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Hotels in tit-for-tat price cuts as occupancy rates plummet

WORLD-CLASS hotels are launching head-to-head campaigns to lure travelers to their almost half-empty rooms as the global financial turmoil hammers the hospitality industry.

Accor SA is the latest to join the competition in Shanghai by launching its largest-ever Asia Pacific sales campaign yesterday. Europe's biggest hotel group is offering discounts of as much as 75 percent at more than 300 hotels across the region.

Accor's promotion came 10 days after similar plans were announced by InterContinental Hotels Group. The world's largest hotel company in terms of room numbers announced price cuts for three of its brands in China.

The city's hotels have been shedding customers over the past year, as financial doom tightened the budgets of both business and leisure travelers.

By the end of 2008, revenue per available room at the city's five-star hotels dropped 16.6 percent on the previous year to 911 yuan (US$133) while average daily rate fell 3.9 percent to 1,541 yuan. Occupancy plunged to 59.1 percent, a decrease of 9.1 percentage points from 2007, according to real estate services firm Jones Lang LaSalle.

The city's tourism bureau said occupancy at the city's star-rated hotels dropped to an average 56.27 percent during the first 11 months of 2008, a decrease of 5.51 percent from its figures for the same period a year earlier.

While some hotels are struggling to lure customers to their already existing facilities, others are suffering a different plight.

Two buildings in the city's downtown Xintiandi area designated for Conrad and Jumeirah hotels both postponed their opening dates and halted construction.

Conrad, a luxury brand owned by Hilton Hotels Corp, told Shanghai Daily its new hotel, originally slated for an August 2008 opening, is no longer on the firm's "open-list" for this year.

Jumeirah, a hospitality group from the United Arab Emirates, said it hopes to open its 338-room facility by the end of the year - far behind its original date of August 2008.


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