City hotels remain cautious after promising quarter

“First quarter results were very good and our occupancy in average was around 80 per cent. The main contribution is from business travellers, while leisure market recovery is still slow,” said Makoto Inoue, director of sales and marketing of Hotel Nikko Saigon.

City hotels remain cautious after promising quarter

Similarly, the occupancy rate at Sofitel Saigon Plaza has been higher than even before the pandemic. “Roughly, we are averaging around 80 per cent and we see a strong return in corporate travellers due to our location, with a steady increase in leisure travellers,” said general manager Mario Mendis. For the same period of last year, the occupancy rate at the city hotel was only 26.8 per cent.

According to Philippe Le Bourhis, general manager of Hotel des Arts Saigon, the international market has recovered to pre-pandemic levels. “We saw business travellers coming back slowly from April 2022 as they had to reconnect with their teams, factories, or clients,” Le Bourhis said. “The international leisure market recovered strongly from the end of 2022. During the first quarter of 2023, our market has recovered and we notice a stronger demand for long-haul travellers who were unable to do so during the pandemic,” he added.

Julian Wong, general manager of Sheraton Saigon, said the hotel’s Q1 occupancies are also above pre-pandemic levels. “We are seeing a much faster business travel recovery compared to leisure. The events industry looks very promising in 2023, with larger-sized international groups of between 100-200 rooms, from long-haul feeder markets this year as opposed to the mainly regional events movements last year,” said Wong. “From a leisure standpoint, we anticipate traditional pre-pandemic regional key source markets such as China and India to ramp up by Q3.”

On the path towards recovery, the city’s hotels embarked on various transformations. Sofitel Saigon has buffed up its outlet offerings by recreating a whole new ecosystem of businesses. It added the cigar and whisky shop Habanos, Ministry of Men bar, gentlemen’s barbershop House of Barbaard, private wellness club RESET, and a showroom for the export of Japanese fine foods through the Japan External Trade Organization, among many others.

“With these businesses, we created new cashflow-positive revenue, thus also creating new demographics of clients and guests to our hotel,” said Mendis. “Our owners are now more open to further investments in creating concept food and beverage (F&B) venues throughout the hotel.”

For Hotel des Arts Saigon, new luxury level standards have been developed. “We have organised several F&B events to portray the strength of our outlets, especially the Social Club restaurant and rooftop,” Le Bourhis explained. “We also launched a new series of art events, starting with French photographer Rehahn’s latest impressionist collection. The objective is to develop luxury experiences through lifestyle and fashion.”

However, those in charge of such hotels are keeping a cautious eye ahead for the rest of the year in terms of their finances.

“With a robust demand in Q1 citywide, we are fortunate to be in a better off position than 2019’s business wise; however, we are also cognisant to the fact that there are some dark clouds on the horizon due to the softening or contraction of key industries such as real estate, IT, and manufacturing,” said Wong of Sheraton Saigon.

The Sofitel’s Mendis said he will be cautiously optimistic. “We can see that various sectors have suffered setbacks so it’s going to take a toll,” he noted. “One major challenge is the lack of experienced staff. We have downsized, too, but we will probably not need to rehire that many people. Many of our added services now are run by partnered businesses,” he said.

The lack of experienced staff also continues to be the most acute problem for Inoue of Hotel Nikko Saigon. “Recruitment and retention are tough,” Inoue said. “When the hotel industry suffered in 2020 and 2021, we were forced into downsizing our business. Due to the current steady demand growth, it is hard to retain the high-quality services of a 5-star hotel. However, we are very optimistic about the bright future of our industry overall, and this difficulty could be seen as a good opportunity for us to turn things around.”

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