Hoteliers to swallow a bitter pill

“2013 will be a challenging year for the hospitality industry in general as the economic growth is forecasted to keep moving slowly,” said Celine Guyomarc’h, general manager of Melia Hanoi Hotel. 

“We have to anticipate, adapt to the trends in order to be always competitive. We still expect to achieve positive results, although we know that we will have to strive hard to do so.”

Dao Thanh Tung, sales and marketing director of Silk Path Hotel Hanoi, said 2012 was a difficult year for hotel market and Silk Path. Though the total number of arrivals in Hanoi increased significantly over 2011, most visitors cut unnecessary expenditure due to tight budgets.
 
“Looking ahead, Silk Path Hotel will continue to face many challenges in 2013 as the market received the new supply at the end of 2012 and early 2013, raising the risk of oversupply where competition within each and between the different segments will be tougher than 2011,” shared Tung.

According to a CBRE report, by the end of 2012, Hanoi’s hotel market had 8,673 rooms, representing an annual growth of 5 per cent, more modest than the 12-13 per cent growth enjoyed during  2010-2011.

CBRE said 2012’s fourth quarter was high season and showed improved performance in all segments quarter-on-quarter, except for a slight decrease in average daily room rate (ADR) of three-star hotels. On the contrary, compared to 2011, 2012 was a worse year throughout the market, most severely in the three-star segment. A few three to four-star hotels suffered worsening performance year-on-year over several quarters.

In 2012, visitor arrivals to Hanoi increased significantly over 2011. The city received around 1.6 million international visitors, up 27.4 per cent, and 8.46 million domestic visitors, up 8.2 per cent, over the previous year.

Visitors to Hanoi in 2013 will keep increasing with an expected annual growth of international and domestic visitors up to 10-12 and 8 per cent, respectively. Occupancy might rise slightly by 3-5 per cent on average, while the ADR might fall 3-5 per cent for three- and five-star segments and 6-8 per cent for the four-star segment.

The hospitality industry in general, Guyomarc’h said, has struggled with reduced demand because of the economic slowdown. The increasing number of competitors compared to previous years is also creating pressure, as the number of visitors staying in Hanoi is not increasing as fast as the number of rooms available.

CBRE said that 2013 would see an increase in supply of 1,000 rooms, over half of which will be in the five-star segment.

Two famous brands, International Hanoi Hotel and Hilton Garden Inn, are expected to debut in 2013’s first quarter with 450 rooms, raising the risk of oversupply and increased competition within and between the different segments.