Hotel market in for some more pain

30 Jul
The global economic downturn and swine flu could put a big dent in hotels’ profits. According to General Statistics Office, foreign direct investment for the first half of 2009 was only $8.9 billion, a strong decrease of 77.4 per cent compared with the same period of last year, while the Ministry of Health last week also confirmed more than 400 cases of swine flu infections in Vietnam.

According to Vietnam National Administration of Tourism, the country received 1.9 million international travellers in the first half of the year, a 19 per cent decrease year-on-year. This negative trend in international travel is expected to hurt five-star hotels the most and not any hotel has prospered in the current market. CBRE managing director Marc Townsend said it could be another six or 12 months before Europeans started travelling again.

According to CBRE, occupancy rates were down across the whole sector with five-star hotels down 15 per cent year-on-year to 50 per cent while four and three-star hotels were both down 25 per cent year-on-year to 39 and 43 per cent occupied rates respectively. Average daily rates also fell year-on-year but not as much as expected. Five-star hotels only declined 3 per cent year-on-year to and average daily rate of $150 while four-star hotels fell 10 per cent year-on-year to $67 and three star hotels only fell 5 per cent to $37.

“Our suggestion for hoteliers is to closely catch up with the market’s changes as well as being flexible in the rents,” said Townsend. Nathan Cumberlidge, head of Colliers International’s Market Research and Valuation Department, said the tourism industry should begin to recover in 2010.

“The market is, however, becoming more competitive with a number of large chains entering or expanding in the market such as Novotel, Intercontinental and Marriot,” Cumberlidge said. “It can be seen with five-star hotels in Hanoi moving away from the traditional Hoan Kiem and West Lake location looking to take advantages of the business and conference community in the new central business development area,” he added.
Five-star hotels due to come on line in Hanoi include the 630-room Hanoi Plaza Hotel, 350-room Crowne Plaza Hotel, 383-room Intercontinental Landmark hotel and the 300-room Time Square hotel.

The Hanoi Administration of Tourism targets two million foreign visitors to Hanoi in 2010, implying a requirement of approximately 24,000 hotel rooms, 6,800 of which will need to be of four or five-star quality.

According to CBRE, Hanoi now has 5,784 three, four and five-star hotel rooms. Of those were nine five-star hotels with more than 2,830 rooms.

Source: VIR

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