequently, do not suffer per se or become ill etc. Visiting Hong Kong
may even be a reason for them to work hard.
definitely benefits Hong Kong yet how much, where, when, to whom etc
need to be carefully reviewed. Also, as in business, Hong Kong cannot
afford to be everything to everyone, including tourists. With an average
GDP per capita of around US$23,500, only some from the Mainland can
afford to visit, or frequently. As an analogy, we are still closer to a
high-end Parisian restaurant than a MacDonald.
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and are not meant to substitute for proper professional advice and/or due
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