HONG KONG (Bloomberg) ? Bermuda-registered Mandarin Oriental International Ltd.?s Landmark hotel opened yesterday in Hong Kong, boasting bigger rooms, music downloads and a two-storey spa, the first salvo in a battle with Four Seasons Hotels Inc. for growing ranks of executives lured by China?s growth.

While prices start from HK$4,000 ($515) a night at the downtown hotel, four blocks away on the city?s harbourfront, the Four Seasons newest ?six star? property will open in early September, charging HK$3,200 for its cheapest room.

More than 1.7 million visitors came to Hong Kong in June, the sixth straight monthly record, as Chinese tourists came to shop and China?s flourishing international trade attracted more business travellers. The opening of Disney?s fifth theme park in the city next month may help extend the gains.

?Occupancy rates have almost risen to the level of 1997 but room rates are still lower,? said Louis Wong, research director who helps manage about US$30 million at Phillip Securities Ltd. ?We are still optimistic about the hotel industry outlook.? They currently don?t hold any hotel shares.

Mandarin, the luxury hotel arm of Bermuda-registered Jardine Matheson Holdings Ltd., Four Seasons, which also operates under the Regent brand, and other luxury hotels aim to cash in on the increase in business travellers, and growing number of Chinese tourists.

The number of long-haul travellers, especially from Europe, Australia, New Zealand, increased by 9.6 percent to almost 11 million in the first six months of this year. Retail sales in Hong Kong rose to records for 21 months until May. Analysts said a subsequent slide was due to people delaying until Disney?s park opens.

?It is perfect timing to open a hotel and with all the exciting things happening around Hong Kong,? said Susanne Hatje, general manager of the Landmark Mandarin Oriental in an interview. ?We certainly are very encouraged about the next couple of months and about the future overall.?

Mandarin Oriental shares, listed in Singapore, have risen by a fifth this year, compared with a ten percent increase in the benchmark Straits Times Index. Hongkong & Shanghai Hotels shares rose about 33 percent this year, compared with a 6.9 percent gain in Hong Kong?s Hang Seng Index. Mandarin also manages Bermuda?s Elbow Beach Hotel.

Still, with 34 hotels opening, 15,233 more rooms will be available in Hong Kong between now and 2008, according to the Tourism Board. At the same time, some of the tourists lured by the Disney park will stay at one of its two resorts, which between them, will have 2,100 rooms.

Chinese tourists also tend to stay at cheaper accommodations in the city, some analysts say.

?Accommodation for them is of low priority,? said Nicola Fallon, an analyst at CLSA Asia-Pacific Markets, in an interview. She explained that visitors from mainland tend to be reluctant to pay for high room rates and would rather spend on handbags and other luxurious items.

According to the Hong Kong Tourism Board, the mainland overnight visitors spending per capita was HK$4,355 in 2004, compared with HK$5,235 the previous year, due to an increased number of visits. Average length of stay was 4.26 nights in 2004, compared with 4.81 nights a year earlier.

?What you?ll see in the next ten years is an increasing awareness of hotel brands,? Fallon said. ?I think it?s going to be a trend.?

Phillip Securities? Wong said much of the upside is already priced into the stock market, saying hotel shares are ?not very attractive.? He said he doesn?t expect to see major gains because ?the valuation has already been fully factored in.?

That?s why top end hotels such as Mandarin, Four Seasons, Hongkong & Shanghai Hotels Ltd. and Shangri-La Asia Ltd. are wooing richer tourists and business travelers with a host of new features.

The Four Seasons Hong Kong?s 399 guestrooms feature a 42-inch plasma screen satellite television, DVD player and an LCD television in the bathroom, and a 25,000-square-foot spa.

At the Mandarin, you get two high-definition LCD flat-panel televisions, a DVD player and surround-sound system, and color touch-screen telephones and its suites offer 5,000 MP3 audio tracks available for download onto Apple Computer Inc.?s iPods or other MP3 players. Mandarin also claims its 113 rooms average 540 square feet, the highest average in Asia.

The Landmark Mandarin Oriental opens ahead of a $110 million refurbishment of the group?s 42-year flagship hotel on the city?s harbour, which will close in December and reopen next year.

Hong Kong?s average hotel occupancy for the first six months of the year was 83 percent, two percentage points lower than a year earlier, whereas the average achieved room rate was HK$900, 18.2 percent higher than in the same period of 2004, according to the Tourism Board.

Five-star hotels in the city, such as the Island Shangri-la, JW Marriott and Ritz Carlton say they are already reaping the benefits of visitor influx.

?We achieve higher rates from mainland Chinese than from those coming from other countries,? said general manager of Island Shangri-La, Franz Donhauser. Among his Chinese clients are government delegations, business travellers and leisure tourists for whom ?rate is not a problem.?

The hotel?s current occupancy rate stands above 80 percent. Donhauser, who is also a member of the Hong Kong Tourism Board, said.

At the Four Seasons, vice president William Mackay expects more than 80 percent occupancy in the first full year of operation. Based on figures from other local hotels, mainland Chinese visitors will make up about ten percent of the occupancy, Mackay said in an interview.

Hong Kong?s Tourism Board estimates a total of 23.41 million arrivals this year, and 27.14 million for 2006. It expects total tourism expenditures to reach HK$114.7 billion in 2006.

Hong Kong Disneyland, which opens on September 12, will attract 5.6 million visitors and create 18,000 jobs in the city in its first year, the government estimates.