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Clamping Down on Illegal Guesthouses in Hong Kong: Government Seeks Input on New Proposals




by:
Andrew P. B. MacGeoch
David S. C. Mallinson
Emily I. C. Wong
Mayer Brown JSM - Hong Kong Office

 
July 17, 2014

Previously published on July 16, 2014

The Home Affairs Department of the government has issued a consultation document (the “Document”) reviewing the Hotel and Guesthouse Accommodation Ordinance (Cap.349) (the “Ordinance”) with recommendations to improve the licensing regime and the effectiveness of enforcement action.

According to the Home Affairs Department (HAD), the number of inspections and prosecutions of suspected unlicensed guesthouses has increased significantly in recent years but the HAD is still concerned with the number of illegal guesthouses, examples of nuisance by licensed guesthouses, and the inability of the existing licence regime to deal with the problems. As a result, on 4 July 2014 it commenced a consultation process seeking input from the public on a raft of proposals to improve the situation.

The proposed measures should go some way to resolving the issues cited by the government and are likely to be welcomed in particular by the hotel industry. It is interesting to note that the Document does not focus on the growing number of websites offering short-term accommodation in private residences or mention whether this is an area that the government will target.

Key Proposals

Enhancing the Licensing Regime

The following measures are proposed to enhance the licensing regime:

  • Introduce distinct licences for hotels and guesthouses - this will be welcomed by the hotel industry which has long been concerned that the two are licensed under the same category. Tourists and visiting businesspeople should be able to easily distinguish hotels from guesthouses.
  • Enable the Office of the Licensing Authority (OLA) to refuse to issue new licences, and even cancel existing ones where the relevant DMC contains an express provision against the establishment of guesthouses, and require applicants to submit a certificate signed by a solicitor confirming that no such express provision exists - there is currently no provision in the Ordinance requiring compliance with the DMC so this should be good news for fellow residents of multi-storey buildings who would otherwise have to launch a civil suit against the applicant.
  • Add a requirement for local consultation as part of the licence application process. Three proposed options include:
    • consulting with District Officers;
    • setting up an independent panel to consider local views; or
    • setting up a new statutory body responsible for licensing - this body may hold public hearings.
  • Introduce “fit and proper” criteria for applicant licensees.
    Add a requirement for licensees to maintain third-party liability insurance.

Enhancing Enforcement

Several proposed enforcement measures which should enable the government to effectively police and limit infringement include:

  • Increased penalties including raising maximum fines from the existing HK$200,000 to HK$500,000 and maximum imprisonment from two to three years.
  • Addition of a provision deeming any premises offering or providing short-term sleeping accommodation at a price to be a guesthouse unless the contrary is proved - this should make prosecution much easier than is currently the case where the burden of proof is on the OLA.
  • Addition of a provision empowering the OLA to appeal to the magistrate’s court for warrants to enter premises for inspection and enforcement actions.

Comment

Overall the measures should be welcomed by hotels and other legitimate players in the industry (including neighbours of prospective guesthouses) by raising the required criteria for the licences and substantially strengthening the enforcement mechanism available to the government.

Further Details of the Consultation Document

The consultation period expires on 28 August 2014. The full consultation document is available, and any view or comment should be sent to review&under;hagao@had.gov.hk before 28 August 2014.



 

The views expressed in this document are solely the views of the author and not Martindale-Hubbell. This document is intended for informational purposes only and is not legal advice or a substitute for consultation with a licensed legal professional in a particular case or circumstance.
 

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Author
 
Andrew P. B. MacGeoch
David S. C. Mallinson
Emily I. C. Wong
Practice Area
 
Government
 
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