Wed, Jul 23, 2008 - Page 5 News List

Games fail to drive hotel sector

SLASHEDThe Olympic Games should have been a boon for the hospitality industry, but security measures, the Sichuan earthquake and snowstorms have put paid to that


Hotels in Beijing are cutting their rates by as much as 30 percent because expected high demand for the Olympic Games has not materialized, tourism officials said yesterday.

Fan Runjun, an employee of the press department of popular travel Web site, said many two to four-star hotels have reduced prices by between 10 percent and 20 percent compared with May and last month. Some have slashed rates by as much as 30 percent, said Fan, whose site lists about 500 hotels in its English-language section.

Average room prices in three-star hotels are down to 400 yuan (US$60) per night from 700 yuan in previous months, according to the state-run China Daily newspaper. Four-star hotels have dropped to about 800 yuan a night from 1,500 yuan, it said.

Beijing is expecting 500,000 foreign guests for the Aug. 8-Aug. 24 Olympics, but has been scaling back that estimate. Some people have been scared off by high prices, while others have had trouble getting visas.

China has ratcheted up security for the Games, tightening visa rules even for foreign travelers who hold Olympics tickets.

Multiple-entry visas have also been restricted, causing a drop in business travel.

The government has said the Games are a target of terrorism, and reported breaking up plots to attack the Games by Islamic radicals in Xinjiang. In a show of force, China’s military has stationed a ground-to-air missile battery just 270m from one Beijing Olympic venue.

Eric Wong, co-head of Asian Real Estate Research with investment bank UBS in Hong Kong, said the drop in rates resulted from a combination of overambitious pricing and the new security measures, which took many hotels by surprise. Hotels also slashed their prices right before the start of previous Olympics Games elsewhere, he said.

“We all hear how stringent searches and visa requirements and rejections based on the slightest whim of political activism is diminishing the desire to visit China,” Wong said. “Beyond the Olympics, things should turn normal.”

A man surnamed Wu from the China Hotel Management Association, who was unwilling to give his full name or position as is common in China, said most three-star hotels or below were cutting prices because occupancy rates were not as high as expected.

“Now that they found there are not enough guests booking their rooms, they have to cut their prices,” he said.

Most Olympic hotels that have been approved by the Beijing Olympic Organizing Committee are four or five-star, Wu said, and their rooms have already been booked. Those hotels cater to Olympic officials, sponsors and national Olympic delegations. Their prices were set last year by negotiation rather than by market demand, he said.

Tian Ye, the manager of the sales department at the Fuhao Hotel, a three-star hotel in the central shopping district of Wangfujing, minutes from Tiananmen Square, said it cut its rates last month by about 20 percent.

A quarter of the hotel’s foreign bookings were canceled at the end of May because of the massive May 12 earthquake in Sichuan Province and the snowstorms that struck the south in February, Tian said.

“It is getting harder as the Olympics approach to sell rooms. Now we have cut our prices to attract domestic guests,” he said.

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