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Hong Kong Diaries

Hospitality sector looks to better times

Updated: 2015-12-15
By Timothy Chui (chinadaily.com.cn)
1

It is the Hong Kong hospitality sector’s time to shine as retail sales fall alongside drops in inbound mainland tourists, Chief Executive Officer and Director of the Lan Kwai Fong Group Jonathan Zeman says.
Shifts in mainland consumption are hitting luxury goods hard with shopping districts, reliant on a heavy retail business mix, now putting greater emphasis on hospitality.
Amid a retail slump which closed Coach’s Central flagship store and declining mainland visitor numbers, consumer goods are also plagued by disruptions from online research and sales. But food and beverage (F&B) fundamentals, and a necessity for food and friends, remain strong, the son of Hong Kong’s hospitality king Allen Zeman told China Daily.
“If you look at retail and by extension property, Uber and taxis, Airbnb and hotels, every business is being disrupted. But we’re in a good space because so far you can’t eat out on the Internet,” said Jonathan Zeman.
Landlords, in Hong Kong and the mainland, are beginning to address dwindling demand for retail space in commercial districts. The retail sector’s share was expected to fall from an average of 70 percent while entertainment and F&B was making up the difference, he said. Retailers were also seeking out partnerships with ancillary F&B and lifestyle offerings.
Prime street shop prices in Hong Kong peaked at the start of 2014, according to Savills. Cheaper rents and the decline of luxury stores created a gap for F&B to exploit.
“F&B in the past was not able to complete with retail shops but landlords are now more open to the aspirations of their tenants. While we don’t expect restaurants to be opening on Canton Road, we do expect a proliferation in second-tier locations in major shopping districts,” Colliers International Senior Director Helen Mak said.
Meanwhile, F&B has gone from 29 percent of leasing deals in 2013 to more than 50 percent this year, according to Jones Lang LaSalle.
Despite a similar slowdown in retailing on the mainland, Zeman’s entertainment ventures in Chengdu and Shanghai, covering more than half a million square meters of space, remains robust. They have attracted interest from peers hoping to emulate them.
“GDP growth of 6.5 percent is not much of a slowdown compared to other countries and we’re taking advantage of the timing to be part of the new domestic economy.
President Xi Jinping wants to grow the domestic economy and this includes entertainment, dining and culture,” he said.
Zemen added that his group is readying expansion plans to more second and third-tier mainland cities in addition to Haikou, Wuxi and Zhuhai.
Demand for varied F&B services will rise, with Zeman noting Hong Kong’s demand for both local and international products, services and experiences served as a precursor for mainland tastes. These are expected to follow the same pattern but on a much larger scale. Now, more than 200 million middle-class mainland residents are travelling abroad and returning with more international perspectives and tastes.
tim@chinadailyhk.com

It is the Hong Kong hospitality sector’s time to shine as retail sales fall alongside drops in inbound mainland tourists, Chief Executive Officer and Director of the Lan Kwai Fong Group Jonathan Zeman says.

Shifts in mainland consumption are hitting luxury goods hard with shopping districts, reliant on a heavy retail business mix, now putting greater emphasis on hospitality.

Amid a retail slump which closed Coach’s Central flagship store and declining mainland visitor numbers, consumer goods are also plagued by disruptions from online research and sales. But food and beverage (F&B) fundamentals, and a necessity for food and friends, remain strong, the son of Hong Kong’s hospitality king Allen Zeman told China Daily.

“If you look at retail and by extension property, Uber and taxis, Airbnb and hotels, every business is being disrupted. But we’re in a good space because so far you can’t eat out on the Internet,” said Jonathan Zeman.

Landlords, in Hong Kong and the mainland, are beginning to address dwindling demand for retail space in commercial districts. The retail sector’s share was expected to fall from an average of 70 percent while entertainment and F&B was making up the difference, he said. Retailers were also seeking out partnerships with ancillary F&B and lifestyle offerings.

Prime street shop prices in Hong Kong peaked at the start of 2014, according to Savills. Cheaper rents and the decline of luxury stores created a gap for F&B to exploit.

“F&B in the past was not able to complete with retail shops but landlords are now more open to the aspirations of their tenants. While we don’t expect restaurants to be opening on Canton Road, we do expect a proliferation in second-tier locations in major shopping districts,” Colliers International Senior Director Helen Mak said.

Meanwhile, F&B has gone from 29 percent of leasing deals in 2013 to more than 50 percent this year, according to Jones Lang LaSalle.

Despite a similar slowdown in retailing on the mainland, Zeman’s entertainment ventures in Chengdu and Shanghai, covering more than half a million square meters of space, remains robust. They have attracted interest from peers hoping to emulate them.

“GDP growth of 6.5 percent is not much of a slowdown compared to other countries and we’re taking advantage of the timing to be part of the new domestic economy.

President Xi Jinping wants to grow the domestic economy and this includes entertainment, dining and culture,” he said.

Zemen added that his group is readying expansion plans to more second and third-tier mainland cities in addition to Haikou, Wuxi and Zhuhai.

Demand for varied F&B services will rise, with Zeman noting Hong Kong’s demand for both local and international products, services and experiences served as a precursor for mainland tastes. These are expected to follow the same pattern but on a much larger scale. Now, more than 200 million middle-class mainland residents are travelling abroad and returning with more international perspectives and tastes.

tim@chinadailyhk.com

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