Hotels in Beijing are cutting their rates by as much as 30% because high demand forecast for theOlympic Games has not materialised, the Associated Press has reported. Chinese authorities was expecting 500,000 foreign guests to arrive in the capitalduring the Games, however a combination of factors has led that figure to berevised. High flight and hotel prices, Tibetan unrest and tightened visa regulations have all contributed to the shortfall. According to Ctrip.com, 2 to4-star hotels have started reducing rates by between 10 and 30% compared to May& June.
Average room prices in 3-star hotels are down toCNY400 (US$59) per night from CNY700 (US$103) in previous months, according tothe China Daily. Four-star hotels have dropped to about CNY800 (US$117) fromCNY1,500 (US$220).
Eric Wong of UBS in Hong Kong,said the drop in rates was due to a combination of overambitious pricing andthe new security measures. He also said however, that hotels a similar ratetrend had been seen in previous Olympics Games. “We all hear how stringentsearches and visa requirements and rejections based on the slightest whim ofpolitical activism is diminishing the desire to visit China,” Wong said.”Beyond the Olympics, things should turn normal.”
It certainly does appear that hoteliers, due to acombination of factors, have misjudged the market. In a time when overseastravel is increasingly becoming an expensive luxury rather than a must-have,hotels must try to consolidate quickly so to avoid their greatestrevenue-generating opportunity becoming a revenue management disaster.
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