September 2009
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Shifting winds |
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Hotels are halving their rates as lower MICE arrivals
create a buyers’ market, but a three-pronged strategy offered by the
private sector, including a proposed convention bureau, offers a way
forward, writes Sirima Eamtako
In stark contrast to the shortage of rooms and sky-high rates last year, MICE arrivals are dwindling, five-star properties are being avoided and Vietnam’s MICE industry is scrambling to counteract the effects of both an economic downturn and the A/H1N1 pandemic.
Destination Asia CEO and group managing director, James Reed, said the number of forward bookings for MICE groups from the US had fallen drastically and business from the UK had dropped by about 15 to 20 per cent. Australia though was “still producing well”.
| | Ho Chi Minh City: rates about 30 to 40 per cent down |
He said the grey scenario had only started to become more apparent from July, before which the company was still organising “many inbound incentive events” for groups booked one-and-a-half years prior.
“But now, we are starting to see the real impact from the economic downturn. The shorter booking lead times are also making it difficult for us to forecast next year’s outlook.”
But even as Vietnam turns into a buyers’ market, with hotels dumping rates by 40 to 50 per cent to stimulate bookings, the industry believes price plays only a small part in attracting business.
Caravelle Hotel general manager, John Gardner, said it was mainly because companies were not planning incentives due to falling sales and negative media coverage on corporations’ excessive spending amid the present financial crisis.
He said budget cuts by corporations had also shifted business away from five-star to four- and three-star hotels with lower rates.
Vietnam’s MICE industry is not standing still amid the negative sentiment. Its MICE/tourism-related private sector grouping, the Tourism Working Group (TWG), proposed a three-step roadmap to market and reposition the country as a leisure and business destination at the Vietnam Business Forum in late June.
A TWG member, Exotissimo Travel Vietnam general manager, Mr George Ehrlich-Adam, said TWG proposed the relaxation of visa rules and regulations as a short-term strategy to attract more arrivals, the formation of a Vietnam Convention and Visitors Bureau and the repositioning and rebranding of Vietnam as a mid-term plan, and the development of tourism-related human resources as a long-term policy.
The private sector proposal followed a May sales and marketing plan proposed by the Vietnam National Administration of Tourism that revolved around a complete overhaul and restructure of the related sales, marketing and international cooperation departments within the Ministry of Culture, Sports and Tourism (MCST).
MCST and TWG both support the formation of a convention bureau as a public-private partnership funded by both public resources and membership dues. Against a blank timeline, however, MCST is considering several models based on visitor and convention bureaus within the region, and TWG is offering its assistance in the planning of the bureau.
The industry is also targeting the issue of visas as another sticky point and believes more demand could be achieved if visa rules and regulations are relaxed.
Vietnam currently allows visa exemptions for a 30-day stay for ASEAN nationals and a 15-day stay for citizens of Scandinavia, Finland, Japan, South Korea and Russia.
The trade has pleaded that similar arrangements be granted to other key source markets including Australia, Canada, France, Hong Kong, Taiwan and the US – or at least speed up the visa application process for them.
MICE wins
• Vitours’ low-price strategy has won it a handful of incentive groups, including Amway (Thailand) for 2,000 winners to Hanoi and Halong Bay between March 10 and April 2 this year.
• CITE – Centre of Incentive Tours and Events director, Yen Le, said the company had secured two high-profile incentive trips – one for 10 high flyers from Germany in October and another for 40 winners from a regional company in November.
• Four meeting and incentive groups of about 50 to 100 rooms are on the horizon for Hotel Majestic Saigon.
Falling arrivals
• 2009 arrivals is estimated down by about 20 per cent to 3.2 million. The country initially aimed to attract 4.3 million arrivals, up from last year’s 4.25 million visitors.
• Between January and June, the country welcomed 1.89 million foreign visitors, a drastic drop of 19.1 per cent from the same period last year.
• In the first six months, business traveler arrivals dropped 21.9 per cent while leisure traffic plunged by 22.1 per cent year-on-year.
Plummeting rates
• According to Vitours director, Cao Tri Dung, rates are about 30 to 40 per cent down on average in Hanoi and Ho Chi Minh City, where previously the room crunch had prompted hotels to impose steep rate increases in 2007 and early 2008.
• Today, five-star hotels stand at about US$120, four-star hotels between US$70-US$80 and three-star hotels about US$40-US$50.
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