Many hotel owners in HCMC are putting their properties on sale due to the tourism decline inflicted by the coronavirus pandemic but at very high prices.
HCMC is the largest tourism hub in Vietnam, accounting for more than half of the country’s international tourist arrivals. However, its tourism sector has been seriously affected by the coronavirus pandemic.
Data from the HCMC Department of Statistics showed that the city’s revenue from accommodation services fell by 88.2% and revenue from travel services dropped to zero in April.
Revenue from catering services also dipped by 88.2% compared with the same period last year. In the first four months of 2020, revenue from accommodation and catering services was just over VND1.3 trillion, dropping from nearly VND9.14 trillion in the same period last year.
While some other tourist destinations in the country are receiving an increasing number of tourists thanks to local demand, the tourism industry of HCMC has seen no sign of a rebound as tourism services have not been reopened to international tourists.
Therefore, many hotels have not been reopened, while hotels that are still operating are seeing occupancy rates drop below 15%. Room rates are also dropping sharply, with some four-star hotels lowering their room rates from US$70-US$80 to US$40 per room per night.
Many hotel owners are putting their properties, mainly one- to three-star hotels, on sale. However, some buyers have complained that the prices are unreasonably high.
A 30-room hotel on Dong Du Street is priced at VND185 billion, a 28-room hotel on Luong Huu Khanh Street is priced at VND50 billion and a 23-room hotel near Tan Son Nhat International Airport is priced at VND39 billion.
Talking to the Saigon Times, an expert noted that these unreasonably high prices make it very hard for buyers to pay their loans and earn profits.
“An old 28-room hotel that is not very near the central business district with a price tag of VND50 billion will not be profitable,” an investor remarked.
“If buying the hotel at VND50 billion, I would have to spend another VND10 billion to renovate it. If room occupancy rate reaches 80% with room rates of less than US$50 per room per night, the profit rate would be only 4.5% per year, lower than deposit interest rates at banks,” she noted. SGT
Many owners cannot maintain operation of their hotels during the epidemic and want to sell them.
The owners of small and 3-4-star hotels, valued at tens or hundreds of billion of dong, have suffered the most from COVID-19.