A major shareholder of the Hilton hotel in Chongqing municipality was detained this week for his alleged involvement in the running of a prostitution ring at a club based in the hotel, embarrassing the famous international hotel giant.
The arrest also casts the sex industry into the spotlight, particularly the trade's presence in Chinese hotels.
Peng Zhimin, president and the controlling shareholder of Chongqing Qinglong Property Corp, which wholly owns the Hilton Chongqing, was detained Sunday, local police confirmed Wednesday to the Xinhua News Agency.
Apart from Peng's alleged involvement in organized crime and prostitution, police say he also tried to seek protection for the illegal operations and bribed law enforcement officials, including Peng Changjian, former deputy director of the Chongqing Public Security Bureau, with 300,000 yuan ($44,010) in April 2009.
Despite being summoned several times by police since a crackdown on organized crime began one year ago, Peng Zhimin, who is estimated to possess assets of 1 billion yuan, still continued the illegal operations, the police said.
These details were revealed after the "Diamond Dynasty" karaoke club in the basement of the Hilton hotel was raided by police Saturday night, with 102 people arrested. Twenty-two people were detained Sunday for alleged involvement in prostitution.
The Hilton hotel remained closed Thursday after all the guests were vacated by Monday morning. A letter of apology can be seen at the gate of the hotel, saying it is "undertaking a complete and thorough review of safety and security measures," without saying when the hotel would reopen.
A receptionist at the hotel confirmed that it was not taking any bookings until mid-July at the earliest, London's Telegraph reported Monday.
The Hilton reiterated Thursday that the Diamond Club KTV is an independently owned and operated business, though it "is located in the same build-ing complex as our hotel".
"Hilton Worldwide abides by all laws in every country in which its brands operate and is fully cooperating with the investigation," Gao Tingting, corporate communications manager of the Hilton Hotel Management (Shanghai) Co, said in a statement e-mailed to the Global Times, declining to make any further comments.
A source close to the hotel industry, speaking on condition of anonymity, told the Global Times that it's an open secret that sex services are being offered by many hotels operating in China.
The service is usually not offered openly, but rather at the request of clients who call the receptionist, asking for "massage services," a code used to refer to sex services, he said, adding that the hotel usually refuses direct requests for sex for fear that they might be traps set by detectives.
A former senior manager of the Renaissance Beijing Capital Hotel, who declined to be named, said that such practices are more common in local and small hotels.
"However, some international hotel chains, which have been operating in China for years, will also engage in such practices," she said.
