The Beijing Olympics is expected to be out of this world, and hotel prices are no exception.

Welcome to the painful reality of creeping market economics as they collide with sport's biggest showcase.

With up to 550,000 overseas tourists and twice as many domestic visitors expected to flood the capital next August, hotels are set to hike their prices by 800-1,000 percent, according to leaked reports from Beijing-based tour agencies.

Hotel spokespeople are reluctant to disclose details and potentially alarm clients, who will be asked to fork out 4,000 yuan ($518) for a night in a four-star hotel that currently goes for 500 yuan.

Of course there are exceptions to the rule, especially if you belong to an exclusive Olympic family.

For those fortunate few, the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG) has come to the rescue by forming an umbrella group of hotels and imposing price caps on them.

BOCOG has signed an agreement with 122 star-rated hotels in Beijing to provide accommodation for the organizations sponsoring the Olympics as well as for the Olympic families.

The 38 five-star facilities in the group will offer rates of 3,000 yuan per night, some 25 percent cheaper than their non-contracted counterparts, revealed a tour agent in Ningbo, in East China's Zhejiang Province.

The four-star (2,200 yuan) and three-star (1,400 yuan) hotels will also offer comparatively cheaper prices, the agent added.

Yu Xinying, a rival agent in Shanghai, said the rest of the pricing would conform to basic market economics and vary according to demand.

The sheltering city

The good news is that fears of a room shortage during the Games appear to be unfounded, if not all of those come to the Games insist on staying in fancy big-name hotels.

If Beijing's pledge to provide shelter for all falls short, private hoteliers and businessmen are on hand to step in and plug the gap.

The hotels contracted by BOCOG only account for 20 percent of those available in the capital, according to Xiang Ping, deputy director of BOCOG's Games Service Department.

By next year, there will be over 800 star-rated hotels in the city offering 130,000 rooms, he added.

Meanwhile, international chains like Shangri-La, InterContinental and Accor have already drafted aggressive expansion plans.

"From now until 2008, we believe the Games will bring significant business to Beijing and stronger business performances to us in China, especially in Beijing and Shanghai," Kent Zhu, vice-president for Shangri-La, told China Daily in an interview earlier this year.

UK-based InterContinental boasts 51 hotels in China but it plans to add a further 74 to its portfolio by 2008. Hong Kong's Shangri-La will add 17 to bump its total to 37 in China.

A further 4,000 non-rated hotels, youth hostels and family inns will help increase the city's accommodation capacity to 290,000 rooms.

Eco-friendly hotels

Hotels are also being marshaled into supporting the environmental legacy the Olympics is intended to have on Beijing.

In order to qualify as an Olympic-contracted hotel, they should have an eco-friendly, technology-driven managerial system to conserve water and energy and reduce waste generation, according to China's National Tourism Administration.

"BOCOG will hire experts to inspect the contracted hotels early next year. Any hotels that fail to meet this 'green' criteria must do so or face being dropped from the list," Xiang was quoted as saying by Xinhua News Agency.

Even guests will not be immune from the drive to go green.

Hotel staff will be on hand to promote an environmentally friendly lifestyle, pointing out when guests have ordered enough dishes to avoid waste, among other measures, said Xiang.