Hotels mushrooming

Two years ago, there were only two five-star hotels in Danang, namely Furama and Hoang Anh Gia Lai. Now, the city has six more hotels of same standard.

The three-star hotel segment also has an additional 10 facilities, while the number of four-star hotels has doubled from two to four. Overall, Danang now has 40 hotels of three to five stars.

It seems the city's tourism property sector has not felt the impact of a slowdown in the real estate sector. While many hotel projects in other tourist cities have been put on hold or moving at a snail's pace due to financial distress, investors in Danang have been pressing on with their projects. This is evident in the fact that many hotels and resorts have been up and running along the coastal road connecting Danang and Quang Nam in recent years.

Resort projects are in close proximity along the 10-km coastline, especially the area in Danang. Apart from the large projects such as Hyatt Regency, Vinpearl, Life Style, and Fusion Maia that are in service, workers at other seaside hotel and resort projects are busy putting the finishing touches on these projects.

According to the Department of Culture, Sports and Tourism of Danang, there are currently 58 four-to-five-star hotel projects under development citywide, with total registered capital of US$3.4 billion. In addition, a host of small hotels are being built along some streets in the downtown. The pace of hotel construction in Danang is faster than the rest of the country.

At present, it is very difficult for investors to find good locations or coastal sites for new projects, said the tourism department. Therefore, the city has shifted the focus from calling for investment into new hotel projects to accelerating work on the ongoing projects.

Insufficient rooms for majority

Some travel businesses said hotel development in Danang is heating up, but if there was no good planning, it would lead to a hotel room redundancy while types of guest rooms suitable for most tourists would fall short.

In Danang, the domestic market still accounts for a majority of tourist arrivals. Domestic tourists often choose coastal resorts of around three stars. However, most of the coastal resorts are luxurious.

Local and international visitors who can spend several million dong for one-night stay at luxury hotels are in the minority. It is predicted that this segment would not grow significantly in the next few years. This explains why even during peak seasons, the five-star resorts are hardly full.

One of the segments that should be promoted in Danang is coastal hotels affordable to the majority of tourists, said Cao Tri Dung, director of Vitours Travel. "Currently, Danang lacks coastal resorts of three stars or so, with room rates of US$40-50 per night. Tourists have great demand for such rooms, but travel agencies cannot find," said Dung.

Another problem faced by Danang and other tourist destinations is many investors, especially small ones, lack a clear vision. Seeing the number of tourists coming to the city increasing, they eagerly spend money building hotels, leading to small hotels mushrooming.

For example, on Pham Van Dong Street alone, there are more than 10 small hotels. In some other routes, small hotels are going up but the market has limited share for these projects.

A business in Danang told the Daily that now is a good time to buy a small hotel in the city's downtown. Many investors are offering hotels of a few dozen rooms, which are only crowded during tourism events such as the International Fireworks Competition or during the peak tourism seasons.

"Since they lack thorough market research, these businesses can hardly earn profits. If you want to buy some, I can take you to a few places," said the source.

According to the Vietnam National Administration of Tourism, since early 2012, Danang, Quang Nam, Khanh Hoa, Quang Ninh and Binh Thuan have recorded high tourism growth. In particular, tourism revenue in Danang surges sharply, earning the city the third highest tourism revenue of all localities nationwide, only after the two biggest cities Hanoi and HCMC.

According to the tourism department of Danang, in the first eight months of the year, more than 1.87 million tourists arrived in the city, up 8% year-on-year. Total revenues from tourism are estimated at VND4.09 trillion, up 29%. The figure is expected to hit VND5.5 trillion by the year's end.