Hotel room occupancy keeps falling in difficult times

      Experts forecast hotel room occupancy, particularly at luxury hotels, will fall further this year after hitting a new low last year as the global economic malaise continues to jeopardize Vietnam’s hotel industry.
Occupancy has fallen significantly at hotels, Ken Atkinson, managing partner of Grant Thornton Vietnam, told reporters in HCMC on Tuesday when this accounting and consulting firm released its annual Hotel Survey 2009.
“Some are running around at 40% and lower because of low season,” Atkinson said and added that he knew this result after talking with hoteliers in Hanoi and HCMC.
Vo Ta Ngoc, general manager of Allezboo Beach Resort and Spa, backed Atkinson’s observation, saying international bookings at properties in Mui Ne this summer could tumble by as much as 30% from the same period last year.
Ngoc told the Daily on the phone on Tuesday that the fall mainly resulted from the decline in Russian arrivals in the seaside resort town of Phan Thiet in the central coast province of Binh Thuan.
Reliable sources close to the Daily said guests currently occupied just a little higher than 40% of the rooms at certain four to five-star hotels here.
Experts said that the existing low occupancy could pull the hotel room occupancy for all of 2009 even lower than last year, when the average occupancy rate for five-star properties in 2008 was only 56.9%, as against 65.7% in 2007.
The overall occupancy rate for high-end hotels across all categories was 59.8%, down 9.6 percentage points compared to 2007 as indicated in the sixth edition of the Hotel Survey that Grant Thornton conducted at 50 three- to five-star hotels and resorts with a total of 7,911 rooms throughout the country.
The average occupancy rates across high-end hotels in Vietnam dipped 14.2% in 2008 to their lowest in the past four years of the survey.
Despite the fall in room occupancy as the impact of global economic downturn on Vietnam’s hospitality and tourism industry, the survey shows average hotel room rates across all categories last year picked up by 9.6% from 2007, or to US$114 from US$104. The room rate at five-star hotels averaged US$195 per night last year.
Atkinson said the average room rate in Vietnam was “relatively higher” than in other comparable regional countries such as Malaysia and Thailand, despite the decline in international arrivals.
According to the General Statistics Office, the number of international visitors to Vietnam in the first five months of this year declined nearly 19% year-on-year to around 1.6 million. Last year registered around 4.25 million international tourists, up a mere 0.6% on the previous year and much lower than the 12-17% industry forecasts released early that year.
Atkinson said the survey shows that hotels in Vietnam managed to maintain the increase in room rates that occurred earlier in 2008 throughout the year. He noted that hotels were not rushing to slash rates because they found it difficult and long to raise prices back again once the market improved as they had learned much from the past during the 1997/98 regional financial crisis.
However, Atkinson said it was expected that the global economic situation and declining room occupancy would result in average room rates. “The reduction in occupancy is putting pressure on the industry, reinforcing the outlook for further reductions in room rates during 2009.”
The current room rates at four to five-star hotels in HCMC range from US$95 to nearly US$200, which some hoteliers said are lower than the same period last year. Ngoc of Allezboo estimated that the rate at four-star resorts in Mui Ne at US$65-95 per night, or down 10-15% year-on-year.
However, hotels should do more than just lower room rates as this did not necessarily bring a lot more business. “So, they should add more benefits, meaningful benefits,” Atkinson of Grant Thornton Vietnam told the Daily and described these benefits as discounts and free internet access among others that are essential for business travelers.
Matthew Lourey, corporate finance director at Grant Thornton Vietnam, called for hotels to take moves to mitigate further declines in international arrivals in the first five months of this year and plunging room occupancy.
“Occupancy levels are facing sustained pressure across all categories. It is in times like this that positioning and marketing strategies become vitally important for hotels to ensure their ongoing profitability,” Lourey said.
According to Grant Thornton, there are currently some 199 three-star, 88 four-star and 41 five-star hotels in Vietnam with a combined room number of 32,000.
The Vietnam National Administration of Tourism has forecast that an additional 15,000 to 20,000 hotel rooms will be needed to meet the dual target of five to six million international travelers and up to 25 million domestic tourists.