VietNamNet Bridge – Hotels in HCMC, especially those in the four- and five-star segments, had a tough 2014 when they had to lower tariffs to attract guests and offset dropping room occupancy rates.

Hotels are seen in downtown HCMC. Room tariffs and occupancy at hotels in HCMC decline by 5-7% last year against 2013

Hoteliers told the Daily that most hotels of four- to five-star ratings here in the city had to reduce tariffs by at least US$8-10 per room per night to woo leisure and groups of guests and leisure travelers instead of focusing on businessmen only.

Difficulties continue this year as the average room charge at five-star hotels has fallen from US$133 last year to US$125-128 at the moment.

Dang Huy Hai, deputy general director at New World Saigon, said the five-star hotel went through a difficult year, especially in quarters two and three after tensions in the East Sea in May 2014. The hotel’s room occupancy in the year averaged 66%, slightly dropping from 68% in the previous year.

“We managed to maintain this occupancy rate as we lowered room tariffs and kept five crews of airlines to stay in that tough year,” Hai explained.

In the same boat was Hotel Majestic Saigon. Last year, the hotel overlooking the Saigon River had to cut its room rates by around US$10 per room per night, and this resulted in year-on-year decreases of 4% in revenue and profit.

According to hoteliers, the tensions in the East Sea between Vietnam and China after the latter illegally placed a giant oil rig well in Vietnam’s waters in mid-May dealt a heavy blow to the hotel sector in the city, particularly hotels in District 5 which is a destination of choice for a high number of Chinese-speaking guests.

As a result, the number of guests at hotels in District 5 tumbled, sending hotel occupancy to as low as 25%. Until now, business at many hotels there has not returned to normal.

However, some hotels of two- to three-star standards in District 1 briefly encountered sales falls but their overall business results were quite good last year.

“In the middle of last year, though the number of guests decreased, our revenue and profit still grew around 10% against the previous year. Perhaps it was because we offered reasonable prices,” said the director of a hotel on Le Thanh Ton Street.

A survey of Savills Vietnam showed that the average room tariff at three- to five-star hotels in HCMC in last year’s final quarter was VND1.8 million per room per night, or US$87, the lowest in five years.

The average hotel occupancy in the quarter was 68%, up 11 percentage points quarter-on-quarter but down four percentage points year-on-year.

EVN wants to add costs to power tariffs this year

HCMC - Despite profit last year, Vietnam Electricity Group (EVN) is seeking approval to include more costs in this year’s electricity tariffs, citing a low profit margin, VnExpress reports.

At a review meeting yesterday, EVN deputy general director Duong Quang Thanh said rising input costs like the prices of coal and gas and the water tax left big impact on the group’s operations last year.

The environmental fees of 2011 and 2012 at hydropower plants whose capacities are smaller than 30 MW also pushed up the power production and buying costs by trillions of Vietnam dong. However, these have not been calculated into the current power tariffs.

“Though the parent company and its member units earned profits last year, the profit margin was low.

The parent company’s after-tax profit was estimated at around VND300 billion and the return on equity was a mere 0.2%,” Thanh said.

Regarding the financial situation this year, EVN said it would face many challenges as the huge costs since early last year have not been included in the power tariffs. This could result in additional losses of nearly VND8 trillion plus the losses of VND8.8 trillion accumulated in the previous years.

“These are not minor challenges to EVN as the group was required to offset losses this year,” Thanh continued.

Therefore, EVN has proposed the Ministry of Industry and Trade add the aforesaid costs to the power tariffs besides asking the Government to allocate more funding and official development assistance (ODA) loans to enable it to complete projects for power supply in remote areas.

EVN plans total investments of VND96.5 trillion and more than VND30.8 trillion for principle and interest payments this year.

SGT