Luxury hotels more profitable than ever: survey

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The Vietnamese hospitality market performed better in 2010 than at any time since before the financial crisis, with considerable increases in both average room and occupancy rates in high-end hotels and resorts across the country, a survey found.

The survey, released by the accounting and consulting firm Grant Thornton Vietnam in Ho Chi Minh City on Wednesday, said that 2010 was a landmark year for Vietnam's growing hospitality and tourism industries.

International arrivals to Vietnam rose by 34.8 percent to over five million visitors "” a new record "” providing a major boost for room and occupancy rates.

The survey found that the average occupancy rates at high-end hotels in Vietnam increased in 2010 by 1.9 percent, while the average room rate increased 6.8 percent.

The average occupancy rate for Vietnam increased in 2010 to 59.7 percent.

Four- and five-star hotels saw an increase of 5.3 percent and 5 percent in their occupancy rates respectively, in 2010.

The previous year, occupancy rates fell an average of 6.3 percent at five-star and 14.1 percent at four-star properties.

However, three-star hotel occupancy rates decreased by an average of 1.6 percent in 2010, compared with an increase of 2.1 percent in 2009.

The changes in these figures demonstrate a shift in the customer demand toward higher-quality hotels. Travelers are selecting their hotels according to facilities and services rather than price alone, said Ken Atkinson, managing partner at Grant Thornton Vietnam.

The survey found that room rates rose an average of 14 percent (from US$63.83 in 2009 to $72.53 in 2010) during the low season and 11 percent (from $80.46 to $89.16) during the high season.

Four-star hotels saw the most dramatic increase in average room rate (8.5 percent) followed by three-star hotels (4.7 percent). On the other hand, five-star rooms averaged $131.38, in 2010, an increase of only 0.8 percent compared to 2009.

The increase in occupancy and room rates contributed to an overall rise of revenue per available room (i.e. RevPAR the standard industry measure of hotel utilization and return).

RevPAR across Vietnam increased from $44.63 in 2009 to $49.76 in 2010, or 11.5 percent. The RevPAR of three-, four- and five-star hotels rose by 5.8 percent, 15 percent and 10.3 percent respectively.

The jumps represented Vietnam's first return to RevPAR growth since 2007.

"2011 is expected to continue where 2010 left off with continued growth and improvement of rates and occupancy," Atkinson said, of the trend.

Hotel expansion plans

As of December 2010, Vietnam had 239 three-star, 120 four-stars and 65 five-star hotels and resorts, with a total of 42,098 rooms, according to the findings.

Of the hotels surveyed, 42.6 percent plan to expand or improve their facilities over the next two years. This was consistent across all categories. Most planned to renovate their existing facilities.

Four- and five-star hoteliers said they planned to add services while physical expansion remained the most popular option for three-star hotel operators.

For the Vietnamese hospitality sector as a whole, 2010 was a more profitable year than 2009, with average earnings before interest, tax, depreciation and amortization increasing from 27.1 percent to 35.6 percent.

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