Hong Kong's hotel quarantine system buckles under China demand

Cleaners dumping garbage outside a quarantine hotel in Hong Kong on April 2, 2022. PHOTO: REUTERS

HONG KONG (BLOOMBERG) - Hong Kong's move to halt flight bans removed one of the biggest headaches for travellers.

Yet residents who want to go abroad still face another hurdle: Finding a hotel quarantine room for their return.

The city's 24,000 designated hotel quarantine rooms for August until the end of October are struggling to meet demand, as recent decisions to slash isolation to seven days and reopen the border to non-residents prompted a surge of travellers who snapped up reservations, sometimes months in advance.

The non-resident rule has also prompted Chinese travellers to use Hong Kong as a gateway to the mainland, where international flight connections are scarce as President Xi Jinping tries to shut out the virus.

Monthly mainland Chinese arrivals at Hong Kong airport jumped nearly 11,000 per cent between April and June to 30,222 - accounting for one-third of airport passengers last month.

In that environment, travellers are struggling to book quarantine rooms, scalpers are entering the market and properties have raised their own prices.

Foreign business chambers last month told the Liaison Office, Beijing's main body overseeing Hong Kong, that the city must end quarantine to remain a finance hub, according to multiple people familiar with the matter.

Regional rival Singapore has reopened its borders, as the world beyond China allows much freer entry.

Hong Kong's new leader, Mr John Lee, pledged this week to reduce travel "inconvenience", while also stressing the need to reduce Covid-19 cases and limit deaths - key requirements to open the mainland border.

His decision to make pausing the flight ban system his first Covid-19 policy move since taking office on Thursday (July 7) bolstered optimism he will ease quarantine requirements too.

Lawmaker Doreen Kong called on Mr Lee's government to regularly monitor quarantine room availability and publish the results - currently, it is not clear if authorities track this - and set up a hotline for residents who can't return. Longer term, she said an exit plan was needed.

"The government has to provide the citizens with a timeline," she said. "How will the government relax the restrictions and under what basis? I think we must have a road map."

Travel back to Hong Kong this summer is already expensive as the cost of global air tickets rise.

Searches for a return economy-class ticket between Hong Kong and London on Cathay Pacific Airways in late June turned up prices as high as HK$42,051 (S$7,500), more than five times the typical cost before the pandemic.

But returning to the mainland is perhaps even harder.

China has severely limited international flights as it tries to block the spread of the more-infectious Omicron variant, meaning only 93,000 people landed on such routes in April, the month for which figures are most recently available, representing a 31.5 per cent year-on-year dip.

Ms Miranda Yu travelled through Hong Kong to re-enter the mainland from Britain where she had been studying, because she could not find "direct flights from England to China".

Transiting through Europe would have cost about 50,000 yuan (S$10,450), she said, whereas flying from Britain to Hong Kong was 5,000 yuan. From Hong Kong, she took a bus back to China via the Zhuhai bridge.

Ms Yu says scalpers are already a staple of China's quarantine hotel and bus ticket market. "No one can buy with original prices," she added.

As more Chinese travellers come through Hong Kong, scalpers are capitalising.

Ms Vicki Wong, a Hong Kong-based construction firm sales coordinator, says she had to use a mainland agent to get a quarantine room for this summer - and pay double the official rate.

"Before, even when a hotel's official website said they were full, when you call or e-mail them they could still find a room for you," said Ms Wong. "But when I'm looking for rooms for August, they all said they're fully booked."

Ms Wong paid HK$21,000 (S$3,750) for seven nights in a single room at the four-star Regal Kowloon Hotel, twice the government-listed price of HK$10,850. She got booking confirmation within three hours, despite the hotel website showing no availability.

The Regal Kowloon Hotel did not respond to Bloomberg's request for comment.

Hong Kong authorities last month imposed measures to curb the problem, stipulating hotels must prevent agencies from block booking, ensure reservations are under a real name with full payment and require third parties to provide receipts showing the official rate.

A spokesman for the Food and Health Bureau said in an e-mail the government had written to all quarantine hotels to restate their obligations and any venue found not complying would be investigated or removed from the programme.

But lawmaker Ms Kong said the measures had not been effective and the same problems persisted. "It seems that the government is unable to control the present situation," she added.

While authorities in Singapore, New Zealand and Australia operated their now-retired hotel quarantine systems, Hong Kong has left it open to the market.

That means the "resources go to people with the most money", said Mr Perry Yiu, a lawmaker representing the tourism industry. "It's not illegal but it's a matter of fairness."

Although Hong Kong authorities imposed measures to curb hotel room scalping, the measures have not been effective. PHOTO: REUTERS

Hotels in the quarantine programme have also jacked up their prices, charging on average 25 per cent more now than they were one year ago for equivalent rooms, according to analysis by Bloomberg.

Ms Kris Li, a Hong Kong-based social work graduate, decided to travel to Thailand with her boyfriend this summer after quarantine was cut. She had a budget of HK$800 per night for two people, but after searching scores of websites, eventually booked for HK$1,200 per night.

"This might be the most stressful trip of my life," she said. "Most of the quarantine hotels are non-refundable. That made me stressed as there are many uncertainties."

Mr Girish Jhunjhnuwala, founder and executive chairman of the Ovolo hotel group, said despite his properties achieving near 88 per cent occupancy, the cost of being a quarantine hotel is "hefty" and only keeps the lights on.

Ovolo Central and Southside have raised their prices by about 12 per cent and 50 per cent, respectively, over the past year.

Mr Jhunjhnuwala explains properties have had to hire extra staff to monitor the 100 or so CCTV cameras installed to police guests' confinement and use some 200 protective suits a day at HK$30 each, while the "harsh" chemicals the government requires to sterilise rooms take a toll.

"I hope it's the last cycle and I'm hoping that they will end it before the cycle completes itself," Mr Jhunjhnuwala added of the eighth cycle, noting the group will renovate afterwards. "The designs are being drawn up right now."

Despite those challenges, Professor Jin Dong-yan, a virologist at the University of Hong Kong, said the government needed more properties to join the programme.

"The government is trying really hard to convince hotels to become quarantine hotels so supply can increase," he said. "If in the near future they further shorten the quarantine period that might make things a bit easier."

Until then, he added, "we just have to handle the chaos".

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