Legislative Council

LC Paper No. CB(2)2571/98-99
(These minutes have been
seen by the Administration)

Ref : CB2/BC/4/98

Bills Committee on Hotel Accommodation (Miscellaneous Provisions) Bill 1998

Minutes of Meeting held on Thursday, 22 October 1998 at 10:45 am in Conference Room B of the Legislative Council Building

Members Present:

Hon CHAN Kam-lam (Chairman)
Hon HO Sai-chu, JP
Hon Edward HO Sing-tin, JP
Hon CHAN Wing-chan
Hon Howard YOUNG, JP
Hon YEUNG Yiu-chung
Hon CHOY So-yuk

Members Absent:

Prof Hon NG Ching-fai
Hon James TO Kun-sun

Public Officers Attending:

Mr LEE Lap-sun
Deputy Secretary for Home Affairs

Mr Francis LO
Principal Assistant Secretary for Home Affairs

Miss Angela LUK
Assistant Director of Home Affairs

Mrs Alice LAU
Assistant Commissioner of Inland Revenue

Chief Officer, Office of the Licensing Authority
Home Affairs Department

Ms Anastasia M H KWONG
Senior Government Counsel
Department of Justice
Attendance by Invitation:
The Federation of Hong Kong Hotel Owners Limited

Mr Michael LI
Executive Director

Miss CHAN Shuk-fong
Assistant Executive Director

The Tourist Guest Houses Federation of Hong Kong Limited

Mr LAU Kung-shing, Sam

Ms LAM Wai-lung

Mr CHOW Shun-yung

The Hong Kong Hostel and Tourism Association Limited
Mr WONG Chok-man
Mr TAM Tin-tak
Mr NG Ming-chak
Clerk in Attendance:
Mrs Constance LI
Chief Assistant Secretary (2) 2
Staff in Attendance:
Miss Anita HO
Assistant Legal Adviser 2

Mr Stanley MA
Senior Assistant Secretary (2) 6

The Chairman welcomed representatives of the Federation of Hong Kong Hotel Owners Limited (FHKHO), the Tourist Guest Houses Federation of Hong Kong Limited (TGHF) and the Hong Kong Hostel and Tourism Association Limited (HKHTA) to the meeting.

I. Meeting with deputations

The Federation of Hong Kong Hotel Owners Limited (FHKHO)
[Paper No. CB(2)438/98-99(01)]

2. At the invitation of the Chairman, Mr Michael LI of FHKHO highlighted two concerns as stated in his submission. Firstly, the organization asked the Administration to provide separate definitions for "hotel" and "guesthouse" under the Hotel and Guesthouse Accommodation Ordinance (Cap.349). Secondly, the organization suggested extending the maximum period of the licence up to seven years. Mr LI said that the distinction between "hotel" and "guesthouse" based on a simple classification system would help provide a clearer guide to overseas visitors and tourists in finding suitable hotel accommodation in Hong Kong, and would project a better image of Hong Kong hotels internationally. On the proposal of a seven-year licence, Mr LI said that it would facilitate hotels in planning their major renovation which took place once every seven years. Most hotels would be prepared to submit an annual certificate from an authorized person during the seven-year licence period that no substantial alteration had been made to the approved plan and that there had not been any breach of the regulations. The Licensing Authority could also make surprise inspection any time.

The Tourist Guest Houses Federation of Hong Kong Limited (TGHF)
[Paper No. CB(2)438/98-99(02)]

3. Mr Sam LAU of TGHF expressed the following views -

  1. The Administration should set clear guidelines on the safety requirements and avoid frequent changes to such requirements.

  2. Despite amendments to the definitions as proposed in the Bill, certain guesthouses (some occupying the entire building) run by Mainland companies could still operate outside the regulatory system under Cap.349 and Cap.348, using the excuse that the premises were let out on a monthly basis and only to members of their staff from the Mainland. TGHF suggested that guesthouses which provided accommodation to visitors (persons without Hong Kong Identity Cards) should be brought under regulation even though the tenancy was on a monthly basis.

