Tourist numbers are up and discounts are down

As SARS took hold competition heated up

As a result, major hotels such as the Omni Saigon Hotel, Hanoi Horison Hotel and the Melia Hotel in Hanoi have said they will end their discount promotions.
Although the Japanese and European tourism markets are still very weak, hotels in Ho Chi Minh City and Hanoi are seeing an increase of visitors from South Korea, Thailand and other regional countries. Tourism from Europe and Japan is expected to pick up in the fourth quarter.
Saigontourist, Vietnam’s largest tourism operator, recently took a 450-person tour group from Malaysian insurance firm Great Eastern on a four-day tour of the south.
Earlier this month, the company also welcomed the Super Star Leo ship with 1,800 passengers to Halong Bay, the first cruise ship arrival since the SARS outbreak. Vietnam Airlines has restored flights to Beijing and Taiwan that were suspended due to SARS.
Hotel developers are actively focusing on new city and resort hotels in Vietnam to accommodate the new demand. Focus is on mid-market and luxury hotel rooms, modern conference facilities and new exhibition spaces.
The general manager of Ho Chi Minh City’s Omni Saigon Hotel, Henk Meyknecht, said the buy-two-get-one-free programme would not be extended beyond September in most international hotels given the tourism growth.
Hanoi Horison Hotel general manager Jan Hilhorst agreed, saying business was picking up again and most hotels were doing well with around 50-60 per cent occupancy in August – double the rate of the April-May period.
Melia Hotel general manager Alfonso Romero said business, MICE (meeting, incentive, conference, exhibition) and corporate markets in particular had started to recover since June and he would not extend his discount campaign past October.
Hoteliers said that by ending the discount programmes for the leisure market, nearly all hotels in Ho Chi Minh and Hanoi were protecting their average room rates as they believed the future outlook was positive and not in need of further subsidising.
Meyknecht said although hotels were still well below last year’s financial performance, the short-term outlook was positive and promoting the SEA Games 22, to be held in early December, would play a key role in promoting Vietnam.
The hotels agreed to initiate the ‘two plus one’ summer programme in June, offering a complimentary third night to key travel agents in addition to a million-dollar overseas promotion campaign by Vietnam Airlines.
In effect, the hotels were offering a 30 per cent discount by giving away the third night free of charge. Other hotels also extended discounts to their restaurants, as well as free drinks, late check out benefits, special shopping vouchers, and complimentary airport transfers.
The discount campaign has been conducted in the past few months after tourism business plummeted during the outbreak of the deadly virus earlier this year. But opinions of the effect of SARS differ.
Meyknecht said most domestic travel agents had clearly been benefiting from the market recovery and some airlines had even included the two-plus-one programme in their brochures to boost seat occupancy in airlines flying to Vietnam.
“It took at least four to six weeks before the two-plus-one discount programme reached consumers in Asia, Australia and Europe, and during recent weeks it has clearly boosted demand, especially from regional markets,” he said.
However, Jan Hilhorst said the response from the campaign was not so good because the problem was not the price but SARS.
He said SARS had again started a price war among Hanoi hotels, referring to a five-star hotel that had been offering three-star hotel rates.
“I strongly believe this is a wrong strategy, especially for a five-star hotel. These are not solutions and show that some hotels do not know exactly what to do in a time of a crisis,” he said.
Meyknecht said the tourism industry in Vietnam must stop discounting its prices for hotels and other tourism services to sustain investor confidence.
This year will go down as the worst year in tourism history as hotels reported historically low occupancy rates in April and May after the SARS outbreak.
Some regional airlines even cut flights to Vietnam to save costs, and tourism shops in popular tourist cities have reported serious financial problems this summer due to the absence of visitors. Nearly all hotels and travel agents implemented cost-cutting measures to protect their profit performance.
Vietnam authorities have downgraded their expectations for visitors this year in the wake of SARS. They originally expected arrivals to rise to 2.8 million but now they are cautiously hoping for just 2 million tourists in 2003.
There were 1.2 million foreign visitors to Vietnam in the first seven months of the year, a 19 per cent decline compared to the same period last year.