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Expert sees strong hospitality market   2009-09-28 - Viet Nam News

There are many opportunities in Viet Nam's hospitality sector for investors, an industry insider said, pointing to its strong fundamentals.

Robert McCintosh, executive director of the hotels division, Asia-Pacific, at American real estate services provider CB Richard Ellis, said the country offered cultural attractions, a diversity of destinations, a safe and secure social and political environment, and convenient geographical location.

But it had one of the smallest visitor arrival per capita in the region last year, at 0.05, compared to 0.217 for Thailand and 2.087 for Singapore, according to the London-based hotel index provider STR Global.

At a recent presentation on the hotel market overview, he said opportunities existed for development in different market segments.

"Like low-cost airlines, there is a demand for budget hotels," he said.

"Also offering an opportunity is the fact that Viet Nam faces a severe shortage of hotels at industrial parks, which are increasingly located far from cities," he said. There are 35 IPs in the south but none of them with a four-star hotel in the vicinity, while only one out of 28 IPs in the north has a hotel nearby.

The hospitality industry would do better if the country strengthened marketing to attract international tourists, he said, adding that improving infrastructure, including roads and ports and the visa system, would also be of great help.

The Viet Nam National Administration of Tourism estimated international tourist arrivals to reach 4.5 million this year. But following the global economic crisis, it revised the forecast in June to 3.3 million, down 20 per cent from 2008. The year's first half saw 1.89 arrivals, a 20 per cent year-on-year decrease.

Hotels lower rates

With the low travel season beginning this quarter, hotels lowered their rates in the second quarter.

According to CBRE, five-star hotels (excluding luxury hotels) cut rates by 13 per cent from the previous quarter to an average of US$118. Their occupancy fell by 14 per cent to 45 per cent.

The international luxury hotel segment, at $198, had significantly higher room rates than other five-star hotels. But it was the segment hardest hit, with rates plunging 14 per cent in the second quarter. Occupancy rose from 44 per cent to 47 per cent.

The four-star segment saw rates falling a mere 4 per cent to $80 but the highest decrease in occupancy of all segments, plunging from 75 per cent to 47 per cent.

Corporations like Saigontourist and Hanoitourist own the largest hotel chains in the country.

The Government retains an interest in more than 40 per cent of HCM City three star hotels, 60 per cent of four-star, and 30 per cent of five-star hotels.

International hotel operators in Viet Nam include Accor, which has eight properties already in operation and another six under construction, Starwood, Swiss Belhotel and Six Senses.

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