Hotel industry facing hardships

The survey of CBRE on Vietnam's hotel market said that the slump in Vietnam's tourism sector was shown clearly through the ratio of hotel room bookings and rental. In the first half of 2009, the ratio of hotel room bookings fell 30% and the room rental was lowered by 25-28%.
Total number of foreign visitors to Vietnam during the first eight months was estimated at 2,479,939 arrivals, down 17.7% year-on-year, according to general Statistic Office (GSO).
In HCM City, below 4-star hotels offered an average rental of $50 per night, sharply decreasing from $80 of January while that of 5-star hotel room slid from $130 to $80 per night. Meanwhile, to rent a luxury hotel room, customers spent only $180 per night in June instead of January's $240.
Some sources reported that the demand for renting 4-5 star hotel room is in downward trend. The usage capacity of many hotels plunged from 70 percent in last Q2 down to 55 percent this year. Small sized hotels operated better.
At the meeting to discuss on the tourism promoting measures, held in HCM City recently, Tran Hung Viet deputy general director of Saigon Tourists said that in 2009, the tourism sector made big efforts but was only able to welcome four million arrivals of international visitors, lower 500 arrivals than the initial plan of 4.5 million arrivals.
In recent time, the visitor number to Vietnam via all airlines, seagoing and roads declined by 20 percent from the same period of 2008. In June 2009, prior to CCBRE, Grant Thornton also announced a survey result over fifty 3-5 star hotels in Vietnam.
Average hotel room rental surged 9.6 percent between 2007 and 2008 whereas the average hotel usage ratio was down 14.2 percent in the period. During the period, the profit from hotel business fell 10.4 percent as well, particularly the profit from five-star hotel business was higher than 3-4 star hotels.
As reported by Grant Thornton, the number of international tourists to Vietnam's resorts accounted for 56 percent of total figure. In 2007-2008, those arriving in Vietnam for business purposes dipped 0.7 percent. The costs for hotel business all increased last year, excepting the management cost and general costs. In which, the hotel room cost was up 19.4 percent, restaurant cost rising by average 13.7 percent of total revenue of each restaurant.
Before the tense competition, the hotel managers all planned to launch selling-off programmes to attract customers. Factually, some hotels do not offer direct sales-off but they switched to launch promotion programmes, renovation and provide more services. On average, each five-star hotel has 16 major services while each 3-star hotel has only five.
Robert Mcintosh, managing director of CBRE Hotels Asia Pacific said that hotel businesses need to have clear strategies just as of starting the operation. Each investor and business must work out a particularly group of customers to release suitable designs and personal services for domestic visitors to optimise profit. Meanwhile, tourists are switching from high-cost to low-cost products.
Vietnam's hotel market is short on the diversification of trade names and products especially the products at medium prices, he added.
In next five years, Vietnam's hotel market will have many changes in diversifying market segments. To date, few global well-known hotel managers like Accor, Intercontinental and Marriot entered Vietnam and they will use their own trade names to develop Vietnam's market potential, he forecasted.
However, according to STR Global, Vietnam still ranks the second in terms of hotel room selling turnover on total available rooms and be the brisker market compared with regional countries.