The 50th hotel of Hong Kong-based Shangri-La Hotels and Resorts, Shangri-La Hotel Guangzhou, began its operation earlier this week.

With 704 rooms and one of the city's largest meeting and banquet space, and other deluxe facilities, the hotel will offer upscale services and this Asia Pacific's leading luxury hotel group is expected to reap benefit from exhibitions and conventions like the Canton Fair, which is held twice annually in April and October, the flourishing tourism industry and the 2010 Asian Games to be held in Guangzhou.

Besides Shangri-La Hotel Guangzhou, a landmark in Guangzhou's hotel industry, more luxury hotels are likely to come up before the Asian Games.

Among the deluxe hotel investors and premier property developers seem to be more active to ride on that tide.

One of them, KWG Property, a leading developer of premium properties in Guangzhou, signed an agreement with US-based Starwood Hotels & Resorts Worldwide Inc, a leading hotel and leisure company in the world, earlier this month to launch one super-five-star rated hotel, one five-star hotel and one four-star hotel respectively under the prestigious brands of "W", "Sheraton" and "Four Points by Sheraton" in the city's Tianhe and Huadu districts.

KWG Property will make an investment of about 1.5 billion yuan for the development of the hotel projects, while Starwood will be responsible for their operation. All the three hotels will be operational by 2009 before the Asian Games.

Senior executives of both KWG Property and Starwood are upbeat about the business prospect.

"Guangzhou is one of the nation's most important economic powerhouses, it needs more luxury hotels," said Stephen He, vice-president of Starwood Hotels & Resorts, Asia Pacific.

"The globally reputed Canton Fair and other international exhibitions as well as other frequent economic, social and cultural exchanges, home and abroad, will intensify the market demands for deluxe facilities," he said.

He said the 2010 Asian Games will offer a golden business opportunity for deluxe hotels.

Chen Jieping, general manager of KWG Property's marketing and planning center, said his company's strategy to invest in luxury hotels was also based on the appreciation of hotel properties.

However, experts warn that the burgeoning luxury hotels might result in vicious competition, and there might be rampant undercutting practice.

"New deluxe hotels have better in-room facilities and more fashionable decorations, while old ones have reliable guest resources and do not need to worry too much about the investment cost," said Zhang Buhong, associate professor of the school of tourism and management, South China University of Technology. "The competition will naturally become fiercer than now."

"I really worry that very few hotel investors, if not none, have done good researches about the business potential of the 2010 Asian Games and afterwards," he added.

Reliable sources say that the number of five-star hotels will surpass 20 in Guangzhou before 2010 compared to eight at present and the number of star-rated hotels is expected to exceed 400 before 2010, about half of which will be four-star hotels and above.

Editor: Donald