China Hotels Not Seeing Olympic Gold Rates

A hotel bell boy helps a guest carry the luggages into the Fuhao hotel in Beijing, China, Tuesday, July 22, 2008. AP

Hotels in Beijing are slashing room rates for next month's Olympics after tighter security - among other measures - dashed an expected windfall of visitors, hotels and travel industry executives said Tuesday.

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

The usual pre-Olympic festive atmosphere host cities experience has not hit Beijing yet, with some hotels feeling empty and listless. In June, the number of visitors to Beijing, including overseas and domestic, declined by 19.9 percent from a year earlier, according to the Beijing Tourism Authority.

Now average room prices in three-star hotels are down to $60 per night from $100 in previous months, the China Daily newspaper said Tuesday. Four-star hotels have dropped to about $117 a night, from $220, it said.

Beijing was expecting 500,000 foreign guests for the Aug. 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 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 has 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 yards from one Beijing Olympic venue.

Luo Qiong, a public relations manager at the Xiao Xiang Hotel, a three-star hotel near the Temple of Heaven in southern Beijing, said they cut prices by 20 percent a few days ago.

She said the drop in the number of guests was caused by the visa restrictions and the fact many exhibitions moved to other cities in China.

"As a result of all that, our occupancy isn't as good as we expected. And I don't think things will get any better even with the rate cut," she said.

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 have had to slash 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 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 percent.

A quarter of the hotel's foreign bookings were canceled at the end of May due to a massive May 12 earthquake in southwest 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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