•Sociopolitical unrest will severely affect hotel performance in H2 2019. Citywide RevPAR could drop by more than 15% for full-year 2019.

•Visitor arrivals to Hong Kong maintained strong momentum in H1 2019, rising to 34.87 million, an increase of +13.9% y-o-y.

•Citywide occupancy fell by 100bps compared to the same period of last year, declining to 90%.A total of 1,700 new hotel rooms were added in H1 2019.

•Room Nights Sold (RNS) increased by +2.60% y-o-y in H1 2019 while Room Nights Available (RNA) increased by +3.75% y-o-y, primarily due to slower growth in visitor arrivals.

•RevPAR performance varied across different segments but has displayed signs of decline since early 2018. RevPAR fell by -1.98% y-o-y for high tariff A hotels; rose by +0.31% y-o-y for high tariff B hotels; and declined by -0.79% y-o-y for medium tariff hotels.

•The market outlook for H2 2019 has weakened substantially due to the U.S.-China trade war and ongoing local sociopolitical unrest, both of which are likely to severely impact the retail and tourism sectors.

•Hotel performance is expected to decline in the coming months and investment activity will weaken.