In the first half of 2007, the hotel room occupancy rate was between 90-95%, and even 99% for some hotels in HCM City.

Skyrocketing hotel room rates keep foreign tourists away

Hanoi needs many big hotels

Lack of rooms, not small thing!

High rates close door on tourists

The tourism sector is trying to build the image of Vietnam as an attractive, safe and friendly destination. Vietnam’s plan is to lure six millions foreign visitors by 2010 but the unbalanced development of the hotel sector has made the efforts of the tourism sector to court high-class travellers and fulfill the six-million visitor plan by 2010 to become more difficult.

Hotel room prices up, competitiveness down

In the first half of 2007, the hotel room occupancy rate was between 90-95%, and even 99% for some hotels in HCM City. Along with high occupancy rate, the room prices were pushed up.

Travel companies complained that the room prices of big hotels increased by 100% compared to the same period of 2006. This situation affected the competitiveness of Vietnam’s tourism sector. Many groups of visitors cancelled their tours to Vietnam because of high room prices.

Tourism companies said that they had signed room leasing contracts with hotels in advance but those hotels kept trying to increase room prices and asked them to re-sign contracts. As a result, those companies had to re-negotiate with tourists to increase tour prices.

According to the MICE Tourism Centre (CITE) under the Ben Thanh Tourist Company, a MICE (Meetings, Incentives, Conferences and Events) tourist in Vietnam has to spend US$180 per night while for a room of the same standard it is only $100 in Thailand.

To restrain room prices in HCM City and Hanoi, Hoang Anh Tuan, Minister of Culture, Sports and Tourism, said that the ministry would ask the government for help in terms of formalities for new hotel projects in Vietnam. From now to 2010, Vietnam needs 15,000 to 20,000 rooms of 4-5 star standard to meet the development of tourism.

In the first six months of 2007, the HCM City People’s Committee instructed the local Department of Tourism to strictly control the increase of room prices in the city but this task was impossible because of over-demand for hotel rooms.

According to statistics of the Vietnam National Administration of Tourism, some provinces that have attractive tourist sites are exploiting those sites and not re-investing in them. Vietnam currently has 8,556 hotels with 170,551 rooms. Of them, there are 25 five-star, 65 four-star, 141 three-star hotels and the remaining are 1-2 star hotels.

At this moment, Vietnam welcomes around 13,000 foreign visitors a day. Though the number of foreign visitors coming to Vietnam is growing rapidly, especially the volume of businessmen-travellers, the number of high-class hotels hasn’t been increasing.

The lack of rooms has urged hotel owners to increase room prices by 30-50%. Some hotels have even increased their room prices by 200% over the past two years. The prices for tours, as a result, have also risen, turning Vietnam into one of the destinations with the most expensive tour prices in the region.

Le Ngoc Ha, General Director of the Hoang Ngoc Resort in Mui Ne-Phan Thiet, said that there were two sources of foreign visitors coming to Vietnam. The first is normal tourists and the second is businessmen who come to Vietnam to seek investment opportunities and to travel as well.

Compared to other destinations in Southeast Asia like Thailand and Indonesia, which are unstable, Vietnam’s safety is an advantage for its tourism sector but as hotels break their contracts with foreign travel companies, those companies will not bring travellers to Vietnam but to other countries.

Unsustainable business

Several months ago, to solve this issue, the Vietnam National Administration of Tourism discussed the serious shortage of 3-4 star rooms at all tourist sites in Vietnam. All resorts in Vietnam have begun to realise that the increase of hotel room prices in HCM City and Hanoi has really affected their business.

Though room prices have been increasing for the past one year, during this time, the volume of tourists coming to Vietnam hasn’t declined since demand was much higher than supply. In the long-run, the volume of travellers coming to Vietnam will decrease and hotels in Hanoi and HCM City will no longer maintain their current way of doing business, which is considered living from hand to mouth.

Mr. Ha said that the state should set the maximum percentage which room prices are allowed to increase each year.

When foreign visitors come to Vietnam, they arrive in Hanoi or HCM City, then go to other tourist sites like Hoi An, Hue or Mui Ne, etc. However, hotels in Hanoi and HCM City have raised their room prices, even by double, from $70-80 to $140/night at four-star hotels, breaking contracts with tourist companies. Foreign tourists, thus, go to other countries. They don’t come to Hanoi or HCM City, which means that tourist sites in Vietnam don’t have tourists.

In addition, service quality at many tourist sites is low and they are short of tourism human resources. These also partly affect the competitiveness of the tourism sector compared to other countries in the region.

For hotel or tour booking, you can contact Vietnam Homestay Specialist at: www.vietnamhomestay.net 

(Source: TBKTVN)