While some indicators in the Hotel Survey 2014 released by Grant Thornton were on the rise there were others heading downwards, but neither to any significant extent.
International visitors to Vietnam in July were estimated at 564,736, an increase of 4.6 per cent against June but down 14.2 per cent over the same period last year. Total international arrivals in the first seven months of 2014 stood at 4,852,621, 15.6 per cent higher than in the same period last year. In 2013 Vietnam welcomed 7,572,352 international visitors, for a 10.6 per cent rise and just a touch lower than the 13.9 per cent growth recorded in 2012. The number, though, actually exceeded the expected 7.2 million international tourist arrivals for the year. “As our hotel survey reviews results from operations in 2013 it does not make any forward looking projections,” said Mr Ken Atkinson, Executive Chairman of Grant Thornton Vietnam. “However, as we have seen from the visitor arrival numbers, 2014 promises to be a better year for hoteliers, with arrivals up approximately 15 per cent in the first seven months. Had it not been for the tensions surrounding the East Sea the results would have been much better. In the first four months of 2014 arrivals were up over 21 per cent, with arrivals from China up 46 per cent.”
According to Grant Thornton’s Hotel Survey 2014, revenue per available room (RevPAR), a standard industry measurement of room utilisation and return, revealed a slight decrease in 2013 of 0.4 per cent, from $54.44 in 2012 to $54.22 in 2013. The decrease was caused by a fall in average room rates (2.7 per cent) and an increase in average occupancy rates of 2.4 per cent. The decrease was also the result of a significant loss of 14.6 per cent in RevPAR in three-star hotels. Meanwhile, four-star and five-star hotels recorded good performance in 2013, with RevPAR increases of 1 per cent and 2.4 per cent, to $52.7 and $71.79, respectively.
2013 saw an overall decline in room rates in all star rankings, of which five-star hotels experienced a significant loss of 5.5 per cent, followed by four-star and three-star hotels with 4.7 per cent and 3.1 per cent, respectively. By region, the central and the central highlands region fell 7.5 per cent in 2013 compared with 2012 but was higher than room rates in the northern region. Average room rates continued to fall in the north, at 2.6 per cent, while the southern region saw an increase of 3 per cent compared with 2012, reaching an average of $90.03 per night. In 2013 hotels experienced an increase of 2.2 per cent in average room rates while resorts continued to fall significantly, at 10.3 per cent. The latter’s decline was primarily due to a fall of 9.7 per cent in five-star resorts and 9.6 per cent in four-star resorts located mainly in the central and central highlands region.
Average occupancy rates in 2013 increased 2-4 per cent compared to 2012. The north saw an improvement of 2.7 per cent while the south performed worse than in the previous year, with a decline of 1.7 per cent. Occupancy rates in the central and central highlands region also performed much better than in 2012, with growth of 3.7 per cent. Four-star and five-star hotels saw good performance in occupancy rates, with high growth of 3.6 per cent and 4.7 per cent, while three-star hotels experienced a decline of 8.1 per cent.
|VIETNAM’S HOSPITALITY SECTOR: FOOD FOR THOUGHT|
|• According to VNAT, one of the most significant issues facing Vietnam’s tourism industry is the limited number of qualified local staff.
• Vietnam currently has the highest visa costs for foreign visitors of any country in the region. It would be greatly beneficial for the country to reduce its visa fees and simplify its visa application process, as it is currently very bureaucratic.
• A lack of trained human resources and entertainment and recreation service personnel is likely to challenge some of Vietnam’s tourism destinations.
• Water scarcity and wasteful water use in many tourism destinations are also serious issues that need to be addressed.
• In addition to these issues, the sector still faces other pressing problems. These include a shortage of funding for tourism promotion activities, improper management over travel and tourism agencies, and traffic accidents.
According to the Hotel Survey, the proportion of international travellers out of total travellers staying in three- to five-star hotels was lower than in 2012. The ratio of international travellers staying at hotels in the central and central highlands region increased 1.9 per cent compared with the previous year, while declines of 1.6 per cent and 9.7 per cent were seen in hotels in the north and the south. In 2013 Asian guests, including Vietnamese, held top place in regards to origin of guests staying at hotels, comprising 47.1 per cent, for an increase of 0.3 per cent compared with the year prior. “I believe that foreign visitor arrivals will continue to grow steadily at over 10 per cent, with significant growth in specific destinations like the central coast, Cam Ranh and Phu Quoc Island,” Mr Atkinson said.
According to the Vietnam National Administration of Tourism (VNAT), as at December 2013 there were 15,210 hotels throughout Vietnam. Of this total, 86 were five-star, 223 four-star, and 377 three-star. The number of rooms provided by hotels nationally rose 13.9 per cent, to a total of 324,800.
In 2013, approximately 69.6 per cent of surveyed hotels had plans to expand, add more services, or renovate their properties; an increase of 1.9 per cent against 2012. Renovation plans accounted for the majority, while only 30.4 per cent of hotels had expansion plans. Renovation plans were also at the top of the list across all star categories. Four-star hotels continued to favour renovation as the most important plan for the next two years, as answered by 76.9 respondents. More three-star hotels had expansion plans than five-star hotels.
Hotels in the south reported an opposite trend to 2012, with an increase of 20 per cent in the average number of hotels having expansion plans. However, the result for the central and central highlands region showed that hotels had more plans to add more services, with an increase of 17.4 per cent, but less for renovation, with a decrease of 4.3 per cent. The north had an overall increase in the number of respondents for all options.
Meanwhile, interest in hotel and resort developments is starting to return generally and specifically in certain areas such as Phu Quoc. “Vietnam has great potential for investors in hotels and resorts as it offers a beautiful coastline, numerous heritage attractions and wonderful, welcoming friendly people, but hotel and resort developers must take into account the lack of adequate infrastructure in many areas and plan accordingly,” said Mr Atkinson.
The challenges for developers, according to Mr Atkinson, remain very much the same as they have been for many years. These include the inconsistent application of rules and regulations concerning land leases and the allocation of land, lengthy delays in the submission and approval process for new developments, delays and costs in site clearance and compensation, and a lack of real transparency regarding land use fees. All of these lead to very lengthy delays and added costs in the development and implementation of new projects, with the time from conception to licence issuance and the starting of construction often taking from three to five years.