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Supply squeeze creates rocketing hotel rates.
Rising hotel rates are causing headaches for tourists and tour operators and there’s no solution in sight. International visitors to Vietnam will find it more difficult to secure comfortable lodging at fair prices as hotel fares soar in big cities across the country.

A report from Ho Chi Minh City Department Tourism said the average price of hotel rooms in the city in 2007 increased 23 percent from the previous year, with three- to five-star luxury hotels experiencing a 31 percent price escalation.

Visitors pay on average about VND1.2 million (US$75) a night presently, compared to the average price of VND965,000 in 2006.

The agency predicts the average price for hotels will surge 15 to 30 per-cent in 2008, and may even leap 30 to 40 percent for luxury and downtown hotels and properties with conference and exhibition facilities.

The city currently has around 290 hotels ranging from one to five stars, including 118 new hotels with 2,500 new rooms added in 2007, according to the service.

Three- to five-star hotels totaled 44, providing more than 7,000 luxury rooms to tourists by the end of 2007

Yet, the number of available rooms has not kept pace with the influx of international tourists and domestic visitors flocking to urban metropolis-es, said a senior officer from Saigontourist Holdings, the country’s leading hotel operator.

About 19.2 million local tourists and 4.3 million international arrivals— respective year-on-year increases of 9.7 and 17.2 percent—traveled in Vietnam in 2007, according to the Vietnam National Administration of Tourism.

Not only HCMC but also big cities like Hanoi, Ha Long, Da Nang, Hue, Nha Trang, Phan Thiet, Can Tho and Vung Tau face a shortage of hotel rooms in the coming years, according to a survey conducted by Grant Thornton last year.

Room squeeze

“Now is the era in which hotels fix prices and shape the market since demand is rapidly rising while supply is inching up slowly,” said Truong Minh Huy, director of XPC Tourist Company.

Huy said several years ago the market was weak, with high vacancy rates.

To fill rooms, hotel owners had to market their properties heavily and offer competitive prices.

But now a shortage of rooms means travel companies have to reserve rooms months in advance and tours for more than 50 guests are difficult to book.

Tour operators are forewarned to expect an increase of 15 percent in price for rooms, but in reality they have paid 30 to 300 percent higher during peak seasons, said the director.

Hotel rates began rising several years ago and tour operators are sometimes forced to cancel tours because they can’t find rooms at a rate that will make the trip profitable.

Huy said the room shortage was affecting Vietnam’s image and could damage the tourism industry if prices kept increasing.

Vu The Binh, head of the administration’s travel department, expressed concern about the situation, saying Vietnam’s tourism industry would not be as competitive if hotel prices were higher than in other countries.

Binh said hotel owners planning to raise their rates should match the higher prices with better facilities and improved service levels.

Vietnam will receive about 25 mil-lion domestic tourists and six million international visitors annually by 2010.

Hotels under construction throughout the country will add about 28,000 rooms to the current 142,000 rooms by 2010, reported the Grant Thornton survey.

The survey concluded that the total of 170,000 rooms will not meet market demand and prices will climb steadily if hotel construction continues to lag behind demand.

HCMC’s government is seeking investors to build more accommodation for tourists in the country’s busiest city, which attracts for 65 per-cent of the country’s foreign arrivals.

Last year the government released a list of more than 40 potential sites in beautiful areas of HCMC and appealed for local and foreign investors.

Source: TNN

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