And then I look up ahead. Appearing like a mirage is a teak building unlike anything I have seen before. Capped by a seven-tier roof, it looks like an ancient palace. We finally pull up outside a colonial-style building, where I am saluted by a guard who greets me: "Welcome to the Mandarin Oriental Dhara Dhevi, sir".

I am visiting Chiang Mai, a city in the northern reaches of Thailand, which is at the centre of a hotel and tourism boom. Amazingly, the Mandarin Oriental is only one of a handful of new five star resorts that has sprung up in Chiang Mai over the past few years. Something is happening here. Only a decade or so back, the city was regarded as the backpacker haven of south east Asia. The old walled city, surrounded by a moat and packed with ramshackle guesthouses, bars and bookstores, proved an irresistible lure for adventure seekers over the years.

The guesthouses remain and the backpackers still come, but travellers seeking an upscale holiday experience is growing in leaps and bounds. Up until five years ago, there was only one five-star hotel in town. The Four Seasons Chiang Mai, which is located in a village outside of town, set international standards for luxurious retreats a decade ago and remains one of the world's top resorts.

Over the years it has competed with the best in Bali, Hawaii and European hotspots for the cream of the leisure market. Now its biggest rival for international supremacy is across town. The Mandarin Oriental has created quite a buzz among well-heeled travellers around the globe. More than a few have been lured to Thailand specifically to check out this resort, which is spread over 60 acres. By any standard, it is an impressive hotel.

Located on the outskirts of the city, it is like a teakwood fantasyland modelled on a northern Thai village. The teakwood palace that grabbed my attention on my arrival is a superb re-creation of a 19th-century Burmese palace, used as the hotel's award-winning spa. Rooms, some with private pools, are spacious and comfortable.

Not surprisingly, there is little to choose between the Mandarin Oriental and the Four Seasons. Both offer superb accommodation, world-class spas, fine dining and a breath-taking level of service. They both have rural Thai settings, with extensive gardens, vast villas with private gardens and more staff members than guests.

The Mandarin Oriental may have the edge architecturally, but the Four Seasons has an understated charm that is just as alluring. At the top of the pile for the past 10 years, it has hosted many international celebrities. The hotel is not in the business of giving out the names of its guests, although the Secret Service contingent was probably a giveaway when Hillary Clinton stayed there.

While the big two battle it out for supremacy on the outskirts of the city, a host of new five-star hotels have been built close the city's ever-popular night market or along the Ping River. The first to appear was the D2 Hotel, an ultra-trendy boutique hotel in the heart of the night market. In contrast to the Thai decor of many hotels, restaurants and bars around it, the D2 is decked out in bright colours. The atmosphere is funky and sophisticated, aimed at young executives and the trendy crowd.

Only a few blocks away, the Shangri-La group recently opened their latest 281-room resort. With views of the impressive Doi Suthep mountain and the Ping River from its city centre location, the Shangri-La Hotel Chiang Mai will probably be a hit among business travellers. With the same level of five star luxury as its competitors, the biggest attraction is likely to be its CHI spa. It offers a range of treatments inspired by traditional healing philosophies from China and the Himalayas.

Midway between these two hotels, yet another five star hotel is about to open. The 22-storey Le Meridien Chiang Mai, with 384 luxury rooms overlooking the bustling night market, is nearing completion. Built on a prime street corner location and with a massive mall beneath it, the hotel will be a shopper’s paradise.

The banks of the Ping River are dotted with the homes of wealthy residents, coffee shops and temples. But, in recent years, small guesthouses have been popping up, along with upmarket nightspots. But the trendiest establishments by far to line the river are two new hotels, built to take advantage of the river views.

The first to open was The Chedi, an offshoot of the highly-respected Aman Group. Built around a former British Consulate building (which now serves as a restaurant), the 84 rooms are modern and minimalist in design. It has a Japanese feel, but there are touches of Thai style to remind one of its location. With a riverfront spa and private courtyards off bedrooms, The Chedi is a place for privacy and relaxation. As one of the guests said: “It has a zen-like calm and sense of space and harmony”.

A little further down the river is the new Sofitel, which combines traditional Lanna architecture with modern facilities. A huge pool overlooks the river, as does the main restaurant serving international fare. A Brazilian eatery, famed for its barbecued meat dishes, is tucked away inside. With only 74 rooms, The Sofitel Riverside Chiang Mai is the most intimate of the city’s top-end hotels. It has a comfortable, relaxed atmosphere and genuinely friendly staff.

With all the new five star establishments competing for tourist dollars, one might expect building to slow down. But that’s not likely to happen. Word is that both the Hyatt and Banyan Tree group are planning hotels in the city. And along with the new hotels come the trendy, upmarket restaurants, boutiques and shops. There is no doubt that Chiang Mai is one of the destination hotspots of the decade.