Today’s Saigon Times reports of hard times for the city’s luxury hotel market, with occupancy as much as 10% down on the same period in 2007 (to tell the truth it’s closer to 15%!). Citing factors such as global recession, increasing air ticket prices and the 2007 hotel rate hikes, the city’s upscale hoteliers are wringing their hands and pining for the boom years.
With one exception. One hotel is still achieving high occupancy, hitting 95-100% in midweek and holding a steady 80% over the summer low season period, without cutting its rates or offering promotions in order to do so, and thus holding the highest occupancy in Saigon and probably in Vietnam as a whole. That hotel is, of course, the Duxton!
How are we doing it? Well, we have a few yield management tricks up our sleeve which I’m not prepared to divulge in public, and our consistent marketing and busy networking schedule have helped, but another reason is the very factors cited in the opening paragraph. In a time of recession & rising prices, travellers, be they business or leisure, look for ways to cut their travel costs, and those who usually stay in 5* hotels often choose to stay in a 4* instead. As the only international standard 4* hotel in the centre of Saigon, we are in a great position to benefit. And when those guests try us and see that our service and location are as good as, if not better than, many of the city’s 5* properties, they become regular customers.
This highlights probably the biggest reason for the decrease in visitors, particularly tourists, to Saigon and Hanoi – the lack of 3* & 4* hotels. Both cities have plenty of 5* properties – too many in low season, as the Saigon Times report bears out. What they lack are mid-range hotels to cater for tour groups, affluent tourists who prefer to save their money for shopping & eating rather than blowing it on a room they will only use for sleeping & showering, and business travellers who have been told to cut their travel budgets!
Looking at hotel development plans for the next few years it doesn’t look as if the situation is going to improve, with most planned openings being in the 5* bracket. Why is this? Well, one obvious answer is simply that, all things being equal, 5* hotels make more money. But another answer is that, in Asia, the concepts of prestige and ‘face’ are more important than in the west, and Asian hotel owners value the prestige of owning a 5* property. And so the trend for 5* hotels continues, leaving a big gap in the market for good 3/4* hotels.
We’re not complaining – we like being unique, as it’s good for business, and our customers enjoy getting a 5* location and 5* service at a 4* price, and our occupancy figures reflect this. But in the long run, if Saigon and Hanoi are to cement their status as popular business, tourism and MICE destinations, hotel developers need to swallow their pride and be a little more pragmatic – far better to be the owner of a full 4* hotel than a half-empty 5*!