Nha Trang hotels forced to cut rates to cope with room glut

“The hotel occupancy in Khanh Hoa has never been as low as at the moment. The average occupancy rate which was 63 per cent at this time last year but has been reduced to 43 per cent at the moment”, revealed Nguyen Duc Chi, Chairman of Crystal Bay.

Hoteliers blame the lower occupancy on the rapid increase in new room supply, with the number of rooms rising 30 per cent to reach 39,400 keys last year. Among them 20,000 rooms are classified as three- to five-star rates.

Meanwhile, the tourist volume grew only 16.7 per cent, with more than 6,3 visitors staying in the province, including 2.8 million foreign visitors.

Competition among hotels is expected to get fiercer this year as around 10,000 rooms will be added to the current supply.

The south central province has set a target of attracting total 6.8 million visitors this year, an increase of 7 per cent compared to last year. The number of foreign visitors is expected to reach 3.3 million, 18 per cent higher than last year.

Le Van Son, General Manager of Liberty Central Nha Trang hotel and Chairman of Khanh Hoa Provincial Hotel Association, claimed that travel agents were taking advantage of the situation to force hotels to reduce room rates.

“Some hotels have accepted to lower room rates to attract visitors. The room rate of three-star hotels can be as low as VND600,000 a night now,” said Son.

He reveals that the hotel market in the province has started to change since the middle of last year when travel agents began to ask hotels to reduce room rate. Earlier, almost all travel agents had to beg hoteliers to earmark rooms for them, but just a few hotels have been able to secure an annual contract with travel agents this year”, said Son.

Son asked all hoteliers to discuss and set the floor prices for three- to five-star hotels in order to stabilize the market and upkeep service quality.

“Don’t let the pricing competition affects the service quality or turns Nha Trang – Khanh Hoa into a cheap destination”, he added.

However, Le Thi Hong, Vice Director of Champa Island Resort said a floor price scheme would not work, and instead, hotels should intensify marketing and promotion for the destination.

Chi said Nha Trang city was facing an imbalance in tourism development space, with hotels focusing on the downtown area that have led to overloaded infrastructure. Meanwhile, the city lacks entertainment services such as water parks and theme parks.