  3. The organization supported extending the licence period up to three years on the understanding that no annual certificate of compliance by the authorized person was required during the three-year licence period, in order to lessen the financial burden on small guesthouse operators.
The Hong Kong Hostel and Tourism Association Limited (HKHTA)

4. Mr CHANG Hao of HKHTA made the following points -

  1. The Association supported the proposal to extend the maximum period of a licence to three years, on the understanding that there would be an agreed licensing standard which would not be changed frequently;

  2. The licence fees should be reduced by 50% in view of the economic downturn;

  3. Public officers conducting inspections of hotels and guesthouses should be more courteous and be provided with consistent guidelines by the Licensing Authority;

  4. The current criterion (with less than 10 rooms) for exemption from the Hotel Accommodation Tax Ordinance, Cap.348 should be relaxed to include premises with no more than 15 rooms; and

  5. There should be stricter law enforcement against illegal guesthouses as the latter created unfair competition.
Discussion with deputations

Definition of "hotel" and "guesthouse"

5. Referring to FHKHO's suggestion of distinguishing "hotel" from "guesthouse" in the definitions in legislation, Mr YEUNG Yiu-chung asked the representative of FHKHO for suggestions of a viable definition. He asked whether it would be appropriate to classify hotels or guesthouses by the number of rooms in the premises or the "28 days rule". Mr LI of FHKHO said that there were universal standards for "hotels" which were usually purpose-built buildings providing accommodation of a higher quality with a range of facilities and services. By specifying such standards in the definition of "hotel", there would be greater protection of consumers' interests.

6. Mr Edward HO and Mr HO Sai-chu expressed reservation about TGHF's suggestion that the definition of "hotel" should include premises rented on a monthly basis to persons who were not holders of Hong Kong Identity Cards. Representatives of TGHF were of the view that Government had been harsh on guesthouses and they hoped the same standards also applied to hotels and other unlicensed premises currently outside the regulatory system.

Maximum period of a licence

7. Mr Howard YOUNG asked whether FHKHO would accept a modified proposal of extending the maximum period of a licence to five years instead of seven years, subject to annual inspection during the five-year licence period. Mr LI of FHKHO responded that seven years would be the ideal arrangement but FHKHO could consider the five-year licence proposal. He said that annual inspection was acceptable provided that there would be no change to the licensing or safety requirements during the licence period. Responding to Mr CHAN Wing-chan, Mr LI of FHKHO said that the hotel industry considered it reasonable for the Administration to exercise discretion in determining the maximum period of licence to be granted to different hotels and guesthouses on the basis of their past compliance records. He pointed out that the hotels of Hong Kong had a remarkable record of building and fire safety, and there was only one disastrous fire in the past 40 years.

8. Mr LAU of TGHF said that the longer the licence period the better protection would be provided to the guesthouse operators. Mr CHANG of HKHTA considered the proposed three-year licence period acceptable.

Changes to licensing conditions

9. Mr Howard YOUNG asked the representatives whether they had concerns about the possibility of changing the licensing conditions upon renewal of licence. Mr Edward HO also asked how the hotel owners would plan their renovation schedule in anticipation of the revision of the fire safety standards every ten years.

10. Representatives of the three deputations generally felt that some inspectors did have different interpretation of the building and fire safety standards, and frequent alterations to the plans would have financial implications to the hotel and guesthouse operators. However, Mr LI of FHKHO pointed out that the establishment of a consultative machinery (Advisory Group on the Implementation of the Hotel and Guesthouse Accommodation Ordinance) did improve the communication between Government and the trade, and representatives of the trade could forward proposals and comments to the Advisory Group on matters affecting the operation of the trade.

11. Responding to Miss CHOY So-yuk on the time required by hotel or guesthouse owners to comply with changes in the building or fire safety requirements after the issue or renewal of licence, Mr LAU of TGHF said that sometimes it would take one or two years to complete the necessary modification works. Mr LI of FHKHO considered that a grace period of one year would be required for compliance with the new requirements.

12. The Chairman thanked representatives of the three deputations for attending the meeting.

II. Meeting with the Administration

Definition of "hotel" and "guesthouse"

13. Mr YEUNG Yiu-chung asked whether it was possible to distinguish a hotel from a guesthouse by providing different definitions in the legislation.

14. DS for HA responded that Cap.349 was enacted in May 1991 to provide for the regulation, control and safety of hotel and guesthouse accommodation. Its primary aim was to ensure that all hotel and guesthouse premises were safe and fit for their purposes. The purpose of the Bill was to plug the existing loophole that some establishments which offered accommodation to limited categories of persons (persons of a particular nationality or clients of one tourist agency) were now outside the regulation of the three relevant Ordinances (Cap.349, Cap.348 and Cap.158).

15. As regards the need to distinguish hotels from guesthouses in the definitions, DS for HA said that the proposal would involve issues such as the range and standard of services in hotels and guesthouses, and would involve extensive consultation with the trade and relevant bureaux. He agreed with Mr LI of FHKHO that distinction between "hotel" and "guesthouse" could help tourists choose their accommodation. However, the proposal could be dealt with in a separate exercise.

16. Miss CHOY So-yuk was of the view that hotels were definitely different from guesthouses, and she asked whether the Administration would consider providing different definitions to 'hotel' and 'guesthouse' in the relevant legislation as early as possible.

