Luxury hotels face rising competition

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Luxury hotels face rising competitionAlthough the number of foreign guests at four- and five-star hotels in the nation’s south rose 10% last year, upscale hotels saw room occupancy and tariffs declining due to mounting competition, Grant Thornton Vietnam said.

The company’s 2014 survey on hotels released last week showed average room occupancy at four- and five-star hotels nationwide was 60.7% last year, down two percentage points against the previous year. The rate at hotels in HCMC fell 6.7% but edged up 6.7% in Hanoi in 2014 from a year ago.

Kenneth Atkinson, executive chairman of Grant Thornton Vietnam, told reporters in HCMC last week that room occupancy in Hanoi jumped thanks to more supporting infrastructure. Meanwhile, the rate in HCMC was down due to fierce competition and new hotels in service.

The average room tariff in 2014 at upscale hotels inched up 0.2%, from US$97.6 in 2013 to US$97.8 last year. The survey found an increase of 3.6% in the average room tariff at four-star hotels but a decline of 6.4% in that of five-star hotels.

Room charges in Danang City and Hoi An City registered growth of 23% but dropped by 17.2% in Phan Thiet City, by 13.7% in Hanoi and by 4.7% in HCMC.

Atkinson said when a new luxury hotel is put into operation or launches a promotion program, other hotels would have to cut tariffs to woo customers.

Zayne Boon, general manager at Pullman Saigon Centre, said international visitors to Vietnam have dropped over the past months and this hit hotels in various localities including HCMC.

Room charges in HCMC have fallen strongly and competition has intensified after a number of new luxury hotels were up and running.

Boon said many more luxury hotels have entered the market, so the challenge for Pullman is how to retain talent. It is harder to recruit employees with certificates in the sector and meeting requirements of Pullman.

According to property service provider Savills Vietnam, HCMC had an additional 200 rooms of five-star hotels in the first quarter of this year. A four-star hotel was upgraded and put into use more rooms while a three-star hotel resumed operation.

As of the end of the first quarter, there had been 99 three- to five-star hotels with a total of 13,100 rooms in HCMC and 8,960 hotel rooms of three- to five-star ratings in Hanoi.

Grant Thornton Vietnam said last year the EBITA (earnings before interest, taxes and amortization) index of luxury hotels dropped by 5.5% last year to 34%. This was attributable to a 2.7% increase in management costs and a 1.9% rise in other operation costs.

Respondents of Grant Thornton Vietnam’s Hotel Survey were 60 hotels, mainly those of four- and five-star rankings. The company had conducted the survey for 12 consecutive years.

SGT