City puts new hotels to bed

Rising visitor numbers mean more hotels are needed in the second city

Truong Vinh Tho, head of hotels under the city’s Department of Culture, Sports and Tourism, said: “Ho Chi Minh City’s current 836 hotels are enough for now, however, the number needs to go far beyond that in the future under the city’s coming development plan until 2015 with a vision to 2020.”

According to the department, about 900,000 international tourists visited the city in the first quarter this year, an increase of 6 per cent year-on-year, representing around 60 per cent of all international visitors to Vietnam. The occupancy rate of three-star hotels was around 80 per cent, about 5 to 10 per cent more than the first quarter of 2010.

In 2010, the number of foreign visitors arriving in Ho Chi Minh City was 3.1 million, surpassing the yearly plan by 11 per cent. The city expects to welcome 3.5 million foreign visitors in 2011 and earn a revenue of VND49 trillion ($2.4 billion) from tourism, up by 11 per cent and 20 per cent respectively.

Hotel rates are also on the rise with five-star hotels able to surpass the $100 per room, per night level. Four-star hotels were earning rates of more than $90 per room per night and three-star hotels were selling at around $80.

The southern hub has 10,000 rooms in the upper hotel category, up 7 per cent year-on-year. About half of the capacity is in five-star hotels, and there are 2,000 rooms in four-star hotels and 3,500 rooms in three-star hotels. Another 750 rooms will open in the five-star category by the close of 2012 with budget and economy hotels also being prioritised.

“We have learnt that domestic developers are now mostly in the one to three-star hotel category while the upper end of the scale is dominated by foreign developers. However, more hotels built by domestic developers at all levels are on the way in districts 1, 2 and 7 ,” Tho said.

For example, Saigon Tourists Limited Company is upgrading many three-star Que Huong hotels into four-five star internationally-managed hotel brands.

“The occupancy rate for three- to five-star hotels in 2010 was 70 per cent, quite a high rate, so with this momentum, foreign developers are coming to develop budget and economy hotels as well,” he added.

Viethan Hotel Joint Stock Company’s development of ibis hotel in District 7 is an example. The hotel got off the ground last September and will be open in about 20 months’ time. This will be the first hotel in Vietnam bearing the three-star brand ibis of the European hotel management group Accor. The ibis project cost is $11 million and it will have 160 rooms.

Brett Ashton, managing director of Savills Vietnam, said: “With its prime location in the southern area and as regional business and administrative centre, Ho Chi Minh City has seen an increasing number of both international and domestic arrivals, which is expected to strengthen the growth of the city’s hotel market.”

“The hotel market in Ho Chi Minh City has a further 15 projects that are estimated to come online in 2013 onward, however, there are only two projects that are under construction with a total of 810 rooms. Due to the current lack of bank financing available to developers it is likely that many of these planned developments will be delayed,” Ashton added.