Homestay owners' dreams crumble in Da Lat

More than two years ago, Ngoc Thao, 25, quit her Ho Chi Minh City office job to open a homestay in Da Lat, the tourism capital of the Central Highlands, famous for its year-round cool climate and evergreen pine forests.

Initially, as Thao's homestay was filled with holiday-goers and her business thrived.

She said her profits would triple or even quadruple during the peak tourism season back then.

But now she's welcoming 70% less tourists than she did in the beginning.

"We have not received any new bookings for more than three months, forcing us to offer room discounts," Thao said. "But there are still no new guests."

With gloomy prospects, Thao has scaled down her business and terminated the lease contracts of her two establishments to reduce losses. She's done – packing up and going home.

"Many of my friends have given up on their businesses after bearing losses and even incurring debts during their time investing in homestays," she added.

Thanh Luan's 6,000-square-meter homestay has also been gloomy since National Day.

Every week, Luan offers discounts of up to 30-40%, but he's still been unable to attract more than a few customers.

The 35-year-old said he has had to open additional coffee and food services to compensate for consecutive months of homestay losses.

Luan said the prolonged slump is causing many famous homestay hot spots in Lam Dong, home to Da Lat, fall into oblivion, with just 60% of last year's number still operating now.

At the Dambri area, once a homestay capital in Lam Dong, 40% of homestay facilities have shut down and some others are barely able to cover their losses and survive. The problem is the same everywhere: no guests.

The homestay business in Da Lat is no longer a popular trend due to fierce competition, according to insiders.

Minh Long, owner of a popular homestay in Da Lat, said the massive opening of homestay facilities in the resort city has sparked fierce competition as on average there are four to five homestays springing up per day.

"When too many investors race to open homestays for business, some have to lower their room prices to compete with new facilities, resulting in revenues that are not enough to cover operating expenses," Long added.

The lack of unique tourism experiences at homestay facilities has also been a major challenge.

Dang Hung Vo, former deputy minister of natural resources and environment, said many investors spent large sums of money building their homestay facilities without investing in the quality of the travel experiences they offer.

To develop this kind of tourism, homestay accommodation establishments need to focus on accompanying services such as craft villages, sports, or local specialty products to attract tourists and create a unique experience, according to experts.

Four years ago, many homestay investors flocked to Da Lat to catch up with a rising travel fever at the destination, but they didn’t expect that the city has gradually begun to lose its charm to rapid urbanization, poor infrastructure and limited tourism experiences.

Once a favored summer retreat of the French thanks to its cool weather all year round, many tourists complained Da Lat is getting warmer due to the loss of pine forests to make room for tall buildings.

For foreign tourists, Da Lat is not a popular choice due to limited transport infrastructure and tourism services. Because of its dangerous mountainous terrain, and steep passes, road traffic accidents remain an obsession for many tourists.

Room occupancy rates in Da Lat during the five-day Reunification Day and May Day holidays reached only 70% of capacity.

During the recent four-day National Day (September 2) holiday, the room occupancy rate in Da Lat reached barely 50%.

Vo said the potential to develop accommodation services such as homestays in Da Lat is still viable, but they must focus on developing unique tourism experiences to attract tourists and create their own identity.

Ton Thien San, chairman of the Da Lat Municipal People's Committee, said leisure travel programs that combine sports and culture will be the highlight of the tourism industry’s new tourism products.

San said the city is prioritizing the development of tourism in the suburbs that includes ecological activities.

Central Da Lat will adapt new and vibrant entertainment models at night, and suburban areas will form high-quality resorts, he added.