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Vietnam tourism hopes rise again as hotels return

With its old-world charm, mountain scenery and long unexploited stretches of sand, Vietnam's tourism sector is booming again.

india Updated: Oct 29, 2005 21:14 IST

With its old-world charm, mountain scenery and long unexploited stretches of sand, Vietnam's tourism sector is booming again as international hotel groups and investors return after years of mistrust. Vietnam welcomed 2.9 million visitors last year, up from 2.4 million in 2003.

It is aiming to attract 3.2 million this year, despite the threat of bird flu having an impact on. According to the World Trade and Tourism Council, the country should be one of the 10 most dynamic destinations of the next decade. And now the time for huge investments has returned. Victoria Hotels and Resorts, a subsidiary of French Electricite et Eaux de Madagascar, has been stepping up investment in the country and now controls the capital of five hotels. Accor, Starwood, Hyatt, Hilton and also Marriott have preferred to sign management contracts with the hotel owners, often Asians grouped in joint-ventures with Vietnamese operators.

'Vietnam is a splendid country, safe, with some minimal infrastructure and which retains the smells and colors of Asia. It still has that spice which Singapore and Hong Kong have lost a bit of,' says Jerome Auvity, general manager of Hanoi Hilton. The sector experienced a wave of euphoria in the 1990s after the country first opened up.

It was then hit by the Asian financial crisis of 1997, which forced several construction projects to be put on hold. In the southern commercial capital of Ho Chi Minh City, construction of Starwood and Hyatt hotels was halted for years, with their massive concrete shells left open to the elements. The crisis passed and the investors returned, but 2003 was another terrible year for tourism. The SARS (Severe Acute Respiratory Syndrome) epidemic brought the sector to its knees.

Accor lost 30 percent of its annual sales turnover and occupancy rates at the large Hanoi hotels fell between 12 and 30 percent for three months. But enthusiasm quickly returned and, despite ongoing fears over bird flu, the time appears ripe for investment.

The 10 hotels run by Accor, the first foreign operator in Vietnam, will generate sales turnover of 50 million dollars this year, an increase of 43 percent compared to last year, according to Patrick Basset, operational director of the group for the Southeast Asia and India. The great hotels of Hanoi and Ho Chi Minh City say occupancy rates are up to 80 percent. And beyond these cities other destinations are emerging, such as the former imperial capital Hue, the legendary Ha Long bay or the mountain city of Sapa, in the north.

In Hoi An, a seaside resort in central Vietnam with a vast beach and a traditional village, projects are multiplying. 'In 2001, there was between the beach and the city only one state-run hotel, rice plantations and houses. But since 2003, hotels have been built one next to the other," notes Servane Rangheard, general director of the Victoria group in Vietnam. According to her, 'Vietnam is now recognised as not being a risky country for the investors'. Even the threat of bird flu has for the moment had only a marginal impact. Vietnam has accounted for two-thirds of the more than 60 human victims of the disease since late 2003 in Southeast Asia. Experts fear the disease could become a pandemic if it mutates into a form easily transmissible between humans.

But for the moment, the number of visitors to Vietnam has not weakened. 'We feel a certain effect of bird flu but not a devastating one,' says Kim Powley, general manager of the Sheraton hotel in Ho Chi Minh City. 'Bird flu, what is it? Here, one prefers not to think too much about it,' says the Hilton's Auvity. But 'if it is in the newspapers constantly, then we will suffer'.

The World Bank says in any case the tourism sector is not facing too much of a threat at the moment. 'A late-2005 outbreak could have a more sizeable impact if fears about transmission from birds to humans became more widespread,' it said in an economic analysis of bird flu. 'But the impact could be smaller too, as other countries gradually start reporting cases of avian influenza, which reduces their attractiveness as tourist destinations, relative to Vietnam.'

First Published: Oct 29, 2005 21:14 IST