Tourism decline hits HCM City hotel market

A slump in tourism has hit Ho Chi Minh City's hotel market, which saw a drop in the average rate of reserved rooms in the first six months of the year compared to the previous five years.
In its recent report, Savills Vietnam, which provides comprehensive property services, said the hotel market had seen the lowest average room rate in the last five years due to a continuous increase in supply and fierce competition in the market.
For the second quarter of the year, the average room rate dropped 5 percent compared to the first quarter and 3 percent year-on-year to 1.6 million VND (78 USSD) per room per night.
According to the report, the city in the second quarter added 540 rooms in the three-star segment with six new and one refurbished hotels. The five-star segment had 446 additional rooms from an existing hotel and an upgraded hotel.
As of the end of the second quarter, the city had a total of 106 hotels supplying 13,800 rooms, increasing 6 percent quarter-on-quarter and 10 percent year-on-year.
In the first quarter, three- to five-star hotels had a soft performance year-on-year.
The average occupancy was 70 percent, up two percentage points quarter-on-quarter but down four percentage points year-on-year.
All three grades incurred a year-on-year decrease in occupancy.
The four-star segment had the highest occupancy drop of six percentage points. The three- and five-star segment decreased by four percentage points each.
The average room rate was 1.8 million VND (82 USD) per room per night, down 5 percent quarter-on-quarter and 7 percent year-on-year.
In the central region, in the first quarter, the average room rate of hotels in Da Nang city dropped 5 percent against 2014 to 1.75 million VND per room per night, while the revenue per available room (RevPAR), a standard industry measure of room utilisation and return, showed a 12 percent decrease.
The overall occupancy decreased four percentage points against 2014 to 48 percent.
Fifty-six 3- to 5-star hotels supplied about 6,450 rooms, up 7 percent against 2014.
According to the 2015 Vietnam Hotel Survey of 60 4- to 5-star hotels conducted by the UK-owned audit and consultancy firm Grant Thornton Vietnam from March to June, RevPAR experienced a slight decrease of 1.8 percent from 60.42 USD in 2013 to 59.31 USD last year.
The decrease was attributed to a drop of 2 percent in average occupancy, it said.
Data breakdowns showed that while average occupancy rates of 4- and 5-star hotels rose 6.7 percent year-on-year in Hanoi, the rates fell 6.7 percent compared with the previous year in HCM City.