Cut price Beijing hotels

Trip Start Jan 30, 2007
Trip End Dec 31, 2011

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Flag of China  ,
Monday, July 28, 2008

It had to happen. Beijing hotels were asking skyhigh prices for the duration of the Olympics, and now that those hordes of foreigners ain't arriving, it is time for the market to balance itself out and prices to come down.

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

Fan Runjun, an employee of the press department of popular travel website, said many two- to four-star hotels have reduced prices by 10 per cent to 20 per cent compared to May and June. Some have slashed rates by as much as 30 per cent, 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 $US60 ($A61.44) per night from 700 yuan ($A102) in previous months, according to the state-run China Daily newspaper. Four-star hotels have dropped to about 800 yuan($A120) a night, from 1,500 yuan ($A225), it said.

Beijing was expecting 500,000 foreign guests for the August 8-24 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 travellers 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 the western province of Xinjiang. In a show of force, China's military has stationed a ground-to-air missile battery just 300 metres 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 over-ambitious 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 Organising 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 sales department of 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 per cent.

A quarter of the hotel's foreign bookings were cancelled at the end of May due to a massive May 12 earthquake in south-west China and the snow storms that struck the south in February, Tian said.

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