Opening the door to quality accommodation

With hotel rates sky-rocketing over the last two years, will Vietnam’s tourism sector remain competitive against other countries in South East Asia?

In the beginning of this year, some hotels charged up to $300 per night for a deluxe room while others were asking for $250-$270. Of course, these rates are still lower than those in Europe and America. Yet, we have to compare our rates with hotels in Malaysia, Singapore and Thailand. In this regard, Vietnam is losing competitiveness because hotel rates in other countries are cheaper.

Tour operators have been loudly opposing hotel rate hikes of up to 50 per cent year-on-year. What is the most suitable increase?

Any unilateral price setting of hotel owners and operators will get a response from the market. Hotel rates increasing or decreasing will depend on supply and demand. Over the last two years, many hotels raised prices because there was a lack of supply at a time of high demand. Now it is a little different.

The average occupancy rates of many hotels in Hanoi is around 50 per cent compared to 80 per cent during the same period last year. Tourists are tightening spending and travelling less. Although hotels have not announced price reductions, they are offering promotion packages to attract guests. If occupancy reduces below 50 per cent, hotels will have to adjust down prices.

With many other hotels under construction in Hanoi, supplying more than 3,000 rooms in the next three to five years, do you think that prices will go down further?

It is true hotel supplies will increase, particularly with five-star hotels. There will be a glut of rooms in the next three to five years if there are no plans to enhance the attractiveness of a destination like Hanoi.

Developers have said the reasons for building more hotels in Hanoi was the capital city expanding and investment inflows growing. Do you think their confidence is rational?

That are good prospects that all of us hope to see. We expect economic reforms will attract more investment projects into the capital city and more foreigners will come to work, which is good for the hotel business. However, we should also taken into account a possibility that the world economy will slow down and oil prices continue to stay high which will affect the hotel business. We hope that tourism authorities will have stronger promotion campaigns abroad to mitigate negative impacts.

Your company has just opened the InterContinental Hanoi Westlake Hotel. As a late comer after many other five-star hotels in the city, what lessons have you learnt to increase the hotel’s competitive edge?

We, the developers, work very closely with the hotel management company, InterContinental Hotels & Resorts, particularly in terms of marketing strategy to attract guests to our hotels. We pay great attention to overseas visitors to sell rooms but we focus on local Vietnamese and expatriates in Vietnam to sell food and beverages.

Our hotel is the first InterContinental in Vietnam and the hotel management group is very supportive and eager to make the business getting better. We, the developers, ask the hotel managers to maintain a high level of service while having flexible pricing strategies to impress our guests. Our hotel has designed attractive packages, which are attracting a lot of interest from locals and expatriates.

We are also seeing the movement of other hotels in order to work out suitable strategy. In fact, out hotel has a prime location on West Lake, but we do not want to make use of this location to increase prices. In addition to your hotel, InterContinental Hotels & Resorts is going to manage at least five more hotels in Vietnam, including two in Hanoi. Do you fear that expansion will affect your business?

A hotel management group like InterContinental that has long-term business strategy in Vietnam will operate hotels not only in Hanoi but also in Ho Chi Minh City and central Vietnam. I think each hotel will have its unique features and attractiveness. If the group can operate a hotel chain from north to south it will be good not only for the group but for Vietnam as a whole.

Source: VIR