Competition in upscale lodging industry heats up

With an expanding room inventory and more on the development schedule, the competition in the upscale lodging industry in Vietnam will likely heat up over the next two-three years, says Grant Thornton.


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Especially in the 5-star segment, Grant Thornton said in its just released 2017 Vietnam Hotel Survey report.

The report providesa broad range of financial, operational and marketing information for 2016 regarding4- and 5-star hotels and resorts. For simplicity purposes, resorts are referred to as hotels in the report.

Last year,inbound travellers to the Southeast Asian countryrose 26% following a lull in 2015 primarilyfuelled by increased Chinese travellers, said Trịnh Kim Dung, director of advisory services at Grant Thornton Vietnam.

That upward trajectory, buttressed by business travellers from the Republic of Korea, is expected to continue in 2017, and hopefully signal an end to the pre-2016 stagnation the upscale lodging industry experienced.

The Vietnamtourism and business travel industries recorded 10 million inbound visitors in 2016 – which though low by international standards – represented marked improvement over the lull the country had experienced prior to 2016, she noted.

In line with the higher figures for leisure, recreation and business arrivals in the Southeast Asian country, 41 new 3- to 5-star hotels opened their doors in 2016,heightening competition.

The average room rate for upscale lodging in 2016 saw a 1.3% increase year-on-year to US$88. The rate for 4-star rooms was US$75, a rise of 3.8% but still lagging far behind the 2014 level.

Five-star rates dropped slightly for the second year in a row to US$104.40 from U$106.80 in 2015.

Revenue per available room (RevPAR) increased in both star categories: a 10% rise for 4-star hotels to U$51.40, and 4.1%rise for 5-star hotels to U$68.70.

The upscale lodging industry in 2016 saw a recovery with an occupancy rate increase for high-end hotels.

The average occupancy rose to 67.2% from 61.5% for 4-star hotels and to 68% from 62.7% for 5-star hotels.

Individual tourists, tour groups and business travellers collectively made up more than three fourths (77.6%) of the total number of guests staying in high-end establishments last year.

Travel agents and tour operators remained the largest booking channel at high-end properties, accounting for 37.3% of reservations, Ms Dung added.

This ratio, however, has seen a gradual decline over the years, and fell by 3.1%in 2016.

The reportsaida notable increase was seen in the application of digital technology by hotels in 2016.

Last year, 67.3% of hotels reported using digital technology compared to 49.3% in 2015.Another 18.6% said they plan to engage it in 2017 or 2018 while 15.4% said they are undecided about employing it.

VOV



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