Lhasa, the capital of Tibet, will have its first luxury hotel by 2010 to cater to the increasing number of tourists following the opening of high-altitude railway linking it with Beijing.

Starwood Hotels and Resorts Worldwide has signed an agreement with state-owned Lhasa Yungao International Hotel Co. to put up five star 169-room luxury hotel carrying the brand name St. Regis, Forbes magazine reports.

Slated to open in January 2010, the resort would be the sole five-star hotel on a stunning plateau that stretches to the world's highest mountain, Everest, on the Nepalese border. It would also be the first international-branded hotel to open in Tibet since Holiday Inn pulled out in 1997, the report said.

Starwood said the new railway has boosted tourist arrivals to Lhasa by over 15 per cent so far and 3 million more are expected this year, a 28 per cent yearly increase, amid a surge in interest from both international and domestic travelers.

The new hotel, the third for St. Regis in China after Beijing and Shanghai, could become a target for Western activists, who a decade ago forced Holiday Inn to retreat from Lhasa after 10 years operating there, Forbes said.