Five-Star hotels in Shanghai continued to register declining room rates and occupancies during the first five months of this year, extending its southward trend amid the global economic downturn and ample supply.

The average daily room rate of the city's luxury hotels dropped 24 percent year on year to 1,225 yuan (US$180) in the first five months while the occupancy rate dropped 14 percentage points to 45 percent, said hotel investment and advisory firm Jones Lang LaSalle Hotels in its Hotel Intelligence Report 2009, released yesterday .

"The weakened global economy and the consequently tightened travel budgets have dramatically affected overseas tourist arrivals to Shanghai,'' said Andreas Flaig, managing director with Jones Lang LaSalle Hotels China. "As a result, the city's five-star hotels have started to significantly lower their room rates in a hope to bolster the dwindling occupancy rates.''

Overseas tourist arrivals in Shanghai fell 6.2 percent year on year to 2.04 million between January and May, according to latest statistics.

The global economic crisis began to have a major effect on the local market in the second half of last year, industry analysts said.

Last year, the average daily room rate at Shanghai's five-star hotels fell 4 percent to 1,552 yuan while occupancy rates dropped 10 percentage points to 56 percent, according to Jones Lang LaSalle Hotels research based on a sample of more than 9,700 guest rooms.

Occupancies and room rates at Shanghai's five-star hotels are expected to continue to feel pressure in the near term as a number of new hotels, many of them in Pudong, are expected to open in the next 12 to 18 months, noted Lily Ng, senior vice president with Jones Lang LaSalle Hotels China.