Many luxury hotels in large cities are applying new rate which is much higher than last year (30-40%). High room rates make travel companies encounter tour cancellation.

Upon a survey of VnExpress, the room rates in luxury hotels in many Vietnamese cities are increasing in 2008. Average room rate in Sofitel Plaza Hanoi hotel increase from USD 90 to USD 160, Bao Son hotel from 70 to USD 100, Nikko Hanoi from USD 130 to USD 170, Sofitel Dalat from USD 120 to USD 210. In Ho Chi Minh City, Rex hotel increases from USD 70 to USD 100, Equatorial hotel from USD 70 to USD 140, Caravelle from USD 130 to USD 180.

These are contract rates between hotels and the travel companies. If guests book the hotels directly will have to suffer higher rates.

According to Mr. Bui Thanh Tung, Sales Executive of Nikko Hanoi, the rates have increased as a result of the sudden increase of foreign visitors to Vietnam which make the difference between demand and supply bigger. Additionally, the cost of power, gasoline, labor also makes the room rates higher.

Ms. Tabatha Muldoon, Sales Manager of Hanoi Hilton Opera hotel, said that because of the huge flow of tourists, the rate increase is normal to catch up with the market change.

There are some other reasons which many hotels explain are upgrading of services and rooms in hotels also made the rates higher.

Comparing to room rates in luxury hotels in Thailand, Malaysia, they are 20 – 30 % lower than these kinds of hotels in Vietnam.

Meanwhile, the travel companies in Vietnam “are sitting above the fire” as the increase of room rates has made the tour price increase 30%. According to Mr. Dao Hong Phuong, Vice Director of Vietsky Travel, the increase made some of their groups cancelled their tours and change to other destinations like Thailand or Malaysia. Especially, the M.I.C.E guests decreased clearly.

The situation does not only affect the inbound travel, it also make many Vietnamese groups go to other countries to have meetings in stead of having meetings in Vietnam. The package rate person is USD 250 only, equivalent to about 2 hotel nights in Nha Trang or Ho Chi Minh City.

A tour operator in Hanoitourist told us that the number of guests traveling to Vietnam via this company also decreased under the affect of room rate increase. Only the tourists who have not been to Vietnam have to accept higher rate. The people who have been to Vietnam will not come back. Alternatively, they choose other neighbor countries.

Some other agents also said that in Vietnam there are a few luxury rooms but all are in high rates, also it is hard to find the meeting rooms so they have refused many M.I.C.E groups to Vietnam, especially the big groups.

Although the room rates affect to the industry but Mr. Nguyen Phu Duc, President of Vietnam Association, is still optimistic and said that the increase is the result of market regulating, this also make the investor build more luxury hotels in Vietnam.

“Tour prices in Thailand and Malaysia is low because their governments have policies on supporting to attract more tourists to help other industries to develop.” Duc said.