Beijing is standing at a crossroads with more hotels needed to cope with the massive influx of sportsmen and tourists for the Olympic Games in 2008, city officials said on Friday.

Vice-Mayor Zhang Mao called for more low-cost hotels to be built in time for the Games, which are expected to attract more than 100 million visitors to the capital.

Speaking at a hotel development workshop sponsored by local tourism, commerce and investment promotion authorities, Zhang, a deputy executive-chairman of the Beijing Organizing Committee for the Games of the XXIX Olympiad (BOCOG), said: "Lodging capacity is a first-line touchstone to measure any host country's performance in the Games."

Some 35 hotel investors, financial institutes, world-leading lodging operators and real estate giants attended the workshop.

It is estimated that about 4.6 million overseas visitors and 96 million domestic tourists will come to Beijing in 2008, both to see the Games and tour the city while enthusiasm for the capital and the country's 5,000-year-history reaches a new high.

Around the Games period, 1.44 million visitors, including 250,000 foreigners are expected to arrive.

At least 800 star-rated hotels providing around 130,000 rooms will be needed to accommodate the influx. However, Beijing currently has only 658 star-rated hotels, with a total of 109,000 rooms and 200,000 beds. Besides that many of the city's non-rated hotels will need urgent renovation to meet the lodging shortage.

Du Jiang, director of the Beijing Municipal Tourism Bureau, said he was ambitious about the chances of improving the overall operating level of the city's hotels.

Lin Shan, deputy director of the China Tourism Association, said: "The Games present a great chance to boost the management and service standards of hoteliers."

Meanwhile, foreign hotel chains have been steadily buying into the Beijing market, purchasing hotels and merging with local hotel companies.

US-based Touchstone Hotel Investments Ltd launched a 200 million yuan (US$25 million) deal on Friday to reshape lodgings affiliated to the Beijing Patriotic Catholic Society.

Li Ming, president of the company's China branch, is optimistic about the huge potential for developing an economy hotel chain in Beijing.

Economy hotels' share of the business market is greater than 70 per cent in most developed countries. In China however it is still at the start-up stage, with huge potential for growth, Li said.

Economy hotels are rapidly becoming popular among businessmen, self-service tourists and some package tours.