Danang's hotels and resorts see the upturn

According to its latest newsletter last week, tourist arrivals had increased every year since 2006, with a compounded annual growth rate of 16.1 per cent. In the first half of this year, arrivals reached 1.5 million, up 16.4 per cent year-on-year. Arrivals in the second quarter were especially strong due to the International Fireworks Competition held in April, which attracted an estimated 395,000 visitors.

Arrivals are expected to continue to grow by an average of 14.5 per cent per annum to reach four million by 2015 and eight million by 2020. This means that in only three years from 2012 - 2015, arrivals are expected to increase by 1.3 million visitors, or a staggering 48 per cent increase.

“Should this forecast prove accurate and with limited additional supply expected to come online during this period, the existing properties can expect a continued upward march in occupancy and room rates, particularly during the high seasons,” Alternaty said.

According to Alternaty, international arrivals from China accounted for an incredible 50 per cent of total international arrivals to Danang. Although the Russian market dominates arrivals in other coastal destinations such as Nha Trang and Mui Ne, they have yet to make their presence felt in Danang.

However, it seems that midscale resorts are increasingly turning their attention on capturing this market by signing deals with some of the major Russian travel agents who are purchasing large blocks of room inventory. International arrivals from Russia are expected grow.

The Ho Chi Minh City-based real estate firm said that occupancy of hotels in the central city reached around 65 per cent and tended to be less volatile compared with resorts as they are able to mitigate low seasons with Meeting, Incentive, Conference and Events (MICE) and corporate business from Ho Chi Minh City and Hanoi.

Nguyen Duc Quynh, deputy executive assistant manager of Furama Resort Danang, a 5-star hotel, told VIR that organising events was one way to attract visitors.

Quynh added that the hotel’s convention facilities featured the largest grand ballroom in central Vietnam. Revenue from events in eight months of this year accounted for 35 per cent of the hotel’s total revenue.

Danang authorities planned to brand the coastal city as the “city of events”, with it hoping to host APEC and ASEAN meetings and public events such as fireworks performances.

According to Quynh, hotel supply in Danang had rapidly increased in recent years.

According to Alternaty, the city hotels were dominated by one to three stars properties, offering value for money at very low price points, with average room rates in the range of $15 to $35 per night.

Upmarket hotels were setting room rates at around $45 per night and had so far succeeded in justifying a contained price premium over local products.

However, rates remain far below that of the resort segment. Local beachside resorts and particularly internationally managed and high end boutique resorts were achieving average room rates in the range of $140 per night with the lowest being below $110 for the newly opened or newly rebranded properties with the upper level being $170 - $180 for the more established names.

Rates typically fall by 20-25 per cent in the low season.