Vietnam’s “chaotic” hotel scene under scrutiny

HO CHI MINH CITY: In TravelMole Asia last week, Exotissimo Travel accused hoteliers in Vietnam of a “grab for cash”.

An Exotissimo spokesman said, “With the recent room shortage, almost every premium hotel (from 3-5 stars) is operating at close to full capacity throughout the year, and the low-season has all but disappeared.

“Many of the hotels are now taking advantage of this current situation, and are not honouring their prior commitments, including previously negotiated and contracted room rates.”

Jon Hewson, General Factotum, of the online site VirtuallyThere.ca, and a frequent contributor to TravelMole discussions, puts the other side of the story.

He writes:

“The hotel scene in Vietnam is chaotic. Many of the large hotels are joint ventures, 49% foreign owned and 51% government / agency owned and a good number are operated by Western companies.

“The market is still developing and exhibits growing pains with unfettered greed taking advantage of the situation. Capping off this volatile mess is the ability of VNAT, through the government dictat, to artificially control (distort) the market.

“If contracts are not honoured it wouldn’t take many telephone calls to round up the players, many of whom would be provincial government agencies.

“Destination management companies also play a part in this as they, too, have sought to exploit weaknesses in the Vietnam market and have signed contracts that are distinctly lop-sided. Furthermore they frequently contravene Vietnamese tourism legislation.

“They should not protest too much when Vietnamese learn that their contracts are distinctly different from other destinations and simply try to remedy the deficiencies. Furthermore, the retail tour prices when compared to their costs are totally disproportionate and I suspect they are crying wolf at losing the opportunity of making financial killings.

“It is easy to determine the distortions in the market by cross-referencing on-line hotel booking engines both with each other and published rack rates.

“I have serious doubts about the veracity of the Exotissimo statement “almost every premium hotel (from 3-5 stars) is operating at close to full capacity throughout the year” as the online res systems can verify.

“I am presently in the midst of a complete Vietnam hotel survey and I have no difficulty in locating accommodation for our team of six.

“This rapidly developing market also suffers from a lack of professionally trained people, poor pay and working conditions coupled with greedy owners and managers.

“It might surprise many guests to learn that reception staff frequently only get paid USD$50 for a full months work, that is working every day of each month. Likewise, cleaners and kitchen staff receive even less at around USD$35-40 monthly.

“Furthermore, the ‘service charge’ that is imposed by most hotels is frequently pocketed by them rather than being shared amongst employees.

“It must sicken Hanoi front desk staff who check-in guests in USD$4,000+ nightly suites when they check their bank balances at the end of each month.

“Neither can VNAT figures be relied upon either. Notwithstanding the fact that hotels have to provide copies of their hotel registers to police every night, I have found to my personal knowledge that these authorities are not aware of all the guest houses and hotels that are open, nor of the exact room counts.

“Before my team commences to canvass a town or geographic region, often on foot or bicycle, we seek to obtain official lists of accommodation. Presently we are in a mid-Vietnam tourist town and the lists provided us from official sources showed a total of 167 properties of all classes with over 8,000 beds in 4,200 odd rooms.

“Our count shows in excess of 260 accommodation properties in this metropolitan region with many more rooms in existence than is known to the tourism ministry.

“It transpires that often hotels under report actual rentable rooms so that the income can be pocketed without the knowledge of the government, along with the VAT. This situation even exists in government joint ventures.

“Having now canvassed about half the country since last summer I know this situation is common in most provinces.

“Adding to this lack of accurate data is the significant corruption prevailing in Vietnam. Errors and omissions are obfuscated by bribes to conceal illegal activities that further devalue government figures.

“Another factor complicating the hotel scene is the lack of technology. Frequently online res systems make reservations through e-mail, issuing a peremptory hold on so many rooms. Assuming that e-mails are properly handled, and that is a big if, many hotels simply put the bookings in a paper-based record that often result in double or mislaid bookings.

“Truth in advertising needs attention, including that of the destination management companies, for it appears they employ real estate copywriters.

“By way of example of what can happen is the new Celadon property presently being erected in Hue. Its concrete structure is barely complete yet I was able to book, and my credit card was charged for, a room for last week. This is a foreign ‘managed’ property, too.

“How can a reservation system price a room without the cooperation of the property managers?

“So don’t blame Vietnam for all its problems, and don’t put too much value in the complaints from Exotissimo.”