Golden age dawns for Vietnam’s two and three star hotels

VietNamNet Bridge – A recent survey suggests that the Great Recession brought a shift in the preferences of hotel customers here that may persist though the economy’s again expandingstrongly.

Roses for mid-level star hotels

A survey on hotel service released in mid-June by the Grant Thornton business advisory firm reveals two distinct tendencies. Business at two and three star hotels held up well during the Great Recession and now their business is booming. Business at four and five star establishments on the other hand, tanked in 2009 and has yet to recover.

The survey covered 50 hotels and resorts across the country, offering a total of 7911 rooms.

Room occupancy at three star hotels in 2009 was two percent above 2008; occupancy fell about ten percent at the elite hotels. Revenue per available room at the three star hotels increased by 0.9 percent in 2009, but fell at the elite hotels.

“We are seeing a pronounced shift in the preferences of clients” said Ken Atkinson, Managing Director of Grant Thornton in Vietnam. The tourism expert predicts the tendency will continue in 2010

Director Phan Dinh Hue of the Vong Trong Viet agency concurs. He reports that about 60 percent of his firm’s foreign tourist clients are choosing two or three star hotels, while nearly 70 percent of domestic travelers chose medium class hotels.

“Foreign travelers used to always ask for four star hotels. Nowadays they mostly choose to stay at three star hotels.” Hue said.

A representative of Vietravel adds that in the first six months of the 2010year, 60 percent of the firm’s clients chose three star hotels.

Tran Kim Long, General Director of Bong Sen Co., says that the company’s three star Bong Sen Saigon and two star Bong Sen Annex now have clients who previously always put up at elite hotels. Another HCMC hotelier, Thuy Cung at the three star Sapphire, confirms that business is improving steadily.

The Thornton survey found that the average cost of a room at a three star hotel in 2009 was $43, off only two percent from 2008. At four star hotels, the average room cost $75, off 12 percent from the previous year. At the five stars, average room prices fell to $130, a drop of 33 percent.

Elite hotels face a sea of troubles

Sven von Moock, a senior executive at the Norfolk Hotel on HCM City’s Nguyen Du street, said that in 2009 his establishment saw a 38 percent decrease in room occupancy even though the hotel reduced its rates by an average 18 percent.

“Most of our clients are businessmen,” Moock said, “and it is understandable that they have to cut down expenses during a difficult period. Scaling back their hotel outlays is a typical strategy.”

Thoi bao Kinh te Saigon newspaper reports that four and five star hotels in HCM City all have seen their hotel room occupancy drop significantly. Some hotels are only forty to fifty percent booked.

The Grant Thornton report said that in 2009 the occupancy ratio of five star hotels decreased by 6.3 percent on average. Business was off a whopping 14 percent at four star hotels.

Notwithstanding current difficulties, luxury hoteliers remain optimistic. “When the economy fully recovers, clients will surely return to 4-5 star hotels,” said Moock at the Norfolk.

Hue from Vong Tron Viet also judges that the difficulties of high grade hotels are just temporary. “Clients will choose the hotels which can provide better services even though when they have to pay more money,” Hue said.

“Therefore, I think foreign tourists will soon return to four and five star hotels, while the percentage of Vietnamese travelers who choose three-star hotels will be as much as fifty percent in one or two years,” he added.

Source: Thoi bao Kinh te Saigon


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