CHINA'S hotel industry is experiencing unprecedented growth, driven by the strength of the economy, an increase of disposable incomes and a global focus on large events, a leading hotel-investment and advisory-services provider reports.

In the latest report by Jones Lang LaSalle Hotels analyzing the country's hotel industry, seven out of the 11 markets the company tracked were able to secure substantial revenue per available room, or RevPAR, as well as fiscal improvements in 2007 which all indicate solid fundamentals and good future prospects.

"Vast infrastructure improvements are reducing travel time and increasing mobility within the country," said Andreas Flaig, Jones Lang LaSalle Hotels' managing director in China. "Upcoming major events such as the Olympic Games are giving China a makeover which will have a lasting impact on the economy and urban landscape."

According to forecasts from the World Tourism Organization, China will be the world's largest inbound tourism market, the fourth largest for outbound tourism and the largest for domestic tourism in the world by 2015. This will probably translate into more than 100 million overseas tourists and more than 2.8 billion domestic tourists in China by 2015.

Above them all, Beijing and Shanghai, the country's two largest cities, are attracting extra attention.

In the capital city of Beijing, where the opening of the Oymplic Games is just three days away, preparations for the games have no doubt significantly improved the city's infrastructure, service capabilities and quality of life for residents.

Last year, Beijing received 4.4 million overseas tourists and 140 million domestic tourists, a growth of 11.6 percent and 6.1 percent year on year.

For the sixth consecutive year since 2001, the city's five-star hotels saw average daily rates, or ADR, increase by 3.5 percent, while occupancy levels decreased slightly from 73.3 percent in 2006 to 70.6 percent.

Meanwhile in the four-star sector, even stronger growth was recorded with ADR and RevPAR up 10 percent and 8 percent, respectively.

However, the new supply of more than 12,000 internationally managed hotel rooms in Beijing in 2008, with the coming of the Games, has aroused growing concerns from industry experts, who believe the enormous increase in the number of new rooms in such a short period might drag occupancy rates down.

"This could pose a risk to the demand-and-supply balance in 2009 and possibly 2010. But the picture remains positive for the long-term prospects of the tourism and hotel industry in the capital city," said Flaig.

If the outlook for Beijing remains unclear at the moment, Shanghai, the financial center of China, seems to be enjoying a rosy picture in the long term.

Statistics reveal that the numbers of overseas tourists arriving in the city had a compound annual growth rate of 13.8 percent between 2002 and 2007. In 2007, domestic visitor arrivals rose 5.4 percent from a year earlier to 102.1 million, and domestic tourism receipts jumped 13.5 percent to 161.1 billion yuan (US$23.5 billion).

The MICE business (Meeting, Incentive, Conference and Exhibition), together with further diversification of the city's leisure offerings, will further boost Shanghai's tourism and hotel demand in the future, the report said.

With the expansion of the Shanghai New International Expo Center and the coming of the World Expo 2010, the city will further secure its status in the MICE market both regionally and globally.

Moreover, projects such as the Green Tourism development on the Chongming Island and the pedestrian zone near the Bund will increase the variety of tourist attractions in the city.