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Temporary travails

Released at: 08:58, 27/10/2014 Hospitality Sector

Temporary travails

Regional issues have affected hotels and resorts in Vietnam to some degree but resilience will remain in the longer term.

by Linh San

Hoteliers throughout Vietnam started 2014 with good business results in the first four months but a number of challenges arose during the second quarter. “The hotel was running well in terms of both occupancy and room rate through the first four months, but was then affected by the political circumstances in the region, such as the East Sea dispute and the Bangkok protests,” Mr Phuoc Dang, Director of Sales and Marketing at La Residence Hotel and Spa in Hue, told VET. “Year to date, the hotel’s performance has not quite met expectations due to these issues, but we are still doing better compared to the same period last year.”

Mr Nguyen Duc Quynh, Executive Assistant Manager of Furama Resort Danang, tells a similar tale. “Our business performance in the first four months was good, but due to the suspension of some direct flights from cities in China to Da Nang, over the last three months our business volume has fallen 10-15 per cent,” he said. He added, however, that as May to July is the holiday season in Vietnam the occupancy of hotels in Da Nang was still high, at 75-80 per cent, but it may be lower after the season finishes in September. “I forecast our business performance for 2014 will be around 10 to 15 per cent lower than in 2013,” he said.

Business in Nha Trang, meanwhile, remains strong despite the new competition in the market, according to Ms Catherine Racsko, General Manager of the Sheraton Nha Trang. But business has fallen slightly year-on-year, as a result of the Korean ferry disaster and the recent tensions in the East Sea. 

While the recent political and social tensions affected the country’s tourism sector in the second quarter, the year as a whole may still be positive, according to hoteliers. “There are more direct international flights coming to major hubs like Ho Chi Minh City, Hanoi and Da Nang,” said Mr Dang. “Vietnam also has more UNESCO-recognised sites and as such we believe more visitors will come our way.” He added that La Residence Hotel & Spa will strive over the remainder of 2014 to reach its revenue target. “We have launched and will be launching many sales and marketing campaigns until the end of the year, both at the hotel and at the group’s regional level,” he said. “We plan to introduce a number of attractive packages to encourage spending among in-house guests.” The hotel is also focusing on and pushing more aggressively in the domestic market, since the number of high-spending Vietnamese travellers is increasing dramatically every year. 

Mr Quynh from Furama doesn’t believe it can achieve the occupancy rate recorded in 2013 but he hopes to achieve the same revenue as in 2013, as the average room rate is higher than last year. “Besides traditional markets such as Australia, Europe and the US, we have focused many marketing efforts on South Korea and Japan, where airlines have opened direct flights to Da Nang,” he said. “The domestic market is always the market that hotels and resorts should rely on, as it isn’t so sensitive to events.”

“With a stable political and economic system, a profound history and beautiful landscapes, as well as an increasing number of ASEAN travellers, Vietnam will remain an attractive destination for hotel developers.”

Mr Phuoc Dang, Director of Sales & Marketing, La Residence Hotel & Spa in Hue

Sentiments shared at the “Hotel Investment & Management in Vietnam - Lessons from Across Asia” event held in Ho Chi Minh City by CBRE in June indicate that hotel occupancy throughout the country had generally been stronger over the last three years. Rates in Ho Chi Minh City and Hanoi are now inching closer to other major regional cities such as Jakarta and Kuala Lumpur. While there is an increase in hotel supply predicted for Hanoi and Ho Chi Minh City over the next three years - around 8 per cent in total - this is less than the number of projects proposed for Jakarta and Kuala Lumpur, where supply may grow by 20 per cent if all proposed projects actually proceed. Da Nang has performed particularly well over the last few years but its exposure to the Chinese market may present challenges in the very short term. “The longer-term outlook appears positive at present,” said Mr Robert McIntosh, Executive Director of CBRE Hotels, Asia Pacific. “The qualit