HAIKOU, Oct. 18 (Xinhua) -- A hotel boom is transforming the island of Hainan as the south China province attempts to build itself into a global tourism destination, but industry insiders are wondering whether the market can handle the sudden growth.
A drive along the 22-kilometer-long coast of Haitang Bay in Hainan's Sanya City leads to a cluster of newly constructed luxury hotels such as the Sheraton, Conrad and Kempinski. Within the next six years, the stretch will be home to 32 hotels.
Data from the local tourism authority showed that Hainan currently has 65 five-star hotels in business, with another 40 under construction, surpassing the 50 to 60 five-star hotels in China's first-tier cities such as Beijing and Shanghai.
"With so many identical high-end hotels concentrated in one place, it reflects oversupply and a waste of resources," said Wang Jiansheng, head of the Hainan Tourism Development Research Association.
FLOCKING IN
Eyeing potential profits in the tourism sector, domestic and foreign investors flocked to the island after the country announced a plan in 2010 to build Hainan into a top international tourist destination by 2020.
Hainan, home to nearly 9 million people, enjoys year-round tropical weather, clean beaches, forests and diverse ethnic cultures.
Local authorities have been eager to lure outside investment. At first, land was sold to real estate developers. Realizing that revenue from the hotel sector is more stable than land sales, the focus was shifted to fostering the hotel business.
A high-end hotel manager surnamed Wang said that Hainan is more attractive to hoteliers because it only takes three years for a hotel to profit on the island, as opposed to about 12 years in China's first-tier cities and as long as 20 years in second- and third-tier cities.
For Sanya's Haitang Bay project, more than 40 billion yuan (6.5 billion U.S. dollars) in fixed-asset investment has been made since the project's launch in 2007. About 14 five-star hotels have opened.
Similar plans were made in other parts of the island. In Sanya's neighboring county of Lingshui, where five luxury hotels are currently open to tourists, 29 more five-star hotels are under construction. Wenchang City, also a coastal resort, plans to build 17 five-star hotels to cope with a tourist boom. The city already has more than ten five-star hotels.
HEATED MARKET
The burst of luxury hotels has led to intensified competition in the local market.
A senior manager surnamed Zhang from a five-star hotel in Haitang Bay said that the average occupancy rate for his hotel has been stuck at around 20 percent, but he expected a recently launched tax-free store to improve the situation.
Haitang Bay has had an apparent impact on its neighbors. Hotel managers from the nearby Yalong Bay, which boasts nearly 20 luxury hotels, complained that bookings have dropped sharply due to oversupply.
According to local tourism authorities, the average occupancy rate for high-end hotels in Sanya dropped to 60 percent in 2013, down from a stable level of 70 percent in previous years.
A survey headed by Cui Lisha from the People's Political Consultative Conference Hainan Committee, a political advisory body, said that Hainan's five-star hotels can accommodate 28 million tourists a year at present, way exceeding an estimated demand of 8 million tourists by 2020.
As the number of luxury hotels expands rapidly, the survey projected that average full-year occupancy rates for five-star hotels in Sanya and Haikou will decline to around 30 percent in 2015.
A luxury hotel is only profitable when its occupancy rate reaches above 40 percent, insiders said.
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