Luxury hotels in Hong Kong are seeing occupancy rates fall steeply as travellers seek cheaper accommodation because of the global economic slump, according to government figures released Monday.

Top-tier hotels in the city of 7 million, which charge an average of about 270 US dollars a night, saw occupancy down 6 percentage points to 68 per cent in February compared with February 2008, the Hong Kong Tourism Board said.

Hotels located in prime locations, such as the Central and Admiralty areas, where prices are generally higher, have seen particularly sharp falls with occupancy rates tumbling to as little as 60 per cent, the board said.

The trend followed steady declines in luxury hotel occupancy rates from levels of 80 per cent and up in mid-2008.

Board officials said many business travellers now regarded it as 'politically incorrect' to stay in luxury hotels while tourists were travelling on tighter budgets because of the economic downturn.

Visitor numbers to Hong Kong are projected to fall by 1.6 per cent to 29 million in 2009, around 500,000 fewer than in 2008, with a reduction in long-haul visitors accounting for most of the decline.

(Agencies April 7, 2009)