HOTEL rates will continue to rise this year despite the slowing global economy due to a shortage of rooms, the head of the city state's largest hotel operator said on Thursday.

'Because of the subprime crisis, the higher-end ... hotels have less ability to increase their rates. But we are still having a shortage,' said City Developments Executive Chairman Kwek Leng Beng.

He told reporters on the sidelines of a real estate conference that there had been many periods this year when the company's hotels were 100 per cent occupied due to the sharp rise in intra-Asian travel.

Singapore's average hotel room rate rose 24 per cent to S$238 per night in the 12 months to March, bringing it close to the level in Hong Kong, which stood at HK$1,362 (S$241).

Occupancy levels averaged 87 per cent last year, above the 85 per cent mark that hoteliers consider optimal to manage any daily mismatch between supply and demand.

Mr Kwek said the rise in intra-regional travel within Asia and changing lifestyles would ensure demand for rooms remains strong even if there is a decline in visitors from the West.

'In the old days, you go for holidays once a year. Now you go three to four times a year,' he said.

CityDev owns the ultra-luxury St Regis hotel and is the largest shareholder in CDL Hospitality Trusts, a property trust that owns five hotels. -- REUTERS