17. DS for HA responded that the differentiation in definitions would be useful in the long-term. He agreed to review these definitions at a later stage. The Chairman agreed that the Administration would need to consult the trade and concerned parties before introducing legislative changes. Adm

Membership of the Advisory Group

18. Mr Howard YOUNG requested the Administration to include representatives from the guesthouse industry in the Advisory Group so that the views of guesthouse operators would be adequately reflected to the Administration. DS for HA noted the suggestion. Adm

Maximum period of licence

19. Members appreciated that a licence of a longer period would facilitate hotel proprietors to effectively plan and save costs on major renovation works required. Members noted that FHKHO had proposed extending the maximum period of a licence to seven years subject to an annual certificate from an authorized person that no substantial alterations had been made to the approved plan. Members therefore sought the views of the Administration on the feasibility of the proposal.

20. In response, DS for HA said that the Administration had noted FHKHO's proposal and would be prepared to consider extending the maximum period of licence to seven years, on the condition that annual certificates would be required from an authorized person for licences which had a validity period of longer than 36 months. The annual certificate would serve the purpose of testifying that the premises concerned had not undergone any major alteration or violated any regulations. Adm

21. The Chairman asked why the annual certificates were not required for licences of three years or less. Mr Edward HO also asked whether proprietors issued with licences of more than three years should be required to submit the annual certificates only from the fourth year.

22. DS for HA explained that the extension of a licence period from 12 months to 84 months was already a significant improvement and the Administration must satisfy itself that there was no undue relaxation of the public safety standards. In this connection, the Administration agreed to FHKHO's proposal of submitting annual certificates for licences up to 84 months. The requirement would help ensure public confidence and safety of guests, and would be beneficial to the long-term development of the tourism industry. He emphasized that the extension of licence period to 84 months was only to meet the demands of the trade.

23. Mr Edward HO sought further clarification of the proposed licensing scheme. He asked whether guesthouses having a history of good compliance with building and fire safety requirements could also apply for licences with validity periods of more than 36 months. He was concerned that smaller establishments might find it costly to pay for annual certification expenses for licences of more than 36 months. DS for HA said that these proprietors might choose to apply for a three-year licence which did not require annual certification. Mr Howard YOUNG said that the granting of licences of up to seven years to large and proper establishments might subsequently help developing a distinction between hotels and guesthouses.

24. Mr Edward HO said that the seven year licences could give some guarantee to hotel proprietors that the safety and building safety requirements would remain unchanged for a period of seven years.

Grace period for compliance with new safety requirements

25. Noting that hotel and guesthouse operators would need time to carry out alteration works for compliance with new safety requirements, Mr Edward HO asked the Administration whether there was any grace period for compliance with new requirements.

26. Deputy Secretary for Home Affairs (DS for HA) replied that there was no provision of such a grace period in the relevant legislation but some improvement works had been allowed to spread over some years depending on the merits of each case. For example, hotels had been given a grace period to install the fire sprinkler system by phases. Principal Assistant Secretary for Home Affairs (PAS for HA) supplemented that most hotels had been issued annual licences with schedules containing major safety works and timetables for completion. Depending on the complexities of the works involved, the Licensing Authority would allow an appropriate period of time for the operator to complete the necessary improvement works. If there were new substantial requirements, the Administration would consult the trade through the Advisory Group to agree on an appropriate time frame.

27. Responding to Mr HO's further enquiry, PAS for HA said that the policy guidelines issued by the Secretary for Home Affairs (S for HA) in 1993 had expressly stated that new conditions would not be imposed on renewal of licence, unless there were alterations affecting safety, or there were apparent safety threats in the premises concerned.

28 In response to members' request, DS for HA agreed to provide a grace period in the administration guidelines for compliance with new safety requirements. He would highlight this in the speech of the S for HA during the resumption of the Second Reading debate of the Bill.

Licence fees and hotel accommodation tax

29. Mr Howard YOUNG asked about the calculation of fees for licences exceeding 12 months. PAS for HA replied that the Administration would have to examine the fee levels and amend the Hotel and Guesthouse Accommodation (Fees) Regulations in the next financial year.

30 In view of the economic downturn, Miss CHOY So-yuk asked whether the Administration would consider reducing the licence fees and the tax on accommodation charges to lessen the financial burden on proprietors of hotels and guesthouses. DS for HA replied that there had been no increase in licence fees in the current financial year and that the current level only recovered 26% of the costs.

Date of next meeting

31 The Clerk would inform members of the date of the next meeting after consulting the Chairman.

(Post-meeting note : The next meeting was subsequently scheduled for 20 November 1998 at 10:45 a.m.)

III. Any other business

32 There being no other business, the meeting ended at 12:30 p.m.

Legislative Council Secretariat
15 July 1998