Tourism boom helps hotel developers earn more

The sharp increase in the number of tourists visiting Vietnam is good news for hotel developers. Real estate developers, anticipating the new wave of tourism development, have been rushing to build more hotels.
In the third quarter of 2010, the “gold inlaid” five-star hotel Grand Plaza with 400 rooms was put into operation. Two other three star hotels Oasis and Asean have also become operational, thus raising the total number of new hotel rooms to 560. The newly operational hotels increase the total number of rooms ready to serve tourists by seven percent in comparison with the same period last year and by 10 percent in comparison with the second quarter of 2010.
According to Savills Vietnam, a real estate service provider, to date, Hanoi has had 41 3-and-higher-star hotels with 6000 rooms, including 5-star hotels, seven 4-star and 24 3-star hotels.
Also according to Savills Vietnam, Hanoi expects to have 33 more hotels to be put into operation in the time to come. In the immediate time, three hotels will officially join the market, including Oriental Pearl Hotel on Phan Chu Trinh street, Hotel de L’Opera (which was once Dan Chu Hotel) on Trang Tien street and Crowne Plaza Hanoi located in the west of the city, which will provide 550 rooms.
Vu The Binh, Director of the Travel Department under the Vietnam National Administration of Tourism (VNAT), said that in 2010, the number of foreign tourists to Vietnam may reach the record high of five million. These include 770,000 travelers from China, 400,000 from Japan, and 350,000 from the US. Besides, Vietnam also receives the tourists from Taiwan, Australia, Cambodia, Thailand, Malaysia and France.
Robert Mcintosh, Managing Director of CBRE Asia Pacific, a real estate service provider, said that the increasing number of tourists to Vietnam should be seen as the good news for hotel business. However, he said that hotel developers should draw up clear business strategies right when they decide to do business in this field. They should point out who will be their target clients, so that they can have a suitable design, thus allowing to optimize profit. Every hotel should provide the kinds of services that fit their target clients. He also said that it is necessary to have specific services for domestic travelers – the clients with great potentials.
However, according to CBRE, the turnover of 5-star hotels has decreased by 10 percent in comparison with the same period last year, while the turnover of 4-star hotels has decreased more sharply, by 31 percent. The noteworthy thing is that the turnover has decreased even though the hotel room occupancy has increased. This can be explained by the fact that the hotel room rates have been decreasing in all market segments. Especially, the room rates of five star hotels have dropped most sharply, by 13 percent in comparison with the same period last year.
Meanwhile, according to Savills Vietnam, once new hotel rooms are available, the room capacity may decrease. However, five star hotels, with their big advantages, will still be able to attract businessmen and the clients who book room for conferences and workshops.