The Sun Dong An Plaza, located at the center of Beijing's "Golden Street"-Wangfujing, is undergoing an overall renovation with a budget of 200 million yuan ($26 million). In May, a budget hotel Motel 168, across the street from the plaza, opened its doors.

In Beijing's central business district (CBD), three of the four golden triangle properties under the Guomao Bridge are now fully occupied. The Beijing Yintai Center, standing 250 meters high and located in the southwestern corner of the area, has been under around-the-clock construction for months. Thus far, the work has progressed smoothly and the facility is on track to open later in 2007.

Park Hyatt, one of the world's premium hotel brands, has only 19 hotels around the world. The one in the Beijing Yintai Center is the first Park Hyatt in China and its room rate is even higher than the Grand Hyatt Shanghai. Both Grand Hyatt and Park Hyatt belong to Hyatt Hotels Corp., the world's largest private hotel management company. Park Hyatt is their premium brand.

The Beijing Tourism Administration estimates that the average daily tourist volume in Beijing will reach 500,000 during the 17 days of the Olympics, and demand for accommodation will peak at this time.

Currently there are over 130 budget hotels in Beijing, providing a total of 13,000 rooms with an average room rate of 240 yuan ($32). In 2007, budget hotel brands such as Home Inn, Jinjiang Inn, Super 8, Motel 168 and 7 Days Inn will all open around 20 hotels each in Beijing. By the end of 2007, the total number of budget hotels in Beijing is expected to exceed 200.

High-end hotels are also joining the Olympic frenzy. Prior to the 2008 Olympic Games, nine new five-star hotels in Beijing will open, including the Hilton, Ritz-Carlton-Marriott, Sofitel, InterContinental, Hyatt, Park Hyatt, Grand Hyatt, Shangri-La and Westin. These hotels are all world-renowned brands and most are located in the CBD area and on the financial street.

Cao Nianguo, from the real estate advisor DTZ, estimated that during the Olympic preparation period, the number of hotels in Beijing will increase from 700 at the end of 2006, to over 800. It is estimated that the number of three-star to five-star hotel rooms will increase from 85,000 to 100,000 by mid 2008.

Best booked & rates increased

Although the opening ceremony of the 2008 Olympics is still more than a year away, bookings are already heavy. Customers who have a reservation are, in many cases, required to pay the full amount three months or even six months prior to the commencement of the Olympics.

According to news released by the Beijing Olympic organizer--BOCOG--on April 19, all of the best hotels within the fourth ring road are nearly fully booked. Over 30,000 rooms in the 122 three-star, four-star and five-star hotels that have signed contracts with BOCOG have been reserved by BOCOG officials, international VIPs, sponsors and media organizations, accounting for over 70 percent of their total capacity. These hotel locations have a distinct geographical advantage as they are all close to competition venues.

The large number of business travelers and tourists attracted to Beijing by its booming economy continues to boost the demand for luxury hotels. According to statistics from real estate services firm Jones Lang LaSalle, with the exception of the 2003 SARS epidemic, hotel room rates in Beijing have been steadily growing at over 10 percent per year for five consecutive years.

However, the problem of a supply shortage in the Beijing hotel market still exists. By 2008, there will be 300 hotels short of supply in Beijing, as the main focus at present is upgrading existing hotels rather than constructing new ones.

The hotel industry has a great opportunity to cash in on the Olympics. Of the hotels that the BOCOG has signed contracts with in Beijing, 38 five-star hotels charge a room rate of $353; 40 four-star hotels charge $272; and 34 three-star hotels charge $176 per night. These rates are three to four times above the current corresponding rates in Beijing.