VietNamNet Bridge - Located in advantageous positions and providing services at high fees, some luxury hotels have been taking losses.

Intercontinental Hanoi Westlake is the unique hotel has been reporting losses in recent years. According to the Vietnam Industry Research & Consultancy (VIRAC), Lang Nghi Tam Tourism Development Co Ltd, the legal entity set up to run the hotel, has seen losses cut into stockholder equity. By the end of 2015, the company’s stockholder equity had been minus (-) VND875 billion.

Located in advantageous positions and providing services at high fees, some luxury hotels have been taking losses.

In 2014-2015, Lang Nghi Tam had revenue of VND345.5 billion and VND378.4 billion, respectively, and took a loss of VND41.7 billion and VND26.5 billion.

This is a joint venture between T.P.C Development Ltd, belonging to Berjaya from Malaysia and Thang Long GTC. The Vietnamese partner contributes 25 percent of charter capital worth $7 million. This includes the right to use 7,899 square meters of land and 24,088 square meters of West Lake surface area for 40 years.

Movenpick Hotel at No 83 A Ly Thuong Kiet street in the central area of Hanoi, another 5-star hotel in Hanoi, has reported a surprisingly high loss. By June 30, 2017, Roxy JSC, which owns Movenpick Hanoi had incurred an accumulative loss of VND258 billion, while the stockholder equity had dropped to minus (-)VND91 billion. Two years before, the hotel reported a loss of VND300 billion.

Movenpick offers room services, leases conference rooms and provides food services. In addition, there is a prize-winning electronic game area within Movenpick’s campus reserved for foreigners with 38 machines.

The VND26 billion worth of profit Roxy made in 2017 and the VND16 billion it made in 2016 eased its losses, but they came mostly from the prize-winning electronics games.

Roxy JSC has charter capital of VND145 billion, in which Roxy Assets Ltd holds an 45 percent stake, while Vietnamese Hung Phu Investment & Trade has 15.47 percent and An Thinh Trade & Production Service has 36 percent.

Ramana Hotel Saigon, a 4-star hotel in HCMC, is also incurring a loss. According to Cafebiz, Ngoi Sao Viet, which owns the hotel, had incurred a gross loss of VND548 billion by 2014 and the stockholder equity had dropped to minus (-)VND209 billion.

Ramana Hotel Saigon was named Amara Saigon in the past as it belonged to Amara Saigon Hotel Co Ltd, a 100 percent foreign owned company. Later, it was transferred to Vina Properties in 2008.

Local newspapers quoted a Savills Vietnam’s Q1 report as saying that the average occupancy of 5-star hotels increased by 4 percentage points QoQ and 10 percentage points YoY to 74 percent.

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