In the first half of 2006, the total retail sales of China's accommodation and food services sector have reached as much as 492.86 billion yuan, up 15.3 percent, according to statistics issued by the Ministry of Commerce of China on July 31.

An official of the ministry said that with buoyant market demands lasting into the second half, the retail sales of accommodation and food services sector is likely to total 1.09 trillion yuan by the yearend.

The statistics show that foreign capital used by China's accommodation and food services sector increased dramatically in the first half. Specifically speaking, the contractual value of foreign capital utilized in the sector was US$1.43 billion, increasing by 16 percent; the actually used sum of foreign capital was US$380 million, gaining by 49 percent. Among the latter, US$250 million went to accommodation services, dramatically increasing by 94 percent and US$130 million entered food services, up 3.6 percent.

For overall point of view, we can see that in the first half, China's accommodation and food services sector was more centralized; that the accommodation services were more internationalized; that more hotel chains and hotel groups were created fast; and that budget hotel business was booming.

But operating costs are high while added values of products are low in spite of low labour costs in accommodation and food services sector, said the official. At the same time, the profitability of enterprises in the sector is falling with the operating costs and the prices of real estates climbing continually, and competition in the sector is likely to become fiercer, the official added.

(People's Daily August 3, 2006)