Indonesian hotel faces tough Hanoi market

Indonesian hotel faces tough Hanoi market

HANOI (AFP): Indonesia's Sungeiway group launches its US$17 million Hanoi hotel today at a time when existing hotels are crying out for business.

Hotel lobbies have long provided a refuge from Hanoi's chaotic streets, but a recent plunge in business travel and tourism has left these traditional oases eerily empty, executives said. And things can only get worse.

Already there is a glut in supply, forcing established hotels such as the Sofitel Metropole and the Hanoi Daewoo to slash rates as much as 50 percent, and the number of hotel rooms is set to double this year.

But Lucien Blanchard, general manager of Sungeiway's new 143- room Sunway Hotel is optimistic despite the stiff competition he faces.

"We have confidence in the market. Of course its going to be very tough in 1998. We are all eating from the same cake, and the cake isn't getting any bigger," he said.

Blanchard believes the hotel's quiet location -- it is just two blocks from the residence of former Communist Party General Secretary Do Muoi -- and modest size will cater to middle management business travelers.

"We don't expect CEOs (chief executives), we are aiming for engineers, technicians and professionals," he said.

Analysts say boutique size hotels such as the Sunway and the recently opened 151-room Malaysian-built Guoman Hanoi, should fare better in the economic slowdown than behemoths such as the 411-room Daewoo and the 299-room Hanoi Sheraton, scheduled to open in March.

Timing market cycles is tough in any business, but it is particularly tough in the hotel industry, where projects usually take years from conception to completion.

This year the number of international-standard rooms will more than double from about 1,000 to 2,300 if all projects come on stream as planned.

The Nikko group of Japan, the U.S. Hilton chain, Westin Resorts and the Singapore-backed Lien West Lake will vie for a shrinking number of visitors.

"There's going to be a lot of cutthroats this year," said David Thornton, sales and marketing director of the US$65 million, 324-room Hanoi Horizon Hotel, managed by Swiss-Belhotel International.

For other hotels in other Vietnamese cities the prospects look equally bleak.

In Ho Chi Minh City the Marriott may delay its opening by a year and construction has halted on the Park Hyatt, the Vietnam Investment Review reported.

In Haiphong, Vietnam's third largest city, a 23 million dollar project backed by Singapore's Indotel and Feal of France had its license revoked for failing to break ground after three years.