Hanoi’s hotels highly hungry for guests

Hotel developers are experiencing the dark days in their business. The lower number of guests, low occupancy rate and decreasing revenues have all caused headaches for them.
Hotel development, which was considered a lucrative business, has been in distress. All the business indexes are unsatisfactory in the low business season. Meanwhile, experts say they cannot see any signals of recovery in the long term, because the competition among the hotels in Hanoi has become very stiff.
According to CBRE, a real estate service provider, by the end of June 2012, 3-5 star hotels could provide 8500 rooms, an increase of 4.2 percent over the same period of the last year. Meanwhile, more than a half of the supply sources are located in the two central districts of Hoan Kiem and Ba Dinh.
It is expected that the market would have some 600 3-5 star hotel rooms more in the remaining months of the year, including the last 68 rooms at the 5-star Grand Plaza Hanoi with three foreign brands Hilton Garden Inn (3-star, 86 rooms, on Tran Hung Dao street), Candeo Hanoi (4 star, 68 rooms, Doi Can street), InterContinental (5-star, 359 rooms on Pham Hung road).
More hotel rooms would be available on the market by early 2013. JW Marriott, a 5-star hotel with 450 rooms would be put into operation. After that, 5-star Lotte Hotel with 300 rooms would make debut in 2014.
With the joining of the well-known brands to the domestic market, luxurious hotels would account for 50 percent of the total hotels in the market.
According to Savills Vietnam, from now to 2015, Hanoi would have 43 hotel projects to be developed. Of these, 24 projects would provide 6600 rooms to the market. The suburb district of Tu Liem would be the main supply source of luxury hotels in the future. Meanwhile, 3-star or 4-star hotels would be concentrated in the districts in the inner city.
The hotel room revenue in the capital city has seen the downturn since late 2011. The 5-star hotel room rate dropped from 1.4 million dong on average to 1.2 million dong per night in the first quarter of 2012.
Meanwhile, the room rate of 4-star hotels has decreased from one million dong to 800,000 dong. The figures were 600,000 dong and 400,000 dong for 3-star hotels.
Another four percent decrease was reported for the second quarter of the year.
Analysts believe that the demand in the hotel market is modest because of a combination of different factors, including the complicated procedures for visas, the high airfares, the lack of tourism promotion programs and lack of transparency in the services provided.
Travelers have cut their budget for hotel rooms since 2009, while the average hotel room rate has also decreased accordingly. The number of travelers – businessmen has decreased significantly, while the daily spending of travelers has also decreased. At present, a traveler spends 450 dollars for every trip, and spends 160 dollars per day.
Meanwhile, the expenses on meals and sightseeing have been increasing, which is not directly proportional to the budget for hotel rooms.
The gloomy market, plus the increasing supply all have devalued the hotels at present and in the immediate time. Analysts believe that hotel developers now have no other better choice than striving to become international standard hotels with reasonable service fees.
In the first six months of the year, Hanoi received 8.33 million travelers, including 1.03 million foreign travelers..