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Hotel room rates slashed amid low occupancy

A slew of hotels in HCMC, one of the country’s key destinations for international tourists, has pushed down room rates to attract guests as low occupancy has severely affected their revenues.

In the first week of May, occupancy at many high-end hotels plunged sharply over the same period last year. A popular business hotel on Dong Khoi Street in the city’s downtown recorded an occupancy rate of 50-60%. A five-star hotel in District 5 even faced a lower rate, at a mere 36%.

Nguyen Anh Vu, general director of Majestic Hotel, a unit of Saigontourist Holding Company, said his hotel’s occupancy in April dropped 11% year-on-year. In 2010 and 2011, even in the off-season, the hotel never witnessed such a low number of guests.

However, this year has seen the number of international visitors diminishing while domestic customers have cut their spending on food and events. “We have 178 rooms but for days on end, the hotel is 70-80% full. Though we have launched several promotion programs, no major improvement has been achieved,” said Vu.

He said Majestic had events almost every day last year but this year the situation has been somber. Customers, if any, only take small meeting rooms and spend less on food and drinks.
Representatives of some luxury hotels said that hotels of lower grades, two or three stars, were enjoying better business performance because their room rates were more competitive.

However, this is not a general picture for two- and three-start hotels. Except for some small two- and three-star hotels around the landmark Ben Thanh Market, others are also experiencing tough times.

Do Dai Ba, sales and marketing director at Lavender Hotel on Le Thanh Ton Street, said average occupancy at his hotel was 70%, versus 80% in the year-ago period. Despite the fairly high occupancy, Ba stressed the situation was not so optimistic. He said his hotel and others in the area mostly earn from room sales and dining services and do not serve events.

Vien Dong Hotel, a three-star hotel on Pham Ngu Lao Street, is struggling with an occupancy rate of 50% at the moment, way below the 70% recorded around this time last year. “We have already lowered room rates and applied a promotion program since mid-April, but little progress has been made. Customers have not switched to hotels with cheaper prices, but have cut spending on hotel services,” said Nguyen Xuan Hong, director of the hotel.

Many hotels are also offering price discounts. Majestic Hotel currently quotes their rooms at US$145 per night, versus the previous level of US$170.

A luxury hotel on Dong Khoi Street has reduced their room rates from US$198 and US$170 to US$163 and US$139 respectively. In areas farther from the downtown, it only costs US$83 for one night at a high-grade hotel.


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