No vacancy: high-end hotels need room to grow

Overtime: Vietnam urgently needs more luxury hotels

Occupancy rates at luxury hotels in Ho Chi Minh City surged to peak levels during the recent holiday season, with the Sofitel Plaza Saigon, Omni Saigon, Caravelle, Legend, Sheraton Hotels & Towers, Renaissance, New World and Equatorial feeling the crunch.
Do Thi Bao Tram, communications manager of the Caravelle, said her staff was being forced to turn away guests looking for last-minute rooms.
“As our rooms are full of guests, we are finding it hard to accommodate those who have made reservations three or four days in advance.”
The hotel had an occupancy rate of nearly 100 per cent in December, with room reservations for that month approaching 90 per cent.
The five-star Renaissance hotel also reported brisk business last year, with an average occupancy rate of 90 per cent, 60 per cent of which were business clients.
Daniel Kipping, director of sales and marketing for the Renaissance, said that with Ho Chi Minh City’s plans to upgrade its airport facilities and other infrastructure and create a tourism police, along with the growth of the international business presence, the future looked bright for the city’s hotel industry.
In addition, tourist arrivals in Vietnam have been steadily growing, with the aviation industry adding new flights and opening new routes to the southern city in recent years.

Under-supply
Vietnam welcomed about 2.9 million international visitors last year, up 31 per cent from 2003, according to the Vietnam National Administration of Tourism (VNAT).
The majority of these tourists were from China, Taiwan, the US, Japan and South Korea, with numbers of the latter two rising significantly after visa exemptions were granted to those countries in the middle of last year.
With 1.58 million foreign arrivals last year, Ho Chi Minh City was the country’s leading tourist destination, accounting for over 40 per cent of the industry’s total revenue of VND26 trillion ($1.66 billion) in 2004.
Hoteliers and travel agencies said those numbers could have been even higher if major hotels in the city had been able to adequately accommodate guests.
Nguyen Viet Hung, director of Ho Chi Minh City-based Fiditour, said the company has had to refuse many tour groups from Europe and Japan because of a shortage of four- and five-star hotel rooms.
Other tourism companies also reported difficulty in organising tours in Hanoi or Ho Chi Minh City because of a lack of rooms at high-end hotels.
According to the VNAT, Vietnam currently has 18 five-star hotels and 41 four-star hotels, with Ho Chi Minh City home to nine five-star hotels with 3,400 rooms, five four-stars with 1,090 rooms, 14 three-stars with 1,400 rooms and some 2,100 rooms at hotels with lower ratings.
As the number of MICE (meeting incentive conference events) grows in Ho Chi Minh City and Hanoi, these cities will have to build more luxury hotels to accommodate demand, said industry experts.
“We are seriously concerned about the accommodation problem for tourists coming to Ho Chi Minh City. Most hotels in the city have already been fully booked for the coming season, while the rooms are limited,” said Nguyen Thi Lap Quoc, director of the Ho Chi Minh City Department of Tourism (DoT). “In the future, we must provide more hotel facilities for the increasing number of tourists.”
A survey conducted by the DoT shows that most of the demand is for high-end rooms. Ho Chi Minh City’s room occupancy rate was 48 per cent for low-grade hotels, while it was as high as 80-90 per cent at luxury ones in 2004. “Therefore, we are encouraging companies to build luxury hotels. As no land is available within city limits, investors can turn to new urban towns in districts 2 and 7. We will provide all infrastructure facilities for them to develop hotels in these areas.”

Boom in mid-sized cities
While Ho Chi Minh City and Hanoi are facing a dire shortage of luxury hotels, the country’s central region is witnessing a hotel and resort explosion, with most of the construction occurring in medium-sized cities.
In central Quang Nam province, for instance, Indochina Resort Ltd is building a $30 million resort on a beach near two world heritage sites, Hoi An and the My Son ruins.
The 31 ha resort, to be called Nam Hai, is scheduled to open by the end of this year, offering full facilities and services, including swimming pools and spas. General Hotel Management, a company that runs boutiques resorts in Bali, has been contracted to manage the hotel.
According to the General Hotel Management, the resort will target affluent tourists that “Vietnam has not attracted, tourists that often go to places such as Bali”. This type of traveler has a lot of spending power and can stay one or two weeks or even a month, the manager said.
Several other new hotel and resort projects have been licensed in the region in the past few years. Four luxury hotels and resorts will be completed in the next two years in the historic town of Hoi An, including the Golden Sand and Faifo.
In Hue, four luxury hotels will be built in the next two years. Nguyen Huu Dong, director of the Huong Giang Tourism Company, said his company is working on several hotel projects in Hue designed to meet the increasing number of international visitors, including upgrading the four-star Huong Giang hotel into a five-star facility and increasing the number of rooms from 100 to 200.
The Huong Giang Company has also set up a joint venture with a French partner, the Indochine Developments, to build the four-star Kinh Thanh hotel, which has an investment capital of $5 million. The company is also working with domestic investors to build the five-star Hung Vuong hotel and the 100-room Tan My-Thuan An resort, he said.
The tourism boom in Quang Ninh province’s Halong Bay has spurred the development of new hotels there, including the 88-room Mithrin and the 184-room Dream.
Other tourist destinations, including Haiphong, Nha Trang and Phan Thiet, have recently broke ground on a number of hotel projects.
“A market for luxury travellers is taking shape in Vietnam. Therefore, the construction of new hotels in hot tourist spots in the central region is necessary,” said Pham Tu, deputy head of VNAT.
He added that the development of new hotels was in line with the government’s strategy to highlight tourism, which is expected to see a growth rate of between 10 and 11 per cent in 2005, as one of the country’s key industries.
“Vietnam has long been considered a budget destination for international travelers because it lacks expensive facilities. But once these new hotels are operational, this will change,” Tu said.