Currently, visitors spend only VND100,000-200,000/night to stay at many hotels in Nha Trang City (Khanh Hoa) at the weekend. The 3–4 star hotels and resorts have offered up to 40% discount or more on room rates compared to the heyday of the tourism industry.

Mr. Vo Quang Hoang, Chairman of Khanh Hoa Hotel Association, said this is a consequence of the overbuilding of hotels and resorts in the past few years.

According to the Khanh Hoa Provincial Department of Tourism, the province has more than 52,000 hotel rooms, about 50% of which are rated 3-5 stars. 

But Hoang said this number must actually be over 55,000 and will increase sharply in the near future, because many large-scale projects of 500-700 rooms are still under construction. 

The situation is similar in other provinces. Vietnam Hotel Association figures show that there are 38,000 accommodation establishments nationwide, with 780,000 rooms. The number of 4-5 star hotels is about 500.

Mauro Gasparotti, Director of Savills Hotels Asia – Pacific, estimated that in the next three years, the number of hotels and resorts in key tourist destinations in Vietnam will grow at an average rate of 20%. 

However, oversupply hasn't occurred in all markets and segments. He said that while big cities like Ho Chi Minh City or Hanoi do not have enough hotels, coastal localities have an excess of resort products, especially 3-4-star or less.

He said that in Cam Ranh, Phu Quoc and Ho Tram, many projects have been implemented, and total supply in the next few years is expected to far exceed the actual number of visitors. 

Hotels are thus slashing room rates to compete with each other.

Gasparotti said the hotels and resorts that operate well with highly rated services do not need to worry. Room occupancy is lower than before, but will definitely recover.

He said investors need to change their approach from maximizing space to focusing on customer experiences. He emphasized the two main factors that create long-term appeal: cultural experiences and resort experiences.

Mr. Vo Quang Hoang said the most important factor is still the management agency’s planning. He said that in the next 5-10 years, the tourism industry should focus on developing amusement parks and not permit accommodation projects, in order to balance the tourism ecosystem.

"Tourists can't just come and eat, sleep in hotels and then leave. In some famous tourist destinations, there are too many hotels and too few entertainment sites," said Mr. Hoang.

He emphasized that without early intervention, the oversupply of hotel and resorts will not only harm accommodation businesses but also adversely affect the tourism industry as a whole.

Mai Lan