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LCQ1: Unlicensed guesthouses

     Following is a question by the Hon Christopher Chung and a reply by the Secretary for Home Affairs, Mr Tsang Tak-sing, in the Legislative Council today (January 22):


     Earlier, a Number 3 alarm fire broke out in a commercial/residential building in North Point, causing injuries to over 20 people and, among them, several guesthouse guests were in critical condition.  It was reported that as there were a number of licensed and unlicensed guesthouses in that building and the residents and guesthouse guests scrambled for escape during the fire, the capacity of the fire escapes had been exceeded and a chaotic situation resulted.  It is learnt that in vetting and approving applications for guesthouse licences, the authorities will not consider the requirements of the Deeds of Mutual Covenant (DMCs) nor the views of the residents of the buildings concerned.  Hence, despite the stipulation in the DMC of the building in the aforesaid incident that operation of guesthouses above the third floor is prohibited and objection raised by the owners' corporation, the authorities still issued licences to a number of guesthouses in the building.  There are comments that the fire has exposed the loopholes in the existing guesthouse licensing system and the relevant legislation, and the perfunctory law enforcement against unlicensed guesthouses taken by the authorities.  In this connection, will the Government inform this Council:

(1) whether it will, in the light of the aforesaid incident, conduct a comprehensive review of the existing guesthouse licensing system and legislation, including the addition of a condition for vetting and approving applications for licences, i.e. the applicant must submit proof that the application is not in violation of the terms in the DMC and the land lease of the building concerned;

(2) whether it will examine the introduction in the guesthouse licensing system of a mechanism whereby the views of the residents in the buildings concerned on the licence applications will be gauged, and such views and the capacity of the communal facilities of the buildings concerned will be included as factors for consideration in granting licences; and

(3) whether it has any plan to review and improve the existing policies and measures for combating unlicensed guesthouses, including stepping up efforts in conducting inspections and taking law enforcement actions, and increasing the penalties for the relevant offences so as to enhance the deterrent effect?



     Thanks Hon Christopher Chung for the questions. We are saddened by the casualties caused by the Number 3 alarm fire at the Continental Mansion, North Point in the end of last month.  The incident, which has been classified as an arson by the Police, is still under investigation.  At this stage, I will not relate the incident to the licensing regime for guesthouses.

     My reply to Hon Chung's question is as follows:

(1) The primary purpose of the Hotel and Guesthouse Accommodation Ordinance (the Ordinance) (Cap. 349) is to, through a licensing regime, ensure that premises used as hotels or guesthouses meet the standards specified in the Buildings Ordinance (Cap. 123) (BO) and the Fire Services Ordinance (Cap. 95) (FSO) for the safety of the lodgers and the public.  The Office of the Licensing Authority (OLA) under the Home Affairs Department (HAD) is responsible for the implementation of the Ordinance, including issuing guesthouse licences and performing related enforcement duties.  It has been over 20 years since the Ordinance was passed by the then Legislative Council in May 1991.  The upsurge of incoming visitors in recent years has led to an increasing demand for guesthouses operated in private buildings.  When the capacity for accommodating tourists is increasing, we have to ensure that the life of the public will not be adversely affected.  To this end, drawing reference to OLA's enforcement experience, the HAD has recently kick-started a review on the Ordinance and the licensing procedures with a view to (i) enhancing the effectiveness of OLA's enforcement action against unlicensed guesthouses, and (ii) examining the desirability and feasibility of tightening the licensing regime so as to minimise the nuisance or impact posed to the other occupants of the buildings concerned.  HAD is actively mapping out specific proposals.  It is expected that a consultation exercise will be launched in mid-2014 to widely gauge public views. I make it clear that the review is not a response to the incident.

(2) In processing and approving applications for guesthouse licences, OLA shall act under the powers conferred by the Ordinance.  Under the current licensing regime, premises intended to be used as guesthouses have to be in compliance with the requirements relating to building structure, fire safety and sanitary as specified in BO and FSO, and approved by the Building Authority (Note 1) for "domestic purposes".  In accordance with the BO, "domestic purposes" include the use of premises as a hotel, guesthouse, boarding-house, etc.  OLA will also make reference to the approved plan and the design of the means of escape of the building concerned to ensure that the total number of expected occupants within the building shall not exceed the maximum number of persons specified in the approved plan.

     Under section 8(3) of the Ordinance, the Hotel and Guesthouse Accommodation Authority (the Authority) may refuse to issue a licence in respect of a guesthouse only on the grounds that the guesthouse fails to comply with the relevant standards set out in BO and FSO, or that its operation is not under the continuous and personal supervision of the applicant. The existing Ordinance does not empower the Authority to refuse an application because of other considerations, including terms of land leases, deeds of mutual covenant (DMC) and residents' views.

