Hong Kong’s Retail, Hospitality, Tourism Navigate Recovery in H1 2025 Amid Shifting Consumer Trends

Hong Kong’s retail, hospitality, and tourism sectors continued their post-pandemic recovery in the first half of 2025, buoyed by a resurgence in international arrivals and evolving consumer behaviours. However, challenges remain as spending patterns shift intensifies.

Hotel and Tourism Sector: Resilient Growth Driven by Diversified Source Markets and Mega Events

Hong Kong welcomed over 20 million international visitors from January to May 2025, putting the city on track to surpass the 44.5 million arrivals recorded in 2024. While this represents an 11.9% year-on-year increase, it still lags 22% behind the 2018 peak. The rebound has been led by short-stay leisure travel, particularly from Mainland China, Thailand, and Taiwan, supported by campaigns such as “Hello Hong Kong” and “Night Vibes Hong Kong.”

Hotel performance has been mixed. Occupancy rates remained strong, recovering to around 85% in 2024, which is just 4 percentage points below the 2018–2023 average. However, the Average Daily Rate (ADR) declined by 4.3% year-on-year in 2024, reflecting a more cost-conscious visitor profile. Revenue per Available Room (RevPAR) stood at HK$1,132 on average across all tiers, just 9.6% below the 2018 pre-pandemic peak.

Hotels are currently focused on boosting occupancy in the short to medium term while stabilising ADR. High-tier hotels have fully recovered, with ADR reaching HK$2,145 in the first five months of 2025, almost matching the 2018 level of HK$2,149. In contrast, lower-tier hotels are offering competitive rates to attract a broader range of tourists.

“Over the next five years, while Hong Kong continues to attract more tourists, hotel supply growth will remain limited at just 0.1% CAGR, with most new supply concentrated in the high-end segment. Coupled with ongoing conversions of lower-end hotels into student housing and labour accommodation, supply will stay tight. This makes hotels an attractive investment, offering flexibility to operate as hospitality assets during tourism booms or be repurposed for stable income,” said Hannah Jeong, Executive Director, Head of Valuation & Advisory Services, CBRE Hong Kong.

From an investment perspective, while Chinese operators are growing even faster, landlords are encouraged to explore partnerships with these actively expanding Chinese hotel groups.

Looking ahead to H2 2025, the outlook remains cautiously optimistic. Expanded cultural offerings, infrastructure upgrades, and international events are expected to support continued recovery. However, hotel operators must adapt to evolving traveller expectations and rising operational costs, with a renewed focus on enhancing the visitor experience and attracting higher-spending tourists to sustain long-term growth.

Retail Sector: Strategic Shifts Amid Spending Headwinds

Despite a surge in inbound tourism, Hong Kong’s retail sector faced continued pressure in the first five months of 2025, with retail sales declining by 5.5% year-on-year. Total spending by overnight Mainland visitors has dropped by 6% year-on-year in the first quarter of 2025, impacted by the strong Hong Kong dollar, RMB depreciation, and competitive pricing in Shenzhen. However the total spending from the long-haul overnight visitors increased by 15%. 

Retail rents continued to soften, with high-street rents up 0.9% quarter-on-quarter. However, mainland brands, e-commerce players, and sports and wellness operators are expanding in core districts, signalling a shift in tenant mix and consumer demand.

“The retail landscape is undergoing structural transformation. While traditional luxury retail faces headwinds, emerging sectors like health, lifestyle, and experiential retail are gaining traction. Retailers, particularly tourism retailers, must pivot to meet the evolving expectations of both local and regional consumers,” said Lawrence Wan, Senior Director, Head of Advisory & Transaction Services – Retail, CBRE Hong Kong.

Looking forward, H2 2025 may see stabilizing consumer sentiment, supported by potential interest rate cuts and spending-stimulating mega events such as Art Basel, Rugby Sevens, and international concerts. Retailers and landlords are advised to remain agile, leveraging data-driven strategies and diversified offerings to capture emerging demand.

Unlocking Potential of Victoria Harbour Promenade and Hong Kong’s DNA for Tourism

As Hong Kong continues to evolve as a global tourism hub, the Victoria Harbour Promenade stands out as a prime asset with immense potential for long-term development. Its sweeping views of the iconic skyline, coupled with cultural landmarks such as the Tsim Sha Tsui Clock Tower and the Hong Kong Cultural Centre, make it a natural magnet for both international visitors and local residents. The harbourfront’s unique blend of urban energy and scenic beauty positions it to become a world-class destination that caters to the growing demand for leisure and experiential tourism.

While the government has made commendable progress in connecting various sections of the promenade, there remains significant room for strategic enhancements. A more holistic approach could involve integrating curated arts and cultural programming, pop-up markets, and immersive entertainment experiences that reflect Hong Kong’s diverse identity. Additionally, incorporating thematic zones, such as wellness areas, interactive art installations, and family-friendly spaces, could further enrich the visitor experience and encourage longer stays along the waterfront.

To fully unlock the promenade’s potential, investment in supporting infrastructure is essential. This includes expanding dining options with a mix of local and international cuisines, improving wayfinding and accessibility, and ensuring seamless connectivity through public transport and pedestrian-friendly pathways. With thoughtful planning and collaboration between public and private sectors, the Victoria Harbour Promenade can be transformed into a vibrant, inclusive, and sustainable urban oasis that enhances Hong Kong’s global appeal.