The Hong Kong Hotels Association says the government's bullish forecast for hotel room demand over the next decade might trigger a wave of development, leading to an oversupply of rooms. That the industry had been devastated by the recent outbreak of Sars, or severe acute respiratory syndrome, made the forecast all the more surprising and, given the uncertain outlook, heightened the risk of oversupply, the association said. The government has forecast that between 28,000 and 40,000 new hotel rooms will be needed by 2016. However, association executive director James Lu Shien-hwai said the hotel industry had learnt an expensive lesson from the health crisis. He doubted whether the government had taken into account the potential impact that a new outbreak of Sars - or another natural disaster - would have on the industry. Although Sars was now under control, hotels in Hong Kong were facing stiff competition from others in the region and would have to offer steep discounts to attract tourists, Mr Lu said. Therefore, the government should adopt a more conservative approach in mapping out its blueprint for the hotel market. Mr Lu also disagreed that the opening of Hong Kong Disneyland on Lantau in 2005 would significantly increase demand for hotel rooms. Local residents were expected to account for more than half of Disneyland's visitors in the first five years of its operation, he said. Visitors from the mainland might opt to stay in Shenzhen rather than Hong Kong to save on accommodation costs. As the Hong Kong-Shenzhen border was now open around the clock, it would be convenient for visitors to return to the mainland after spending the day at Disneyland, Mr Lu said. As a result, hotels in Hong Kong might not benefit significantly from the opening of the theme park, he said. But Mr Lu said there was still room in Hong Kong for one or two more five-star hotels in prime locations over the next 13 years. Hong Kong would remain an international business centre even if it had to compete with Shanghai, he said. The growing affluence of mainlanders would boost demand for luxury hotels in Hong Kong, he said. In the mainland, domestic travellers account for more than half of the occupancy rate at luxury international hotel chains such as the Four Seasons and the Grand Hyatt. They were either corporate clients from large mainland enterprises or successful private businessmen, he said. According to the Hong Kong Tourism Board, mainlanders spend an average of at least HK$5,000 per visit, making them the biggest spenders. Nomura Securities analyst Pierre Lau said the spending pattern of mainland tourists was different from that of visitors from the United States and Europe. Most mainlanders spent more than half of their holiday budgets on shopping and dining out but only 25 per cent to 30 per cent on hotels.