Shanghai - As the busy summer season of Expo 2010 Shanghai begins, hotel occupancy rates, especially in the Pudong new area, are reaching nearly 100 percent, while room rates are also increasing.

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The average occupancy rate of Shanghai's star-level hotels was 92 percent on May 20, up from 52.9 percent from January to March.

According to the Shanghai Municipal Tourism Administration, more than 1.7 million people visited Shanghai between January and March, an increase of 23 percent from the same time last year.

Hotels have been suffering from the global financial crisis for at least a year. Now it seems they are eager to charge higher rates to make up for lost profits.

Some budget hotel chains near the Expo Garden, such as Hanting Inn, Green Tree Inn and Jinjiang Inn, increased their rates by an average of 60 percent from May to July. Over the past month, the Green Tree Inn on Pu Jian Road has increased rates for its double rooms from 178 yuan ($26) to 389 yuan per night; deluxe standard rooms from 269 yuan to 569 yuan; and double rooms with views from 359 yuan to 899 yuan.

Despite the hefty increases, all the double and standard rooms in the hotel are booked until the end of June, according to an employee who asked not to be named.

The College Entrance Exam on June 7, 8 and 9 also puts more pressure on the hotel market, as anxious parents compete with Expo tourists for rooms for their children's three-day examination.

The city's high-end hotels are not increasing rates as much as the budget hotels.

"We know who our clients are - the top 5 percent of the 70 million Expo visitors," said Thomas Mueller, executive board member of International Branded Hotels Shanghai. If his hotel gouged prices for Expo visitors, this could create a bad impression that might have long-lasting negative effects, he said.

"Shanghai is not a city where you have limitations on either hotel rooms or rates," said Udo H. Doring, general manager of the five-star hotel Longemont Shanghai. Doring compared the situation to airlines, where "the airline fills up from the back row to front row with the cheapest seats filling up first".

One of the country's most popular travel service providers, Ctrip, anticipated the city's star-level hotel rates would increase by an average of 20 percent during the Expo.

The government is not taking measures to curb the increases but expects a reasonable growth in room rates, said Cheng Meihong, the deputy director of the Shanghai Municipal Tourism Administration. "We encourage a rational and steady increase in hotel room rates during the Expo. However, we won't take any compulsory measure to restrict the increase."

The government has reserved eight four- and five-star hotels, including Broadway Mansions Hotel Shanghai, Hotel Equatorial Shanghai and Seagull on the Bund, for VIP guests. All of these hotel rooms are booked from April to October.

Wu Yizhong, a secretary at the Shanghai office of?Italian chocolate manufacturer Ferrero Rocher, said she is having problems trying to find rooms for visiting company executives.

Wu said she has had to use personal relationships to get rooms. "It's crazy," she said.