As a shortage of luxury hotels in Vietnam pushes up the cost of high-end accommodation, Vietnam has lost price advantages over its neighbors where better hotels cost less money.
According to recent survey by the National Administration of Tourism, there are only 25 four and five star hotels throughout Vietnam while Kuala Lumpur and Bangkok have 29 and 28 respectively.
For years, foreign tourists have been attracted by the Vietnam's soft prices, but the cost of accommodation has jumped twice in the last year.
Ben Thanh Tourist Company calculates that the average cost for a MICE tour (participating in Meeting, Incentive, Convention and Event tour packages) in Vietnam is US$180 per night while the correspondent fee in Thailand is only $100.
Some Vietnamese tourism companies complained that hotels been breaking deals and raising prices arbitrarily, forcing tour agencies to renegotiate with their clients.
Dong Hoang Thinh of Ben Thanh said his firm just lost a group of Russian tourists who switched to Macao due to a shortage of hotel rooms in Vietnam.
Similarly, a group of Italian tourists that wanted to stay one night in Ho Chi Minh City were turned away by luxury hotels that demand at least 2 nights.
In the first 6 months of this year, occupancy rate at Vietnamese hotels has averaged 90-95 percent. In Ho Chi Minh City the figure is 99 percent, with most high-end hotels full.
Small step taken, giant leap needed
The number of hotels in Vietnam has increased nearly four fold in the last decade, from 2,480 in 1997 to over 8,550 in 2007, according to tourism administration survey.
But these are mostly small cheap hostels and do not meet the high-end demand.
Hoang Tuan Anh, the administration's director, said he is aiming to have 15,000-20,000 four and five star rooms in Vietnam by 2010.