LookAtVietnam – The downturn in global tourism and the declining number of business visitors continue to adversely impact the local hotel sector as many three-to-five-star hotels in HCMC have seen their room occupancy plunge sharply in the first four months of this year,

According to Savills, there are 20 hotels from four- to five-star standard in HCMC, totaling some 5,260 rooms, and around 1,500 four and five star rooms to enter the market in the next four years.

Many four- and three-star hotels have also reduced room tariffs through promotional campaigns to spur their business performance in tough times.

An executive of a three-star hotel group said his company witnessed a decline of 13 percentage points in room occupancy to 80% in the first quarter of this year.

He projected that the low travel season in the coming months would pose more challenges to his three-star hotels as vacancy would be very high, revealing that the number of guests booking in advance up to June showed a mere 30-40% in room occupancy in the three-star hotels.

Savills Vietnam, a market research company, showed in a recent report that five-star hotels in the city went through the first quarter of this year with an average occupancy of 51%, and their average room rate was around US$147.5 per night. Meanwhile, the four-star segment made 62% in average occupancy and US$94 in average room rate per night.

According to the company, hotels in town suffered a significant decline in revenue per available room or RevPAR over last year, and the decline continued in the first quarter of this year due to the current low occupancy.

Savills said RevPAR of four- and five-star hotels in the first quarter of this year was at US$66, a decrease of 18% compared to the forth quarter of last year.

Dietmar Kielnhofer, general manager of the Sheraton Hotel Saigon, told the Daily that if comparing the 2009 market to the heights of 2006 and 2007, all hotels in HCMC are experiencing a much leaner year.

However, he explained such growth and demand experienced in these two years was not sustainable, and said that the current situation was a natural correction of the market.

Kielnhofer said that regardless of the difficulty, the hotel’s profit conversion ratios remained healthy, and its market share even increased.

“Not everything is doom and gloom,” Kielnhofer said, adding that he would run the hotel in the traditional low season by reading the signs of the market, feeling the pulse of the market, listening to customers and showing flexibility while protecting the hotel’s interests.

Although low demand is placing pressure on room rates, a price war is not anticipated among the hotels. Instead, hotels will lure guests by launching promotional campaigns such as discounts and value-added services.

Most hotels of all ratings have their own rate strategy that will be tailored to each and every business or customer they interact with.

“Our strategy remains uncompromising. We manage every situation and every client on a case by case, one by one basis,” Kielnhofer said.

Market research companies predicted that new supply anticipated in the second haft of this year would pose further challenges to hotels in an already difficult environment.

According to Savills, there are 20 hotels from four- to five-star standard in HCMC, totaling some 5,260 rooms, and around 1,500 four and five star rooms to enter the market in the next four years.

Among the pipeline stock, Korea’s Kumho Asiana Plaza Saigon, managed by InterContinental Hotels Group, will join the five-star hotel market with some 300 rooms in October this year.

VietNamNet/SGT