Hotel rates rise despite low occupancy

Hotels in HCMC constantly complain about low occupancy despite average room rates of 3-5 star hotels in the first nine months rising 1% year-on-year at VND1,995,000 per night.
Average room occupancy fell 3% against the same period last year, staying at 68.7%, said the HCMC Department of Culture, Sports and Tourism.
Leaders of several hotels and travel firms confirmed that room rates at 3-5 star hotels in HCMC picked up slightly but many hotels have applied flexible sales policies.
“Sometimes, hotels accept the price of US$80 per night for rooms worth over US$120, but they will offset losses through groups of business customers,” said a hotel representative.
Nguyen Anh Vu, general director of the five-star Majestic Hotel, said the average room rate of his hotel rose slightly from US$126 to US$126.4, but the average occupancy rate dipped 6.9 percentage points to 71.7%. The room rate inched up thanks to online sales and high-grade customers.
“We cannot increase room rates, and even have to cut prices for important groups of customers. The market outlook is not optimistic, our whole year revenue is forecast to drop 1.5%,” said Vu.
According to the tourism department, 3-5 star hotel room supply has significantly increased in recent times, heating up price competition among hotels. There are currently around 10,000 hotel rooms of three to five stars citywide.
Previously, many five-star hotels publicly announced their room rates and occupancy, but now the information is concealed.
“Hotels are competing fiercely with one another. Their policies have changed. General managers do not allow their staff members to reveal information about room prices, occupancy rates and VIP customer groups,” said a source from a five-star hotel in District 1.
Tu Quy Thanh, director of Lien Bang Travelink, said his company did not receive notices of price hikes from HCMC-based hotels this year.
Despite no huge price hike, room rates in HCMC are still higher than neighboring countries. Tourists traveling to Thailand or Malaysia can get a hotel room at an average price of US$120, while those coming to HCMC pay US$150 for rooms of the same grade.
According to the tourism department, the number of international tourist arrivals to HCMC in the first nine months is estimated at 2.72 million, rising 12.3% year-on-year. The tourism sector has gained VND48 trillion in the year to date, up 25% against the same period in 2011.