The upcoming Olympics in Beijing, coupled with the mainland's booming economy, are contributing to a surge in hotel plans on both the mainland and in Hong Kong.

Regal Hotels International, a hotel group based in Hong Kong, is one of the development firms banking on a growing need for hotels. Over the next five years, it plans to build 11 in Hong Kong and on the mainland combined.

Regal Hotels Executive Director Belinda Yeung, speaking about the rapid rate of hotel growth, admitted that the "the boom in supply undoubtedly flattened out occupancy growth (last year), but the surge in the number of rooms won't last forever". However, she remains optimistic that the lull will be temporary.

"Demand will then catch up," she said, adding that she expects the influx of hotel rooms to provide an impetus for the government to promote tourism more aggressively.

Speaking to the media yesterday, Yeung said that the company's expansion plans on the mainland will include both first-tier and second-tier cities.

"We are constantly looking for good opportunities," Yeung said.

The hotel group, which currently owns five hotels in Hong Kong and manages three in Shanghai, has purchased an additional 112,000 sq m of land in Chengdu, Southwest China's Sichuan Province.

That land cost Regal Hotels 213 million yuan and will be used for hotel, commercial and residential developments.

Other than land acquisitions, Yeung said the group is also looking to snap up more hotel management contracts and establish joint ventures with local hotel groups as potential ways to expand on the mainland.

Asked if he thought the group's aggressive mainland expansion - which started last year - has come too late, Regal Hotel's director of business development, Frankie Chan, said it hasn't.

"I think it is the right time," he said. "It was only in the last few years that the mainland's economy really started picking up its pace."

He added that the industry was a lot more volatile and immature a few years ago.

With mainlanders becoming increasingly affluent, Chan said, he believes that the increase in living standards will open up business opportunities for the hospitality sector.

"Before, hotels were a luxury for a lot of people. But now, they prefer to dine and entertain guests in hotels," Chan said, "So, instead of just relying on overseas tourists, local clientele is also becoming very important."

The hotel group is expected to announce its 2007 financial results at the end of this month.

The company's share price fell 3.16 percent yesterday to close at HK$0.46.

(HK Edition 03/12/2008 page2)