After Covid-19, a number of hotels owned by private investors may be sold off to cut losses in the worst-case scenario, affecting the tourism environment at tourist destinations and slowing the recovery of the tourism sector,
Even though the opening of a series of hotels in a short time could help diversify offerings and meet the different needs of tourists, negative consequences are expected to arise, according to the study “Recovery Solutions for Vietnam’s Tourist Destinations.”
Due to heavy investment in hotels and high operation fees, it will take investors a lot of time to recoup their capital. Apart from this, the sharp drop in tourist arrivals during the coronavirus pandemic will plunge hotels into a recession.
Referencing the low room occupancy in the cities of Danang and Nha Trang, Dang Manh Phuoc, director of Outbox Consulting, pointed out that the investors, who have poured a significant amount of money into these hotels, will face pressure in terms of operating fees and loan interest rates, leading to a potential wave of hotel sales.
If no solutions to these difficulties are found, the supply chain for the tourism sector will be affected negatively, he remarked.
Tran Viet Trung, director of the Khanh Hoa Department of Tourism, told the Saigon Times that Covid-19, the disease caused by the coronavirus, might be a milestone for rep-filtering the hotel market in the province. Some investors who followed the trend without any market research will find it hard to survive the impact of the disease.
“Some hotels with a mere 16-20 rooms received investment of up to VND30 billion,” he said, adding that these investors will not be able to recoup their capital.
Khanh Hoa Province is one of the country’s localities with the largest number of hotels. It is home to some 50,000 rooms. Last year, the province welcomed some 7.5 million tourist arrivals, but average room occupancy was not high, apart from the ongoing hardship triggered by the pandemic.
As such, the fall in the number of tourists caused by Covid-19 has forced owners of small hotels and guest houses to put these accommodations up for sale, Trung noted. SGT
A new wave of mergers and acquisitions in the hotel segment may reach the shores of Vietnam’s coastal and central cities even as the hospitality sector struggles with the impacts of the coronavirus pandemic.
Tourist accommodation establishments operating in Ho Chi Minh City will be permitted to receive new arrivals, under the condition that they fully comply with the requirements aimed at preventing the novel coronavirus (COVID-19).