Thanks to this pricey purchase St Regis Sanya became the only resort in the city of Sanya with a yachting marina.

On the same day as the St Regis opened for business, MGM Resorts International also opened its first hotel in the Chinese mainland in Sanya.

In recent years, five-star hotels have become the major players in the battle for beach resources. And as hotels and resorts in Sanya become increasingly luxurious, super five-star hotels have also joined the fray.

The latest developed bays in Sanya will soon be locations for 24 hotels, and all available land there has already been snapped up. This is the reason Kerzner opted for Tufu Bay, in Lingshui county, a relatively remote destination from the urban area of Sanya.

In the long-term, a greater variety of hotels enhances the appeal of a destination, increases the marketing channels directed at consumers and attracts more demand, said Hans Galland, senior vice-president of Jones Lang LaSalle Hotels, the hospitality industry division of Jones Lang LaSalle Inc, a Chicago-based real estate investment services company.

Galland said that based on the company's estimates, the number of rooms in international four- and five-star hotels in Sanya will increase by about 70 percent this year compared with the end of 2010.

According to a plan published by Hainan province's travel committee, 76.8 million person-trips are expected to be made to the island annually by 2020.

Too many?

As more luxury hotels move in, some industry insiders have warned that Sanya's hotel industry may be overheating due to the abundance of high-end hotels.

"The presence of too many high-end hotels has pushed up the average price of hotel stays in Sanya," said Wang Jianmin, a researcher at the Tourism Research Center of the Chinese Academy of Social Sciences.

During this year's Spring Festival, a peak season for tourism, the average price of rooms in five-star hotels went up to 3,668 yuan per night, compared to 1,298 yuan one day before the festival.

The week after the Spring Festival, in late January, the average occupancy rate of hotels in Sanya remained around 70 percent compared with 80.48 percent during the Spring Festival, according to tourism agencies.

Each holiday season, the high price of hotel rooms in Sanya is a hot issue. Although the local government has set a price ceiling to cope with public criticism, the average price of hotel rooms keeps rising.

Although they may seem unacceptable to the vast majority of people in China's middle-income bracket, analysts said the soaring prices are normal because they reflect the real demand for quality hotels.

"The supply of high-end hotels in Sanya is still not enough," said Galland.

Only 9 percent of visitors to Sanya stayed in resort hotels during the Spring Festival, but these hotels were all booked out.

Analysts said this showed the big gap between demand and supply for quality hotels in Sanya.

If visitors cannot afford a resort hotel, they have to look for cheaper hotels or guest houses, which are nearer to the free public beaches in the city's downtown area.

But in these types of accommodation, which are often privately run, customer comfort often takes a back seat, and the only beaches their guests can access are the public ones where pollution is a serious issue.

"The government has not designated Sanya as a high-end tourism destination, but actually only rich tourists can enjoy here," Wang Jianmin said.

"The high price of hotels puts off some potential tourists."

The good news is that the local authorities are already taking steps to address the situation.

Available accommodation at guest houses and apartments in high-end communities increased by 18 percent in the past two years.

During the Spring Festival, the average occupancy rate of Sanya's hotels declined by 3.44 percentage points compared with last year, according to figures from the local government.

Analysts said the presence of more budget hotels will not squeeze the revenues of high-end resorts, since they target a different group of consumers.

Alan Leibman, chief executive officer of Kerzner International, said Chinese tourists are looking for better traveling experiences and this gives his company confidence in the long-term market prospects.

Hainan also expects to welcome more foreign visitors, who only accounted for about 2.7 percent of the total visitors to the province in 2011.

Leibman shares that optimism. He said he was encouraged by his recent trip to Moscow, where many top Russian tourism operators are showing great interest in Sanya.

"Our customer group should be a combination of Chinese as well as international guests, who are followers of our hotel brands," he said.