Although Vietnam reopened its door to international tourists over a year ago, small and medium lodging facilities in Ho Chi Minh City are still struggling to recover due to the small number of international visitors.

Their largest source market is China while the number of guests from the northern neighbor remains modest, forcing many hotels to use their facilities for other purposes or stop leasing spaces.

Shutdown, falling room occupancy

In District 1, many hotels which used to be crowded with foreign travelers are now empty or have been replaced by other businesses.

On Ly Tu Trong Street, a spacious hotel is being repurposed. The hotel is in a prime site, near Ben Thanh Market, Nguyen Hue Pedestrian Street, and Le Loi Boulevard, once favored by international tourists.

Many 'House for Lease' signboards can also be seen along Bui Vien Walking Street and De Tham Street with many of them being hung in front of small, one- and two-star hotels.

The director of a chain of one- to four-star hotels in Ho Chi Minh City said due to the impact of the COVID-19 pandemic, three out of the nine hotels of the chain in District 1 which reported a room occupancy rate of 90-100 percent in the pre-pandemic period have been closed.

The six remaining ones are smaller and report the highest room occupancy rate of 70 percent. Most of them are dragging out a miserable existence.

“Up to 60 percent of our customers are foreigners but the number is not as stable as earlier,” the director said.

Amid fierce competition in the market, lodging facilities have to compete with each other to attract customers while still burdened with maintenance and operation costs, the hotel chain director added.

Nguyen Thi Thuy Loan, a representative of Hotel A25 in District 1, said her hotel system has been reopened for a year after the pandemic-induced suspension.

The infrastructure has deteriorated while revenue fell, so the hotel has to carefully weigh the decision before an upgrade.

Costs have surged after the pandemic, so the hotel has to choose the most optimal solution before upgrading or buying anything, which is time-consuming.

As a result, it is hard to satisfy selective tourists, Loan added.

She said many hotels see their infrastructure seriously deteriorating and they want to access preferential bank loans and have their loan payment deadlines extended to improve their capability and service quality to better serve choosy customers.

Enterprises need at least three years to recover to pre-pandemic levels. Therefore, it is necessary to continue applying the electricity prices for production for lodging facilities in the next three years and reducing the water and Internet expenses for them, Loan proposed.

Doan Thi Anh Tuyet, head of the District 1 Culture and Information Division, attributed the difficulties of hotels to the small number of tourists, especially foreigners, their short stays and low spending.

“Due to the long-lasting COVID-19 pandemic, employees of many lodging facilities have changed their jobs and refused to return, resulting in a dearth of human resources, especially experienced and high-quality laborers, at most lodging facilities,” Tuyet said.

Despite the hardship, Nguyen Van Man, managing director of the Silverland hotel chain, said many hoteliers want to increase service prices to make up for the high operation costs after the pandemic but they are afraid that customers will turn their back on them.

At present, the number of three-star hotel rooms with a rate of some VND1-1.2 million (US$43-51) per night is small. Most hotel rooms see their rates 10-15 percent lower than expected.

Looking forward to more foreign guests

According to statistics from the Ho Chi Minh City Department of Tourism, the number of one- to five-star hotels in the city fell over 10 percent at the end of last year compared with 2021.

Bui Thi Ngoc Hieu, deputy director of the department, said small and medium lodging facilities are encountering multiple difficulties resulting from rising operation costs and the lack of resources.

Many of them are short of customer resources and manpower and find it hard to compete with rivals owing to limited digital transformation.

“I know a hotel which has 80 rooms but it can now only offer 30 rooms due to the lack of employees and other resources," Hieu said.

“The tourism sector has worked out support solutions but it cannot help these hotels recover immediately because of the modest number of customers."

Meanwhile, managing director Man said small and medium hotels are waiting for Chinese travelers and seeking new source markets, such as Australia and Northern European countries.

“The local hotel system can only maintain their operation once more tourists return to Vietnam and the hotel room occupancy rate bounces back to 95-100 percent as earlier,” Man added.

District 1 is home to leading lodging facilities in Vietnam. After the pandemic, the number of hotels in the district has fallen by some 20 percent as they have to return spaces and have seen a fall in the number of guests, especially foreigners.

The district is cooperating with the construction sector to draw up a plan to develop nightlife in Ho Chi Minh City until 2030 with a vision to 2050 and a scheme to boost services in District 1, come up with solutions to restructure Ben Thanh Market in District 1, and rearrange trade and service activities on Le Loi Boulevard.

District 1 will launch typical and traditional night tourism products, such as an in-district midnight run, festivals at temples, and activities during the Lunar New Year, or Tet, holiday.

As of the end of last year, Ho Chi Minh City had over 3,200 lodging facilities with a capacity of more than 65,000 rooms, including 325 one- to five-star hotels offering some 17,600 rooms.

The number of one- to five-star hotels plunged 312 percent from the 1,342 units in 2019. The sharpest fall was seen in the number of one- and two-star hotels.

Deputy director of the Ho Chi Minh City Department of Tourism Hieu said small and medium hotels have welcomed a small number of international customers, so they have yet to recover.

In addition, high-quality human resources have shifted to other jobs and are unlikely to return to the hotel sector.

Furthermore, many hotels have deteriorated and fail to meet criteria stated in the section on Tourism Law.

As a result, many hotels in Ho Chi Minh City have closed or converted to other services, Hieu added.

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