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By Hui Ching-hoo (China Daily)
Updated: 2007-09-21 09:09

The outlook is rosy for the hotel market in Beijing and Shanghai in the next two years, with the 2008 Beijing Olympics and 2010 Shanghai World Expo just around the corner, according to consultancy firm Jones Lang LaSalle Hotels.

Andreas Flaig, executive vice-president of Jones Lang LaSalle Hotels, expects the number of rooms at internationally branded hotels in Shanghai to grow 76 percent to 33,000 by 2010, while Beijing's total will more than double to 27,000 by 2009.

"The international brands are in a race against time to be ready for the 2008 Beijing Olympics and the 2010 World Expo," Flaig said. He expects foreign operators to considerably boost their presence on the mainland.

About 27,000 branded hotel rooms will be rolled out in Shanghai this year, 8,240 of which will be new, according to Jones Lang LaSalle Hotels research.

Many world-class hotels are in the pipeline for the two cities. A 190-room Four Seasons hotel will be opened in Shanghai's Pudong District next year, while a Mandarin Oriental hotel with 203 rooms is also scheduled to open in 2008 in Beijing's Chaoyang District.

Flaig said the vibrant economy and tourism industry of the two cities is creating strong demand for the hospitality sector that could be sustained well into the next decade.

"The mainland has the largest domestic tourism market in the world. With growing affluence and better internal travel networks, the domestic traveler will become a key source of demand for a variety of hotel categories - from budget to luxury hotels," he said.

Between 1997 and 2006, international tourist arrivals to Beijing increased at a CAAG (compound average annual growth) rate of 8.1 percent and 13.5 percent for Shanghai. The number of inbound tourists to both Beijing and Shanghai reached a new high last year.

Luxury hotels in Shanghai and Beijing are also seeing strong revenue growth.

The ADR (average daily rate) of five-star hotels in Shanghai surpassed the 1,700-yuan mark for the first time in 2006. The city's ADR tops other mainland cities, and is 33 percent higher than Beijing's.

Flaig predicted ADR growth in Shanghai of 5 percent for 2007, while the occupancy rates of the five-star hotels is expected to pick up moderately.

Last year, Beijing's five-star hotels achieved the highest RevPAR (revenue per available room) since 1994. RevPAR for the first six months of the year has outperformed the same period in 2006. A similar pattern was observed in the four-star segment.