Mutual exchange: Chief Executive Tung Chee Hwa meets with representatives of the tourism sector and exchanges views on ways to boost the industry.

Chief Executive Tung Chee Hwa says the Government will discuss with concerned parties how to handle the increasing demand for hospitality services caused by a surge of tourists.

Responding to hotel operators' concern on the proposal to turn Home Ownership Scheme flats into guesthouses at a meeting with the tourism sector today, he stressed that the Government has no intention to interfere with the hotel industry.

He said this is a "happy problem". Because of the Central Government's support and policy, and the Guangdong Government's tremendous support, there has been a surge of arrivals.

The Government needs to explore ways to cater for the demand both long- and short-term. The Housing Authority is looking at the proposal on turning Home Ownership Scheme flats into guesthouses.

Close ties pledged to facilitate visitors

"As a Government we will be talking with all the concerned parties to see how we will move forward. But one thing we will do is this: we need to have some contingency plan, but whatever we do we will do it together with the trade," Mr Tung said.

He also revealed that the proposal may be conducted as a pilot project to see if HOS flats can help relieve the demand for hotel rooms.

During the hour-long meeting with representatives of the tourism and retail sectors, Mr Tung said the Government will work closely with the trade to facilitate the arrival of visitors at border checkpoints.

Business rebounds after SARS outbreak

Earlier today, Mr Tung took a stroll through a shopping area in Causeway Bay to better understand how the retail and the tourism sectors are faring.

He was pleased that business has rebounded with the return of tourists to Hong Kong after the SARS outbreak.

He also noted that the tourism sector is playing a pivotal role in the economic restructuring and can help create many jobs.