Hong Kong's New Hotel Tax: What It Means for Your Travel Budget

If you're planning a trip to Hong Kong, there's a new update you should be aware of that could impact your travel expenses. Starting in January 2025, Hong Kong has reintroduced a hotel accommodation tax, which could affect your stay, especially if you're on a tight budget. This tax was first introduced decades ago but was removed in 2008, only to return after the pandemic.

Image credit: Ernest Tse via Canva Pro

Let's dive into how this new tax works, how it will affect travellers, and whether it will change your plans.

Also Read: Your Visual Guide to Hong Kong's Most Instagrammable Spots

What is the hotel tax and why is it coming back?

Image credit: Tarzan9280 via Canva Pro

The new hotel tax is a 3% levy on hotel accommodations in Hong Kong. Its primary aim is to help the government recover financially from the pandemic, as Hong Kong's tourism industry has been hit hard over the past few years. The government estimates that the tax will generate up to HK$1.1 billion annually, which will help plug some of the fiscal gaps left by the pandemic.

While this is a relatively modest amount in the grand scheme of things, it’s still a move that will affect your wallet when booking a hotel.

How will the hotel tax affect your stay?

At first glance, 3% might not sound like much, but it could add up depending on your length of stay and the type of hotel you choose. For instance, if you book a hotel for HK$550 (₱4,128) per night, the tax would add an extra HK$16.50 (₱123.80). For a week-long stay, that’s an additional HK$115.50 (₱866.90) – definitely something to consider when budgeting.

Who will feel the impact most?

Image credit: danielvfung Via Canva Pro

This new tax will hit different types of travellers in varying ways. If you're someone who tends to book more budget-friendly accommodations or stay for a shorter time, you'll likely feel the impact more keenly. For example, backpackers and solo travellers who rely on budget hotels or hostels will experience a noticeable hike in their costs. If you're travelling on a tight budget, you might have to rethink your destination or the type of accommodations you book to stay within your budget.

On the other hand, if you're booking a luxury hotel, you probably won't notice the difference as much. High-end hotels in Hong Kong often come with hefty nightly rates, and an extra 3% on top of those rates may not be a dealbreaker. However, it’s still important to keep this tax in mind, especially if you're staying for an extended period.

What else will cost more?

Image credit: Asia Images Group via Canva Pro

The hotel tax isn’t the only increase you’ll see. The Hong Kong government has also raised airport fees, which will increase the cost of flying into the city. The combined effect of higher taxes on accommodation and airport charges means that travellers will likely see a higher overall cost for their trip. For some, this might make the destination seem less affordable than before, especially for those planning to stay for a short time or for those with families.

Is Hong Kong's tax high compared to other destinations?

In terms of tax rates, Hong Kong's 3% hotel tax is relatively low when compared to other popular global tourist destinations. For instance, major cities like New York, Paris, and Tokyo have hotel taxes that range between 6% to 14%. Even so, for travellers who are already dealing with high airfare and expensive daily costs, this additional 3% can feel like a pinch, especially for those visiting for only a few days.

Will this affect your travel plans?

Image credit: Dragon Images via Canva Pro

For some, the extra cost may be enough to reconsider the destination or modify plans, but it's also worth keeping in mind that Hong Kong remains a top tourist destination for its unique blend of modern and traditional cultures. The city offers amazing experiences, from shopping in bustling districts like Kowloon and Central to enjoying delicious street food and immersing yourself in history and culture.

While the hotel tax might add a small hurdle to your travel budget, it shouldn’t be a dealbreaker, especially if you're willing to plan accordingly. Consider booking in advance to get the best deals, looking for promotions, or even exploring Airbnb options to offset some of the costs. And, if you're planning on a longer stay, it might make sense to balance your budget by reducing costs in other areas, such as dining or shopping.

Also Read: A 48-Hour Guide to Shopping & Eating in Hong Kong

Final thoughts

The return of the 3% hotel tax in Hong Kong is a reminder that costs for travellers can change unexpectedly. While it may not drastically alter your overall budget, it’s a factor you’ll need to account for when planning your trip. But don’t let it stop you from visiting this dynamic city. With a little planning, you can still enjoy everything Hong Kong has to offer without breaking the bank.