Hotels in Beijing are slashing prices for next month's Olympics after the expected windfall of visitors failed to materialize, hotels and travel industry executives said yesterday.

Fan Runjun, of travel Website Ctrip.com, said many two to four-star hotels had reduced prices by 10 to 20 percent compared to May and June and some had slashed rates by as much as 30 percent.

The usual pre-Olympic festive atmosphere host cities experience has not yet hit Beijing. In June, the number of visitors to the capital declined by 19.9 percent from a year earlier, according to the Beijing Tourism Authority.

Average room prices in three-star hotels are now down to 400 yuan (US$60) a night from 700 yuan in previous months. Four-star hotels have dropped prices to about 800 yuan a night from 1,500 yuan.

Beijing had been expecting 500,000 foreign guests for the August 8-24 Olympics.

China has ratcheted up security for the Games, tightening visa rules even for foreigners with Olympic tickets.

Luo Qiong, a public relations manager at the Xiao Xiang Hotel, a three-star hotel near the Temple of Heaven, said they cut prices by 20 percent a few days ago. She said the drop in the number of guests was caused by the visa restrictions and the fact that many exhibitions had moved to other cities in China.

"As a result of all that, our occupancy isn't as good as we expected. And I don't think things will get any better even with the rate cut," she said.

Eric Wong, co-head of Asian Real Estate Research with investment bank UBS in Hong Kong, said the drop in rates resulted from a combination of overambitious pricing and the security measures.

A spokesman for the China Hotel Management Association said most three-star hotels or below were cutting prices because occupancy rates were not as high as expected.

Most Olympic hotels that had been approved by the Beijing Olympic Organizing Committee were four or five star, he said, and their rooms had already been booked.

Those hotels cater to Olympic officials, sponsors and national Olympic delegations. Their prices were set last year by negotiation rather than by market demand, he said.

Tian Ye, of the Fuhao Hotel, a three-star hotel in the central shopping district of Wangfujing, said it cut its rates last month by about 20 percent.

A quarter of the hotel's foreign bookings were canceled after the May 12 earthquake and the snowstorms in February, according to Tian.