Beijing hotels slash rates after Olympic demand falters

Some are cutting prices by up to 50 per cent, according to tourism officials.

Average room prices in three-star hotels are down to £30 a night from £50 in previous months.

Four-star hotels have dropped to about £58 a night from £110.

Security fears: Chinese paramilitary police rehearse an oath taking ceremony near the Bird's Nest National Stadium

Beijing was expecting 500,000 foreign guests for the Olympics, which start on August 8.

But some visitors have been put off by initial high prices while others have had trouble getting visas thanks to tighter security requirements.

Multiple-entry visas have also been restricted, causing a drop in business travel.

The government has said the games are a target of terrorism, and reported breaking up plots to attack the games by Islamic radicals in the western province of Xinjiang.

In a show of force, China's military has stationed a ground-to-air missile battery just 300 yards from one Beijing Olympic venue.

Eric Wong, co-head of Asian Real Estate Research with investment bank UBS in Hong Kong, said the drop in rates resulted from a combination of overambitious pricing and the new security measures, which took many hotels by surprise.

Over-hyped: A Chinese national flag flutters in front of the Olympic Rings installed on the outside of the National Indoor Stadium

Venues also slashed their prices right before the start of previous Olympics Games elsewhere, he said.

'We all hear how stringent searches and visa requirements and rejections based on the slightest whim of political activism is diminishing the desire to visit China," Wong said. "Beyond the Olympics, things should turn normal.'

The China Hotel Management Association said most three-star hotels or below were cutting prices because occupancy rates were not as high as expected.

"Now that they found there are not enough guests booking their rooms, they have to cut their prices," he said.

Most Olympic hotels that have been approved by the Beijing Olympic Organizing Committee are four- or five- star and their rooms have already been booked. 

Preparations: A worker stands atop the National Stadium

Those hotels cater to Olympic officials, sponsors and national Olympic delegations.

Their prices were set last year, by negotiation, rather than by market demand, he said.

Tian Ye, the manager of sales department of Fuhao Hotel, a three-star hotel in the central shopping district of Wangfujing, minutes from Tiananmen Square, said it cut its rates last month by about 20 per cent.

A quarter of the hotel's foreign bookings were canceled at the end of May due to a massive May 12 earthquake in southwest China and the snow storms that struck the south in February, Tian said.

"It is getting harder as the Olympics approaches to sell rooms. Now we have cut our prices to attract domestic guests," he said.