Tourism decline hits HCM City hotel market

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A slump in tourism has hit the 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.

Tourism decline hits HCM City hotel market

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% compared to the first quarter and 3% year-on-year to VND1.6 million (US$78) per room per night.

According to the report, the city in the second quarter added 540 rooms in the 3-star segment with six new and one refurbished hotels. The 5-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% quarter-on-quarter and 10% year-on-year.

In the first quarter, 3- to 5-star hotels had a soft performance year-on-year.

The average occupancy was 70%, up 2 percentage points quarter-on-quarter but down 4 percentage points year-on-year.

All three grades incurred a year-on-year decrease in occupancy.

The 4-star segment had the highest occupancy drop of 6 percentage points. The 3- and 5-star segment decreased by 4 percentage points each.

The average room rate was VND1.8 million (US$82) per room per night, down 5% quarter-on-quarter and 7% year-on-year.

In the central region, in the first quarter, the average room rate of hotels in Danang City dropped 5% against 2014 to VND1.75 million per room per night, while the revenue per available room (RevPAR), a standard industry measure of room utilisation and return, showed a 12% decrease.

The overall occupancy decreased 4 percentage points against 2014 to 48%.

Fifty-six 3 – to 5- star hotels supplied about 6,450 rooms, up 7% 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% from US$60.42 in 2013 to US$59.31 last year.

The decrease was attributed to a drop of 2% in average occupancy, it said.

Data breakdowns showed that while average occupancy rates of 4- and 5-star hotels rose 6.7% year-on-year in Hanoi, the rates fell 6.7% compared with the previous year in Ho Chi Minh City.

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