Foreign hotel groups are keen on building or operating five-star hotels in the mainland despite fierce competition and oversupply in cities such as Beijing, according to Christopher Hartley, chief executive of Global Hotel Alliance.

The alliance, consisting of seven hotel partners from 32 countries, currently operates six mainland hotels and plans to increase the number to 15 next year and to 25 within five years.

"Beijing will benefit from the Olympics not only in 2008, but also over the next 10 years. Look at other host cities like Barcelona. The event will open up China to tourists as a travel destination," Hartley said, adding that these tourists will also visit other cities such as Xian.

While Beijing is currently oversupplied, he said, the country is capable of absorbing different brands from the United States, Europe and Southeast Asia as inbound tourism booms and flights to the mainland increase.

Alliance members include the 110-year-old German-founded Kempinski Hotels, Omni Hotels of the United States, Japan''s Pan Pacific, Dusit Hotels and Resorts of Thailand, Taiwan''s Landis Hotels and Resorts, the Marco Polo Hotels unit of Wharf (0004) and India''s Leela Palaces.

Dusit Group, which owns and operates more than 20 hotels, mainly in Thailand, is in talks with newly built, non-brand hotels in the mainland, seeking an opportunity to buy and convert them into Thai-style hotels, said chief executive Chanin Donavanik.

He said Dusit will invest at least US$50 million (HK$390 million) in buying or building two compact hotels with 200 rooms each in first-tier cities such as Beijing and Shanghai within two years.

"They will be five-star hotels renovated in a Thai design and situated in prime locations," he said. Room rates are expected to be US$150-US$200.

Donavanik said competition is fierce in the mainland as many small, local hotels offer extremely low prices. Jeffrey Flowers, president of Marco Polo Hotels, which manages hotels in cities such as Shenzhen, Xiamen and Beijing, said increased domestic spending and an influx of business travelers could support its business.

"People with higher income levels would stay in five-star hotels," he said. The group is constructing three more hotels in Beijing, Wuhan and Chengdu.

Hartley said it is important for smaller hotels to differentiate themselves from well-known brands and large hotels such as Marriott and Hilton, by offering an authentic local experience and representing their own culture.

"When you wake up in Marriott Hotels anywhere in the world, everything is the same," Hartley said.

Donavanik said his group will operate hotels the way it does in Thailand, including providing facilities such as spas and Thai traditional massage.

Stanley Yen, president of Taiwan''s Landis Group, said it opened Hotel One with 200 rooms in Suzhou in a trial operation in November, and will open a 52-story, 600-room hotel in Shanghai next month.

Landis had been approached by mainland hotels keen on cooperative projects, Yen said. "We speak the language [Putonghua] and we have more mature operating skills."-China Daily