Danang: Too many low-star resorts

Danang officials say there is an oversupply of one and two-star hotels caused by too many SME investors attempting to cash in on a tourism boom.

Many of the endeavours are struggling according to the city’s Department of Culture, Sports and Tourism. Supply has outstripped demand at the low-end of the accommodation scale leaving many of the resort owners scrambling to stay out of debt.

The department deputy director, Tran Chi Cuong said: “We should help investors understand the present situation so they make accurate investment decisions. Mid- to high-end resorts are a better prospect, buoyed by a steady rise in occupancy.”

Average occupancy at many high-end hotels ranges from 65% to 75% and even reaches 90% during peak months. There is still room for investors in the up-scale market, he explained.

Danang has 355 hotels, with 300 of them in the one and two-star categories and the remainder in the three-to-five-star segments.

The number of visitors to Danang has grown over the years, and demand for hotels of three to five-star standard has picked up as well.

Local and foreign tourist arrivals in Danang have grown on average at 20% annually in recent years. The department estimates that this year the city will welcome around 3.2 million visitors.

From 2011 to 2012, 1,500 new rooms were added to the inventory, while the average occupancy in the city reached 51%.

An extra 1,700 to 2,000 new hotel rooms should come on line this year

Sourced: ttrweekly