Vietnam lacks three-star hotels

Investors have been told that they can find bigger profit if they have three-star hotels, because the demand has been increasing rapidly.
According to travel firms, 60-75 percent of domestic travelers choose to stay at three-star hotels. As for foreign tourists, 50-55 percent choose four-star hotels and 30 percent choose five-star hotels for their convalescence purposes. Meanwhile, those, who want to have discovery tours, regularly choose three-star hotels.
The Hoa Binh travel firm said that three-star hotels are the choice of 70-80 percent of Vietnamese individual tourists who take domestic tours. The proportion is 60 percent at Vietravel and TST Tourism, and 50 percent at Saigon tourist. Especially, the figures are very high at 65 percent at Du Lich Viet and VYC, and 75 percent at Lua Viet.
Three-star hotels provide barely enough facilities
When asked why tourists prefer three-star hotels, travel firms said that despite the current big economic difficulties, Vietnamese people still have high demand for traveling, but they tend to cut down expenses. The things that travelers most care about are how many destination points in the itineraries and how good the food is, while they do not care much about the accommodation facilities. They can stay at two or three star hotels, where they can enjoy barely enough facilities and clean beds.
There is a big difference in the tours with the same excursion programs and the same quality of food, but with different hotel service quality. As for the tours with 4-5 star hotel rooms, the expenses on hotel rooms account for 45-50 percent of the total tour expenses.
Meanwhile, the spending on hotel room just amounts to 30 percent of total expenses, if travelers choose three-star hotels, and 20 percent if travelers choose 2-star hotels.
Hoang Le Quyen, Deputy Director of the Hoa Binh travel firm, has also noted that travelers nowadays tend to choose 3-star hotels, because the hotels have been better equipped recently, which nearly can meet the standards of 4-star hotels.
For example, there are safety deposit boxes, free wi-fi, free swimming pools, healthcare service centers, entertainment area and restaurants right in the hotels’ precincts. Therefore, travelers would prefer three-star hotels to two-star hotels, if they just have to pay 100,000-150,000 dong per day to enjoy much better facilities and have breakfasts.
Foreign tourists now also tend to choose three-star hotel rooms for their holidays. This has led to the changes in the occupancy of three-star and four-star hotels. In the first six months of 2011, in HCM City, four-star hotels had the room rate occupancy of 80 percent, while three-star hotels 60 percent only. However, big changes occurred in the third quarter: while the three-star hotel room occupancy soared to 70 percent, four-star occupancy drops to 65 percent.
According to Doan Thi Thanh Tra, Marketing Director of Saigontourist, when choosing three-star hotel rooms, travelers do not demand for luxury, but they want “clean, green and safe” services.
Demand still higher than supply
According to Robert McIntosh, Managing Director of CBRE Hotels in Asia-Pacific, there are still big opportunities for hotel investments in Vietnam. Especially, the investors who seek long term growth should think of developing three-star hotels and resorts, because they would not have to spend much money to build the hotels and resorts, while it is easier to do business with them and get higher profit.
Accor Group has jumped into the field, planning to officially manage two hotels with ibis brand in HCM City – ibis Saigon and ibis Saigon South – the firsts of the system of popular hotels with international standards in Vietnam.
Meanwhile, many local authorities have not realized the opportunities. Ninh Binh, Binh Dinh and Soc Trang provinces have been trying to attract more tourists by introducing beautiful landscapes, natural heritages and cultural events, and designing long-time tours to persuade travelers to stay in the localities for more days.
However, there are only one three star, three 2-star and 4 4-star hotels/resorts in Binh Dinh. Meanwhile, Ninh Binh only has one 4-star hotel and 10 2-star hotels. Soc Trang has been advertising for the international rice festival, but there is only one 3-star and 7 2-star hotels, which makes it impossible to keep travelers for many days.