Booming Airbnb service puts pressure on hotels in Vietnam

By Ngan Anh   December 18, 2017 | 08:05 pm PT
Booming Airbnb service puts pressure on hotels in Vietnam
The rising number of people visiting Vietnam has created the momentum for growth in the accommodation-sharing businesses. Photo by VnExpress
Three-star-hotels are affected the most because they focus on the same market as accomodation-sharing services.

A room with a comfy clean bed, free wifi and a nice hot shower might sound like the perfect spot for tourists. But the simple formula no longer seems to be so attractive to young local and foreign visitors to Vietnam as accommodation-sharing services such as Airbnb grow increasingly popular.

The service is competing with traditional hotels to attract visitors who want to enjoy local life for up to half the price.

“Rather than staying in hotel rooms, many visitors prefer to stay in homes,” said a representative of Luxstay, an Airbnb-like business that offers properties for rent in Vietnam.

The rising number of people visiting Vietnam has created the momentum for growth in the accommodation-sharing businesses, according to experts.

Vietnam is on track to receive 12.8 million foreign tourists this year, up 28 percent against 2016, having already broken the record of more than 10 million with still two weeks to go until the year-end.

Official data from the General Statistics Office shows that more than 11.6 million foreign tourists arrived in Vietnam between January and November this year, up 28 percent against the same period last year.

Since officially launching in Vietnam in 2015, Airbnb has enjoyed explosive growth. There are now over 6,500 active Airbnb listings in Vietnam, with Saigon alone offering 4,000 places to rent. Hanoi has been slower to embrace the service with around 2,500 listings, according to a recent report by accounting and consulting firm Grant Thornton.

The driving force shifting consumer attention to Airbnb in Vietnam is a willingness to experience something new and affordable when it comes to rented accommodation, said Grant Thornton.

According to a Nielsen report, 76 percent of respondents in Vietnam like using shared products or services, compared to 66 percent of consumers globally.

In a country with strong entrepreneurial spirit where people want to run their own businesses or have a side venture in addition to their day jobs, many locals have snapped up the opportunity.

Forty-year-old construction engineer Nguyen Van Bao has been renting out four rooms in one of his properties in Hanoi’s Old Quarter for the past six months. Each room costs $18 per night. He did not reveal how much he has earned from Airbnb, but said that his property is nearly occupied on most nights.

Home sharing is also becoming increasingly common, and some people have turned the service into a full time job.

Nguyen Thuy Hoa, a 44-year-old property host in Hanoi, has turned her new house into two listings on the service. She has equipped her home with everyday necessities for families such as cookware, changing tables and high chairs, and rents each part of her home out for $20 per night.

She said that family-friendly amenities are important to guests who want to continue their usual daily routines and sleeping schedules while they're on holiday.

Hoa said most of her guests are young and from western countries. “I like meeting people from different cultures.”

Hotel reactions

Tony Chisholm, general manager of Hotel Pullman Saigon Center, said that booming home-sharing services are competing with traditional hotels. Three-star-hotels are the most affected by the competition because of the market they focus on, he said.

This has forced some hotels to cut their room rates, according to industry insiders. According to a report by Ho Chi Minh City's tourism department, average prices at 3-5 star hotel rooms fell 11.3 percent in the first half of 2017 compared to the same period in 2014.

However, many other hotel operators are unperturbed by the growth of the service.

Forbes quoted general manager of the five-star Reverie Saigon Hotel Kai Speth, who previously helmed the iconic Metropole Hotel in Hanoi, as saying that Airbnb might make for a good fit in destinations such as New York and London. But there were some challenges worth considering when opting for such alternative choices in emerging markets.

“In Vietnam, issues such as power outages, noise pollution and loss of internet connectivity and hot water for indefinite periods are not uncommon,” he said.

“Well-established hotels such as ours, however, that have been built to meet the most stringent of international standards, can ensure that such challenges won’t mar holidays that people have spent months planning. And having unrestricted access to experienced professionals can make all the difference.”

However, theses issues do not concern hosts like Bao, the construction engineer in Hanoi.

“These problems happen sometimes, but mostly in rural areas, not in big cities like Hanoi and Ho Chi Minh City.  I believe guests will continue to use the service because of quality and price,” he said.

"I'm thinking about putting another property on Airbnb to earn more from this lucrative market."

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