Hotel business outlook remains dismal

      The downturn in global tourism and business travel continues to impact on hotels in HCMC as occupancy and room rates took a double-digit plunge in the second quarter.
According to CB Richard Ellis Vietnam (CBRE), a market research company, five-star hotels in town went through the second quarter with average room occupancy at 45.5%, down 10.4 percentage points against the first quarter.
The luxury hotels' room rates saw a quarter-on-quarter drop of 13.3% to around US$134 per night, said the researcher.
Four-star hotels in the city saw room occupancy averaging out at 47%, down 28.5 percentage points from the first quarter, and average room rates staying at around US$81.50 per night.
CBRE attributes the weak second quarter performance to low season for international leisure tourists and to the outbreak of influenza A(H1N1) that has raised fears leading to cancellations from tour groups.
James Montenegro, general manager of Hotel Equatorial in HCMC's District 5, said on July 28 that the unabated spread of the A(H1N1) virus would have major effects on the hotel sector as travel was discouraged to minimize contamination.
Many companies, he said, are already limiting corporate travel until a vaccine could be made available or until the virus showed signs of dissipating.
"We have already received a number of MICE (Meeting, Incentives, Conventions and Events/Exhibitions) cancellations due to the A(H1N1) virus," Montenegro said, adding he expected to see more cancellations especially after the summer season.
Meanwhile, Caravelle Hotel in downtown HCMC is enjoying business as usual without feeling the touch of the disease.
"At this stage, we haven't felt any real effect on the hotel's business," said John Gardner, general manager of the Caravelle.
Asked about cancellations, Gardner of the Caravelle said it was difficult to know reasons as guests seldom gave any, but said there were none due to swine flu.
He did say the hotel's performance in the first half of this year declined significantly compared to the first half of last year. "Like all hotels, our business is down approximately 20% this year compared to last year but mainly due to the world-wide economic crisis."
Many hotels in town have softened room rates and launched promotions to ride through tough times.
International hotel management group Accor offered a 50% discount on room rates at hotels under its management through online or travel agency bookings made between July 7 and July 13 for stays between July 17 and September 30.
The group's participating hotels include Novotel Ha Long Bay, Novotel Nha Trang, Novotel Dalat, Novotel Ocean Dunes Golf & Resort Phan Thiet, Grand Mercure La Veranda Resort & Spa Phu Quoc and La Residence Hue.
Park Hyatt Saigon launched a promotion offering rooms at discounts of up to 20% for bookings made between June 19 and September 3.
The Caravelle launched a promotion on the occasion of its 50th anniversary offering 50% off on rooms by online bookings made between July 1 and September 30.
CBRE predicted the discounts would continue as hotels struggle to maintain their market share in the face of falling tourist arrivals.
The market research firm noted that the launch of the InterContinental Asiana Saigon in the city's commercial district with 305 rooms would further increase pressure on the five-star hotel sector.
Talking about a possible price war among hotels; Montenegro of Equatorial doubted it could happen.
"I think every hotelier in town does not want to go into a price war as this is not the solution. Any reduction of rates/ prices would actually be futile and just further dilute the business," Montenegro said.
Gardner of the Caravelle said there would not be much of a war but there would be more competition which would force all hotels to be more competitive and flexible with rates.
According to the Vietnam National Administration of Tourism, the country has received around 1.89 million international visitors in the past six months, down 19.1% year-on-year.