You are here : Home » Travel News » Luxurious hotels not wise choice for hard times

Luxurious hotels not wise choice for hard times

It now seems to not be the right time for luxurious hotels to join the market. Despite the big events in the first and second quarter of 2012, luxurious hotels remain quiet with the low indexes in the occupancy rate, hotel room rate and revenue.

A lot of five star hotels have been put into operation recently, including the famous names like Intercontinental Hanoi Landmark on Pham Hung Road, Grand Plaza Hanoi on Tran Duy Hung Street, Crown Plaza on Le Duc Tho, Candeo Hotel on Doi Can, Hotel de L’Opera in the central district of Hoan Kiem.

The hotels provide some 2000 5-star hotel rooms, well satisfying the demand of VIP clients who stay in the capital city, according to Dau tu newspaper.

However, the big guys in the hotel sector have been experiencing tough days due to the economic crisis, even though the hotel sector was believed to have stable business potentials in 2007-2008.

According to Savills Vietnam, a real estate service provider, in the first quarter of 2012, the hotel occupancy rate dropped by five percent, while the hotel room rate decreased by 7 percent in comparison with the fourth quarter of 2011. The average hotel room turnover was 815,000 dong, a decrease of 16 percent from the previous quarter.

Especially, the decreases were reported in the high hotel business season.

In the first and second quarters of 2012, a lot of international big events took place in Hanoi, including the MTA Hanoi 2012, Pacific Energy Conference, or Vietnam Mining Exhibition 2012, which helped increase the number of domestic and international travelers to Hanoi by 5-6 percent. However, the number of clients staying at five star hotels remained modest. In the economic crisis, travelers tend to stay at 3-4 star hotels, rather than luxurious ones, in order to cut down expenses.

A market report released by PetroVietnam Land, a real estate joint stock company has predicted that the turnover of five star hotels would be unsatisfactory in the time to come. In principle, the third quarter is considered the low season for luxurious hotels, when the number of foreign tourists decreases.

Meanwhile, this would be the high season for domestic traveling, which means that medium class hotels would prosper.

Regarding the market prospect in the medium term, analysts have said luxurious hotels would still have to struggle with difficulties, since more luxurious hotel complexes would be completed and put into operation.

These would include the five star 500-room JW Marriot Hanoi, located near the My Dinh National Convention Center, the Gamuda Berh five-star hotel complex, a part of the Yen So new urban area in Hoang Mai district, slated for becoming operational in the time from now to 2014.

Anticipating the big difficulties in the hotel business, experts believe that more merger and acquisition (M&A) would be carried out in the sector.

Nevertheless, PVL keeps optimistic about long term prospect of luxurious hotels. Despite the big changes in the market conditions and difficulties, hotel owners would still prosper if they can provide new creative products which fit the tastes of clients and get adapted to the new circumstances.

Doanh Nhan has reported the interesting information that 30 percent of the clients staying in luxurious hotels in Hanoi, including the ones with the room rates of over 50 million dong per night, are Vietnamese people.

The figure is really surprising, if noting that even foreign travelers, the main clients of luxurious hotels, now tend to stay at 3-4 star hotels instead of 5-star hotels to save money.

C. V

  • LINK1
  • LINK2
  • LINK3
  • LINK4