     As one of the occupiers, the licensee of a guesthouse has the responsibility to comply with the DMC of the building concerned.  A guesthouse licence is by no means a waiver of any DMC provisions.  OLA clearly reminds licensees, in the guidelines on licence application, licence application forms, application confirmation letters as well as notification letters concerning licence issuance, renewal and transfer, etc to ensure that the operation of their guesthouses in the premises is in compliance with the provisions of the DMC and other relevant leases, failing which they shall bear the legal consequences and liabilities.

     To let residents know as early as possible that a guesthouse licence application involving a premises of their building is submitted, OLA will put in place a new arrangement under which it will, upon receipt of an application for a guesthouse licence (including a renewal application), take the initiative to inform the owners' corporation (OC), residents' organisation or property management company of the building concerned and upload such information onto its website.  The OC and the owners will therefore have sufficient time to examine the relevant provisions in DMC and consider exercising their power conferred by the DMC to take appropriate action.

(3) OLA has spared no effort and adopted a multi-pronged approach to combat and raid unlicensed guesthouses, including strengthening law enforcement action, enhancing deterrent effect and stepping up publicity, etc.  In recent years, OLA has increased manpower resources and recruited frontline officers with law enforcement experience.  It has also adjusted its enforcement strategies and employed different enforcement tactics flexibly so as to increase significantly the number of inspections, and make every effort to collect evidence of suspected unlicensed guesthouse operation.

     As for law enforcement action, when suspected unlicensed guesthouse operation is identified or such a report is received, OLA will conduct an inspection within eight working days.  Having regard to the circumstances of individual cases, OLA will follow up and collect evidence by employing the most appropriate and effective means, such as conducting surprise inspections at different times, launching large-scale and targeted inter-departmental operations, or posing as clients (commonly known as "snaking").  Prosecution will be instituted by OLA immediately if there is sufficient evidence that the premises concerned are involved in unlicensed guesthouse operation.

     OLA has also strengthened its intelligence gathering work by deploying staff to collect the publicity materials of suspected unlicensed guesthouses.  Moreover, it has set up a dedicated Internet enforcement team to browse webpages, discussion forums and blogs to search information and intelligence about suspected unlicensed guesthouses on the one hand, and appeal to tourists to choose patronising licensed guesthouses on the other.

     Operating an unlicensed guesthouse is a criminal offence.  Any person who is convicted of operating an unlicensed guesthouse is liable to imprisonment and will lead to a criminal record.  The maximum penalty upon conviction is a fine of $200,000 and imprisonment for two years, and a fine of $20,000 for each day during which the offence continues.  For a greater deterrent effect, OLA will pass information on convicted records of successful prosecution cases and their relevant details to the Rating and Valuation Department, the Inland Revenue Department, mortgage banks or monetary institutions, property owners, and the OCs and management offices of the buildings concerned, so that they can take follow-up action under their purview or out of their rights and interests.   Should any property or insurance agent be convicted, OLA will also pass the conviction records to the Estate Agents Authority or the Office of the Commissioner of Insurance for follow-up action.

     OLA has also implemented a measure targeting at those guesthouse licensees who operate unlicensed guesthouses at other premises (commonly known "shadow guesthouses").  If a guesthouse licensee is convicted of operating an unlicensed guesthouse by the court, OLA will consider cancelling all the licences held by the licensee concerned or refusing to renew the licences pursuant to the Ordinance.  So far, OLA has cancelled or refused to renew the licences of 13 guesthouses for this reason.

     As regards publicity, OLA has already uploaded a list of licensed guesthouses onto its webpage ( and launched the Licensed Guesthouse Logo Scheme for tourists' easy identification of licensed guesthouses.  In collaboration with the Tourism Commission, Hong Kong Tourism Board, Travel Industry Council and Consumer Council, the OLA also appeals to tourists to choose patronising licensed guesthouses and conveys the message to the tourism authorities of the Mainland.  In addition, the OLA will launch a new round of publicity before the Lunar New Year holidays and, later this year, roll out a mobile application for tourists' search of information on licensed guesthouses anytime and anywhere.

     In the past five years, the figures of enforcement and prosecution against suspected unlicensed guesthouse operation have been tripled (details are at Annex).  Of the 390 persons convicted in total during the period, 13 were sentenced to immediate imprisonment. These demonstrate OLA's determination, the intensity and effectiveness of its efforts in combating unlicensed guesthouse operation.

     OLA will review and flexibly adjust its enforcement and publicity strategies and continue to combat and eradicate unlicensed guesthouses vigorously.

     Thank you, President.

Note 1: Under the Buildings Ordinance, the Building Authority is the Director of Buildings.

Ends/Wednesday, January 22, 2014
Issued at HKT 14:46


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