Hudson-Odoi, 18, is considered one of the most talented youngsters currently on the books at Stamford Bridge.
An Under-17 World Cup winner with England in 2017, he has found first-team football hard to come by with the Blues, making just three Premier League appearances to date while playing a bigger part in his club's Europa League campaign.
Goal understands that Bayern have now made a £30 million ($37.5m) offer for the teenager's services, with Chelsea also admitting interest from the Bundesliga giants.
And Kovac admitted that Hudson-Odoi was in the club's sights.
"[Hudson-Odoi] is from the same year as [Borussia Dortmund's Jadon] Sancho, which was very succesful," the Bayern coach explained to reporters on Saturday.
"It is completely normal that we are aware of and are following the player. For if and when something will happen you will have to ask Brazzo (Bayern's sporting director Hasan Salihamidzic)."
Sancho left Manchester City for Dortmund in 2017 aged just 17, and now commands a regular place in the BVB side who lead the Bundesliga after a storming start to the season.
Hudson-Odoi's World Cup winning England team-mate alleged lack of playing time at the Etihad Stadium was crucial in his decision to leave his home nation, a situation the Chelsea forward is also suffering.
But Blues coach Gianfranco Zola hopes he will dismiss Bayern interest and stay put.
“We have had a contract with him for a while and we will see what the player wants," the Italian had explained on Friday.
“He has not played what he wanted. I have told him it is not a waste of time, because you are pushed to do more and I hope he uses this time in a wise way. He will be a very good thing in football.
“I understand he has requests but I believe that he has a bright future.
“For 18 years old, he has a lot of potential. You have to understand the journey is not finished, he has to have a good attitude. It is not important he plays straight away, it is about developing. He has to keep an open mind to improve.
“I believe we can help him, develop him and I believe he has a future in this club.”