Hotels: Glints of hope for the luxury sector

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2010 was a challenging year for hotels of all stripes, but 2011 offered glints of hope for the luxury sector, where demand showed signs of improvement.
Most five-star hotels in Vietnam finished off 2010 better than 2009, given the fact that the latter was a year of recovery from the financial shocks of the summer of 2008. Hoteliers say that 2010 was stronger but not strong enough for five-star hotels.

Most hotels experienced full occupancy on weekdays in busy months such as January, February, March, October, November and December. But overall occupancy throughout the year was still only between 60 and 70 per cent. In the new year five-star hotels and resorts throughout the country launched a number of interesting new promotional programmes.

Since early this year tourism in the old imperial city of Hue has been affected by a cold spell, air tickets not being available all through January and February because of Tet and limited flights in April and May due to runway repairs at Phu Bai Airport. Travel from Japan has fallen throughout the country, not just in Hue.

Despite the problems, Celadon Palace Hue, an exceptional hotel with international standard facilities and services, is going ahead with various promotions and events to attract the corporate meeting and incentive market inside and outside of Vietnam.

There are Saturday Night Pool Parties and International Live Music in the Lobby Lounge and on the patio in front of the hotel. The hotel also works closely with tourism authorities and the travel trade to position Hue at the front of the many great destinations in Vietnam.

The Nam Hai in Hoi An has free-night programmes (such as “stay 3, pay 2” and “stay 4, pay 3”) as well as packages for families that include free meals for children and resort credits. Average room rates were $432 in 2010 and growth in revenues was 45 per cent after a difficult 2009. “We expect it to rise this year as awareness increases about the destination and the superior quality of our resort,” said Mr John Blanco, General Manager of The Nam Hai. The target for this year is 20 per cent growth.

Sheraton Nha Trang Hotel & Spa, which opened in March 2010, will launch a Family Summer Package at VND2.3 million ($110)++, inclusive of a Deluxe Ocean View Room, buffet breakfast for two adults, complimentary breakfast for a maximum of two children under 12 years old sharing a room with their parents, 15 per cent off food and beverages in the hotel’s restaurants and bars, 15 per cent off Shine Spa body treatments and 20 per cent off laundry services. The offer is for a minimum two-night stay and available to Vietnamese nationals, overseas Vietnamese and expats working in Vietnam.

Just recently, one of the world’s foremost travel magazines, Travel + Leisure, recognised the Caravelle Hotel in Ho Chi Minh City as one of the top 20 Best Value Hotels in the world. The hotel is going to leverage that appeal with several new packages, including a three-night stay for the price of two nights. “As our occupancy levels have climbed, we’ve regained some standing in the marketplace,” said Mr John Gardner, General Manager of the Caravelle Hotel. “There’s no question that demand in on the upswing. We expect to see room rates rise by about 10 per cent this year.”

Indeed, for the past three or four years average room rates at international five-star hotels in Ho Chi Minh City have risen sharply and then fallen. 2007 marked the highest average daily rate (ADR) at many hotels, but after the financial shock went much lower. The market is still very competitive but guests are in the driving seat, meaning most hotels are not too optimistic about their ADR for this year.
2011: Green and Grey

At the international trade fair ITB in Germany during March the trend created for this year was “Green” and “Grey”. “Green” refers to environmentally-friendly and “Grey” for the so-called silver hair market - retired people with time and money to travel. Hotels and resorts have therefore been preparing appropriate facilities and services to meet these trends.

The Caravelle Hotel has been coming down very hard on its carbon footprint in the last year, completing a wastewater treatment facility that recycles 40 per cent of its water, primarily for use in the cooling facility and for flushing purposes. It’s also using biodegradable solutions to clean their floors and assessing a large project that will greatly reduce its consumption of oil and reduce emissions.

Sheraton Nha Trang Hotel & Spa, meanwhile, has implemented a number of green initiatives in its daily operations. For example, all guest rooms include a card that asks guests to inform the hotel when they would like the bed linen and towels changed. This not only ensures convenience for guests but also cuts down on chemical, water and electricity use.

The key-card slot in guestrooms also automatically turns off the electricity in the room whenever guests pull out the room key and leave the room, enabling the hotel to further reduce its energy consumption. It has installed solar cells, so that hot water systems run on solar energy. “We are also in negotiations with a local company to recycle the used cooking oil from our kitchens,” said Mr Scott Hodgetts, General Manager of Sheraton Nha Trang Hotel & Spa. “We have separate wet and dry garbage rooms so that it is easier to recycle.” The hotel periodically organises beach cleaning days, to help keep Nha Trang Beach clear of litter, and is now working with VNAT on Green Lotus certification.

In order to cater to the “grey” market, Sheraton Nha Trang organises Vietnamese cooking classes at its Cooking School, the first purpose-built cooking school inside a hotel in Vietnam. Its Shine Spa, the second of its kind in the world, delivers rejuvenating treatments to help people feel better. The hotel also developed the Nha Trang Experience Package, making it easier for guests to explore local attractions and experience a slice of local daily life, which is greatly appreciated by its more senior guests.

The National Tourism Year 2011, themed “Exotic Beaches and Islands”, kicked off on April 1 in the central coastal province of Phu Yen. A range of activities will also take place in other central and south-central provinces such as Quang Nam, Quang Ngai, Binh Dinh, Khanh Hoa, Ninh Thuan, and Binh Thuan, as well as in Da Nang city. This is a good opportunity for central and south-central cities and provinces to introduce their tourism potential and promote their marine-based economy.

Vietnam has vast potential for the development of different types of marine tourism as the country has a coastline of 3,200 km and thousands of islands rich in biodiversity. The central region is endowed with exotic beaches and islands and specific cultural heritages. Vietnam aims to welcome 5.3 million foreign tourists in 2011 and earn total revenues of VND110 trillion. Tourism Year 2011 is designed to accelerate investment in tourism development, attracting more tourists to this region.

Hoteliers have asserted that Vietnam is an exciting tourism destination with immense potential. However, in order for its potential to be reached, the quantity and quality of infrastructure and services requires support from local governments and the community.

Insights into the hotel industry for 2011
“Another successful year with aggressive growth, but also more competition with added inventory from hotel openings. We will benefit from the negative effects of the Middle East wars, redirecting some travel to Vietnam.”

Mr John Blanco, General Manager, The Nam Hai

“This year may present some challenges. The catastrophic earthquake in Japan will undoubtedly affect travel from that country. Also, the unstable political situation in Africa that caused a rise in oil prices will affect the business strategies of corporations, especially with regard to travel budgets for employees.”

Mr Scott Hodgetts, General Manager, Sheraton Nha Trang Hotel & Spa

“I think we’re going to see rising demand throughout the year. We’ve witnessed some major global disasters recently, and that always causes some uncertainty in the economy. But I don’t believe those problems will mitigate the demand we’ve been experiencing over the past six months.”

Mr John Gardner, General Manager, Caravelle Hotel, Ho Chi Minh City

“Challenges continue. That is what we predict for the hotel industry in Vietnam for this year, especially hotels that are heavily dependent upon the Japanese market. Hope is still here in Vietnam, though, as we see many investors visiting Vietnam for direct investment or feasibility studies for future investment opportunities.”

Mr Hide Ishiyama, General Manager, Legend Hotel Saigon