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Oversupply of hotels in central region leading to falling room rates

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Da Nang City and Hoi An, the two most famous destinations for tourists in the central region, are full of hotels and resorts, leading to cutthroat competition.

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The number of hotel rooms is increasing 


Claude M. Balland has been working in the hotel/tourism industry in Vietnam for 22 years, with many years as general manager for Victoria Hoi An Resort & Spa. He noted that the number of hotel rooms is increasing more rapidly than the number of tourists. 

In such a context, Vietnamese owned hotels are scrambling for guests by reducing hotel room rates. In Hoi An, many hotels do not have a transparent pricing policy. They regularly open websites of rivals’ hotels to check prices and then set up lower prices for their hotels. They scramble for guests at any cost, without thinking about losses or service quality.

The unhealthy competition is occurring not only in Hoi An, but in Da Nang as well. The occupancy rate at accommodations in Da Nang is 40 percent on average, while the hotel room rate has fallen by 50 percent compared with one to two years ago.

Nguyen Duc Quynh, deputy chair of the Da Nang Hotel Association, said that 4-star accommodations are competing fiercely with 5-star hotels and resorts by offering lower room rates, which are VND700,000-1.2 million per night cheaper.

Luxury hotels and resorts cannot slash their room rates because they have to provide international standard services.

Both Balland and Quynh said their room rates are stable, but they have to offer more services to retain guests.

The director of Indochina Unique Tourist, Nguyen Son Thuy, confirmed that 5-star hotels have to still set high hotel room rates, while 3-4-star hotels are trying every possible solution to increase the room occupancy. 

However, the race of slashing prices will push them against the wall because they will not have money to maintain service quality.

“I know some hotels in the world which are very small but are always full though their room rates are very high. At some restaurants, customers have to queue up for hours to have seats. Why don’t we follow them?” he said.

“Once hotels are original and provide premium quality of service, travelers will come and won’t care about prices,” he added.

The room supply will continue to rise as many projects are under construction.

Quynh believes that it is necessary to open more air routes to bring more travelers to Da Nang and the central region.



Source: VietNamNet

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