VietNamNet Bridge – Although Viet Nam hotels saw positive performance in the second quarter of 2014, growth is patchy across markets and segmentations, according to a report released by CBRE last week.

The Sofitel Plaza Hotel in Ha Noi. Foreign visitors to Viet Nam in the first half of 2014 were estimated to be at nearly 4.29 million, a year-on-year increase of 21.1 per cent.

Foreign visitors to Viet Nam in the first half of 2014 were estimated to be at nearly 4.29 million, a year-on-year increase of 21.1 per cent. The strongest growth came from emerging markets such as China (37.4 per cent), Laos (38.8 per cent) and Russia (27.95 per cent).

"The strong growth in tourist arrivals during the first half of 2014 reflects the resilience of the tourism and travel industry in Asia Pacific as the global economy continues to recover. The ongoing growth and rising incomes of the Asian middle class are also contributing towards an increase in demand for international travel," says the CBRE report.

An estimated 8,000 top-tier hotel rooms will be completed in the three cities over the next two to three years. Outlook for the hotel market remains positive given the anticipated regional and local economic recovery.

HCM City

During the second quarter of 2014, HCM City welcomed 830,000 foreign arrivals, a decrease of 33.4 per cent quarter-on-quarter and 1.5 per cent year-on-year.

As the second quarter was the start of the low season coupled with the threat of tension with China, the occupancy rate decreased across all hotel segments compared to the previous quarter.

The five-star hotel segment witnessed the largest occupancy rate drop with more than half of all five-star hotels having a lower occupancy rate on a year-on-year basis. However, the four-star hotel segment still saw an increase in bookings compared to the same period last year.

All hotels achieving the highest occupancy rate in the second quarter belonged to this segment, thanks to good quality services, more affordable prices and attractive promotions.

Due to the anticipated reduction in the number of tourist arrivals during the low season, hoteliers softened their room rates with more attractive promotion packages.

Three-star hotels saw the largest average daily rate reduction. They are usually owned and managed by private companies or individuals, according to CBRE.

Following a meeting in June on the city's tourism development strategy, a report was issued in which the city will keep improving security and safety for tourists.

The report also listed target markets to focus on, including Northeast Asia (Japan and South Korea), Southeast Asia (Indonesia, Malaysia and Singapore), Western Europe (UK, France, Germany), the US, Russia, Australia, the Middle East and India.

At the same time, domestic tourism will also be promoted through a stimulus programme.

Ha Noi

On the demand side, Ha Noi welcomed 1.1 million international tourist arrivals in the first half of 2014, a year-on-year increase of 18.4 per cent. Domestic arrivals reached 4.8 million, up by 3.2 per cent compared with the same period last year.

The two Cessna Grand Caravan EX seaplanes operated on Ha Noi – Ha Long route from September 2014 will help reduce travel time between Ha Noi – Ha Long from 3 or 4 hours to 30 minutes.

After the Ha Noi - Ha Long route, the airline will operate air routes between HCM City and tourism destinations such as Khanh Hoa, Binh Thuan, Can Tho, An Giang, Con Dao, and Phu Quoc. This will help diversify transport choices for both leisure and business travelers, especially foreign ones. The cost was announced at around US$250 per passenger per one way.

Also, Ha Noi was the cheapest city in the TripIndex Cities compiled by online site TripAdvisor, and the Sofitel Legend Metropole Ha Noi ranked seventh in the "Top City Hotels in Asia" and 66th in the "Top 100 Hotels Overall" by Travel+Leisure magazine in 2014.

In the next three to five years, the market will see an increase in supply of over 4,200 rooms, raising the risk of oversupply where competition within each and between the different segments will be tougher than that in 2014.

"We also expect the market to favour customers with more choices of accommodation and promotion packages offered for hotel guests, especially from new entrants," says CBRE.

Da Nang

In line with the wider Viet Nam hospitality market, Da Nang also experienced impact from East Sea tensions on hotel/resort performance and on the total number of international arrivals to the city.

In the second quarter, Da Nang welcomed 1,035,764 tourist arrivals, of which international tourists accounted for 177,616. This represented an increase of 11.4 per cent year-on-year for the domestic sector, but a slight reduction of 2.0 per cent year-on-year for the international sector.

However, compared to the first half of 2013, both sectors showed an upward trend of 17 per cent year-on-year.

The recent East Sea tension resulted in the cancellation of 14 out of 15 charter flights between China and Da Nang city and a notable decline in the number of Chinese tourists to Da Nang city.

At least 50,000 Chinese arrivals were recorded in the first half of 2014 compared to 68,226 Chinese arrivals in the first six months of 2013, a decrease of 26.7 per cent.

However, the number of visitors arriving from other countries is steadily improving. Korean Air has increased from four flights per week in 2013 to seven flights per week in 2014 and a direct flight between Narita (Japan) and Da Nang opened on July 16 with four flights per week.

On a year-on-year comparison, the average RevPar (revenues par available room) at beachfront five and four-star properties saw a drop of 5.4 per cent and 19.8 per cent respectively due to the decline in occupancy rates.

In contrast, the growth of local tourists together with the good reputation of new city properties increased occupancy rates at most city hotels in both a quarter-on-quarter and a year-on-year basis. The average RevPar at five- and four-star city hotels increased by 9.1 per cent year-on-year and 25.4 per cent year-on-year, respectively.

The fast growth of city developments in recent years helped this segment dominate the market. However, in the near future, beachfront hotels will come to lead the market.

In 2014 and 2015, nearly 1,700 new beachfront hotel rooms will be launched compared with 652 new hotel rooms in the city.

VNS/VNN