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Unwise Investment Shares Blame for Hotel Problems

OVER-INVESTMENT in hotels and economic slowdowns at home and abroad were to blame for the current problems facing the country's hotels, industry experts concluded at the China Hotel Investment Summit which ended yesterday in Shanghai.

"The global financial crisis did reduce trips and tighten budgets by business and leisure travelers from both home and abroad but that perhaps is just part of the reason," Zhang Rungang, chairman of BTG-Jianguo Hotel Management Co, which has more than 60 hotels across the country, told the summit. "Fundamentally, an imbalance between supply and demand due to irrational hotel investment over the past few years should be the ultimate cause for the plight hotel operators are encountering in some areas."

It might take some five years for the hotel industry to recover, said Zhang, who is also president of the China Tourist Hotels Association.

Jeff Ning, general manager of Wanda Hotel Investment and Development Co, also shared the view that many investors had decided to build hotels without a clear understanding of the local market.

The number of star-rated hotels more than doubled to 14,326 across the country by the end of 2007, as compared to 6,029 at the end of 2000, industry statistics showed. However, while most industry experts attending the summit agreed that oversupply existed in some parts of the country, for example, Beijing, where there was a glut of five-star hotels, many have seen the positive side as well.

"Opportunities are emerging and we believe it can be a good time for us to look for future hotel locations because land prices also dropped," said Zhang Zhichao, manager of investment management and engineering for China Jin Mao Group Co.


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