The Chinese hotel market is booming and international hoteliers are racing to open properties across the country. Foreign chains are expected to open a property in one of China’s 30 main cities every four days between 2010-2013, however rising costs will see returns on investment begin to erode slightly. A market report by Jones Lang LaSalle Hotels, shows that rising costs are a top business concern for many hoteliers this year as the rising cost of labour, energy and commodities reduce profit margins. The extent of rising costs is evident from China-based Home Inns & Hotels Management which yesterday reported a drop in profits after rising operating costs offset double-digit gains in revenue. The hotel occupancy in the second quarter was down 2.4 points on last year to 94%, yet operating costs soared 22%. Escalating costs and reduced revenue per available room subsequently off-set 12% revenue growth, producing a second quarter profit of CNY122.1 million ($18.9 million), representing a yearly dip of 10%.Analysts have thus advised operators to improve energy efficiency and revenue management in order to reduce costs. They add that rising labour costs are prevalent in tier I cities and slowing expansion in the Shanghai and Beijing areas are turning eyes to tier II cities. Places such as Zhuhai in Guangdong province and Zhengzhou (pictured) in Henan province, are likely to emerge as new growth markets and demand grows in the coming years.