Foreign tourists cross a street downtown Ho Chi Minh City. Photo by Nghia Pham
Hotels in Ho Chi Minh City are experiencing unprecedented low sales, forcing them to reduce prices and offer customers great bargains.
A plunge in foreign arrivals and the sluggish economy that has cut into business parties and conferences have left the small number of remaining customers controlling the market, hotel managers were cited as saying in a Thoi Bao Kinh Te Saigon report.
A five-star hotel in the city recently won a contract for serving a 65-person contingent, but its sales manager, identified only as N., was not crowing about it.
"It's hard to call that a victory as we slashed prices," he said.
"You will not be able to sell rooms these days if you don't cut prices."
His hotel has cut prices by more than 30 percent from the previous month to VND2.1 million (US$100) a room a night.
Figures from Vietnam National Administration of Tourism show that the number of foreigners coming to Vietnam in the first four months this year reduced by 5.3 percent year-on-year to around 2.4 million.
N. said the situation has been very tough this month.
Hotels normally never let their prices fall from the previous year, but at this stage, no one dares stick to that policy as customers are the ones making decisions, he said.
An individual customer can book a five-star hotel room on the weekend for the "rare" price of $80 a night, he said.
Le Nguyen Tuong Vi, deputy director at the three-star Liberty Hotel, said not only has their room revenues reduced, but customers were also spending less on food and other services.
"Finding ways to attract customers has become our daily job," Vi said.
Insiders are recalling their golden days five years ago, when they had the market and could increase prices by 30 percent every year without losing customers.
A source from another hotel in the city said their room revenue has dropped 25 percent from last year while food income fell by 15 percent.
The representative said the hotel used to make good money from organizations or businesses who booked the hotel for conferences which sometimes lasted several days and thus included the use of the hall, rooms and meals.
But the economic downturn has meant fewer such activities.
"We breathe the air of the economy. Now everyone complains about the economy, and that puts us in a difficult time," the representative said.
Hotel managers said the slow time requires better cooperation between local hotels and more help from the government as they will face harsher competition from foreign-owned properties.
They said foreign-invested hotels are equipped with tools for market assessment and forecasting that allow them to adjust prices at the right time to win customers.
N., manager of the local hotel that won 65 customers recently, said he first charged VND2.8 million a room a night, but a reliable source informed him that a foreign five-star hotel had lowered its prices from VND3.1 million to VND2.2 million.
"Luckily the tour came to us first. If they were looking for a hotel online, they would have gone to the foreign hotel."
N. said local hotels usually guess the situation of arrivals based on what happened in the previous years, and set prices by looking at what others are doing.
Vi from Liberty agreed that local hotels are not proactive about price research.
She said market surveys done by foreign research companies are expensive for most Vietnamese hotels, and it is not easy to get regular, accurate data from government agencies.
"We only need to know the monthly numbers of customers from each country and the average room prices in each segment, but it's very hard to find.
"Such information should be posted on the websites of tourism agencies," she said in the Thoi Bao Kinh Te Saigon report.
Experts said reports from Vietnam National Administration of Tourism do not carry specific information of value other than the total number of foreigners entering the country.
The general manager of a Vietnamese hotel said his and several local hotels are trying to help themselves by forming a group that meets every month to share with each other information about their respective situations including prices, number of customers and their spending patterns.
But the group was only helpful at the beginning, and some hotels have started to provide false information, making others want to withdraw, he said.
"Any business has its secrets and wants to have a competitive edge, of course. But in this condition, hotels need to shake hands and share information in order to survive together."
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