With 3 adults alone, most hotels in HK will require 2 rooms. And adding 2 kids, you really need to book 2. Rooms in HK are not big. I don't even remember Sheraton HKG room has a sofa in regular deluxe room (just an armchair no sofa). W HKG corner suite does have a sofa, but again, even with that suite, it's hard to get 5 people in it, will be too cramped.

I'd say pick a cheaper hotel and book 2 rooms.