Nov 19, 2012

Vietnam - Hard-up hotels must check out new growth strategies

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VietNamNet Bridge – Hospitality businesses must be alert to new opportunities during tough economic times by changing their business strategies and researching the market, experts said at the second annual Hospitality Management Conference held yesterday in HCM City.

Co-organised by Irving Seminar and Training in collaboration with the LEAN media group, the conference attracted the participation of domestic and foreign investors, hotel owners and operators, consultants, and service and technology providers.

Andrew Langdon, senior vice-president of Thailand's and Indochina's Jones Lang LaSalle Hotels, said hotel owners should clearly communicate goals to the operators.

Monthly owner meetings with hotel management should be held to review the performance of all departments, he said, adding that management efforts should be focused on key areas of opportunity.

They should also monitor the local competitive hotel environment to understand market trends, new supply and refurbishment activities of competitor properties, he said.

Langdon noted that owners should be constantly seeking opportunities to maximise cash flow and asset value through repositioning, efficient use of capital, effective re-use of spaces and review of revenue opportunities and costs of ownership.

Maintaining the physical condition of their hotels was also critically important.

Hotel survey

According to Grant Thornton's Viet Nam Hotel Survey 2012, at least 50 per cent of respondents last year said the hospitality and leisure market was an attractive sector, but that dropped to 38 per cent in the fourth quarter of this year.

Kenneth Atkinson, managing partner of Grant Thornton Viet Nam, said the first few months of 2012 showed signs of a slowdown in the five-star market, with several hotels reporting lower occupancy and room rates than last year.

This was due in part to new room supply in the market and also a change in the arrivals mix, with more inter-regional tour groups preferring three – and four-star hotels.

Last year, internet bookings grew only 4.7 per cent. The most popular method used to reserve hotel rooms in 2010 and 2011 was through travel agents and direct reservations. The latter accounted for nearly 30 per cent of bookings in 2011.

There was a major drop of 7.9 per cent in individual tourists, from 40.1 per cent to 32.2 per cent, in 2011.
The number of visitors joining tour groups and attending conferences increased to 29.1 per cent and 7.6 per cent, respectively, last year.

This year, Viet Nam targets 6.5 million international tourist arrivals and 32 million domestic tourists, with revenue of VND150 trillion (US$7 billion).

More than 47 per cent of hotels surveyed said they were planning to expand or improve facilities over the next two years.

In the 2012-13 period, an additional 5,000 rooms from three-, four – and five-star hotels will be on the market in the north, central and southern regions.

More effort was needed to promote Viet Nam in the North American and European markets, Atkinson of Grant Thornton said.

A lack of skilled labour resources and poor public infrastructure were problems facing Vietnamese tourism. Restricted tourist visas on arrival also prevented the industry from attracting more tourists "The Government's budget to promote Viet Nam tourism in other markets is limited for ads on international channels as well as for tourism fairs and opening tourism representative offices in other countries," he said.

At the conference, Raymond Clement, managing director of Savills Hotels in Asia Pacific, said that Asian hotel property markets had been relatively resilient to the global economic uncertainties, given strong domestic demand and wider policy options.

Major locations such as Japan and China remained the focus of hotel investors in the region. Hong Kong, Singapore and Seoul would all be on the investors' radar in the near future.

The investment volume in Viet Nam's hospitality sector saw an increase from 1 per cent last year to 3 per cent in this year.

Matthew Lourey, CEO of Hive Corporation, said successful hotels tried to assess the discretionary income of customers and how they would spend their money. Understanding these drivers would help to increase revenue and profits, he noted.


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