Hoteliers are less than excited about these figures, however, because while there is no doubt that more people are coming to Hong Kong, they are increasingly staying for fewer days.

This is most clearly illustrated by the hotel rooms supply situation. Between 1991 and 2000, the number of visitors to Hong Kong has doubled, from 6.79 million to just over 13 million last year. Over this same period, the number of hotel rooms has barely budged, from 31,163 in 1991 to 36,438 last year. Meanwhile, hotel occupancy rates continued to average about 80 per cent.

What is more worrisome than not being able to increase the average occupancy rate of 80 per cent over the past decade - despite a doubling of arrivals - is that visitors are increasingly sensitive about how much they are willing to pay for a hotel room.

It is therefore understandable that despite such positive developments with visitor arrivals, Hong Kong hoteliers have little to cheer about.

The plunge in visitors coming to Hong Kong during the Asian recession forced hoteliers to ax their room rates to woo visitors. When the market showed signs of picking up at the end of last year, hoteliers raised their rates a peg or two. Visitors balked and forced the hotels to again lower their rates.

A slowing European economy, recession in Japan and a weak U.S. market all threaten to choke off growth in the hospitality sector. Top-tier hotels are likely to bear the brunt of the latest downturn as businesses hunker down by travelling less frequently, while tourists, although are travelling more frequently, are opting for cheaper accommodation.

With lower prices and increasingly finicky visitors, hoteliers have been handed the challenge of finding ways to win business. Hotels have responded by dropping prices to attract customers and although reducing rates may sometimes be inevitable, Mr Waldburger contends that there may be more creative ways to manage the process.

Measures such as providing added-value services as incentives for travellers to stay at certain hotels may prove to be more cost-effective.

Hotels in Hong Kong are already competing on this basis but have not been met with much success. According to Mr Waldburger, this is because hotel promotions are too frequent. He said that as simple as the rationale of gearing value-added packages towards the practical needs of the customer might be, this is often overlooked by those in the trade.

However, if a hotel can help a businessman reduce costs of doing business while in Hong Kong, such as offering discounts on long distance calls, then such added-value services would make more sense than a free glass of wine, he added.

Likewise, the Intercontinental Hotel tries to differentiate itself by offering round-the-clock service to its clients.

Apart from fighting for market share, hoteliers are increasingly sensitive about costs, which can be a delicate matter.

Although occupancy levels have shown recovery, with the average hotel occupancy last year being 83 per cent, compared to 80 per cent in 1999 and 76 per cent in 1998 - but still below the record 88 per cent in 1996 - this has not been quite matched by hotel rates. This can be attributed to the growing importance of Mainland China, which remains the leading source of visitors for four consecutive years with 3.78 million arrivals last year, an impressive 18.1 per cent increase over 1999.

Hotels have generally been unable to benefit from this influx because Chinese visitors represent a highly price-sensitive segment of international travellers. To be sure, visitors from China continue to be the biggest contributor to visitor spending, but taken in context of money spent on lodgings, this accounts for a mere 15.6 per cent of total spending as a group. Japanese visitors, on the other hand, spent 25.9 per cent on hotels in 2000 while American arrivals allocated 45.8 per cent in this regard.

At a time when hoteliers are having to fight harder for a slice of the pie, many find it difficult to resist the institutional imperative to lower rates in a bid to attract more guests. But this approach has been criticised as being short-sighted and damaging to the health of the industry.

One way out of this would be for operators and owners to once and for all agree within the various categories of hotels not to lower rates below a certain level, suggests Mr Waldburger.