IMI: HOTEL OCCUPANCY REBOUNDS, TOURISM CAMPAIGN LIMPS

UNCLAS HO CHI MINH CITY 000197 SIPDIS STATE ALSO FOR EAP/BCLTV AND EB/TPP/BTA STATE PASS USTR/DAMOND/KLEIN, OPIC, TDA, AND EXIM BANK STATE PASS USAID FOR ANE UNCLASSIFIED PAGE 02 HO CHI 00197 280506Z CINCPAC FOR FPA SECDEF FOR ISA/EA/LSTERN DEPTTREAS FOR AJEWELL NSC FOR GENE CHRISTY USDOC FOR 4431/MAC/AP/OKSA/HPPHO E.O. 12958: N/A TAGS: ETRD KTDB VM SUBJECT: IMI: HOTEL OCCUPANCY REBOUNDS, TOURISM CAMPAIGN LIMPS ¶1. HO CHI MINH CITY (HCMC) RECEIVED 1.1 MILLION INTERNATIONAL VISITORS IN 2000, OF WHICH 793,000 WERE TOURISTS. 307,000 OF THE 1.1 MILLION TOURISTS WERE PEOPLE OF VIETNAMESE ORIGIN RESIDING OUTSIDE OF VIETNAM. HOTEL ROOM OCCUPANCY RATES IN HCMC AVERAGED 42 PERCENT, UP TWO PERCENT OVER 1999, WITH A SLIGHT INCREASE IN ROOM CHARGES. HOTELS UNDER STATE-OWNED SAIGONTOURIST CORPORATION HAD OCCUPANCY RATES REACH 68 PERCENT, UP 11 PERCENT, AND SOME OF THE TOP FOREIGN-INVESTED HOTELS HAVE EVEN REACHED 100 PERCENT OCCUPANCY SOME NIGHTS IN FEBRUARY AND ARE FULLY BOOKED FOR SOME NIGHTS IN MARCH. ¶2. ACCORDING TO THE MARRIOTT-OWNED NEW WORLD HOTEL, LEISURE TRAVEL HAS PICKED UP FROM JAPAN, THE PHILIPPINES, AND CHINA FROM INCREASED EXPOSURE IN PRINT ARTICLES AND TELEVISION SEGMENTS (FREE ADVERTISING). THE LIMITED NUMBER OF FLIGHTS INTO VIETNAM FROM THE MAIN FEEDER CITIES OF BANGKOK, SINGAPORE, AND HONG KONG, HOWEVER, IS MAKING IT OFTEN DIFFICULT FOR TOUR OPERATORS TO SECURE FLIGHTS FOR THEIR CUSTOMERS. THERE HAS ALSO BEEN AN INCREASE IN UNCLASSIFIED PAGE 03 HO CHI 00197 280506Z BUSINESS TRAVELERS FROM THE U.S. AND OTHER COUNTRIES EXPECTING A PICK-UP IN TRADE ONCE THE U.S.-VIETNAM BILATERAL TRADE AGREEMENT IS RATIFIED. ALTHOUGH NOT 100 PERCENT FINALIZED, IT LOOKS AS THOUGH THE LONG-MOTHBALLED, JAPANESE-INVESTED MARRIOTT HOTEL IN HCMC WILL OPEN IN SEPTEMBER THIS YEAR. NO OTHER MAJOR HOTELS ARE EXPECTED TO OPEN IN HCMC THIS YEAR BESIDES THE MARRIOTT. ¶3. ADVISED BY A LOCAL PUBLIC RELATIONS FIRM THAT VIETNAM SHOULD USE PUBLIC RELATIONS SERVICES TO MOUNT A FOREIGN- AIMED CAMPAIGN, A VIETNAM ADMINISTRATION OF TOURISM (VNAT) OFFICIAL COUNTERED THAT VIETNAM'S DESTINATION FOR A NEW MILLENNIUM CAMPAIGN BEGUN IN 2000 WAS ALREADY QUITE SUCCESSFUL. MANAGERS IN THE TOURISM INDUSTRY ARE UNANIMOUS, HOWEVER, IN NOTING THAT THE CAMPAIGN LACKS A HEALTHY BUDGET AND MARKETING SAVVY, EXPENDITURES ARE SUBJECT TO A LENGTHY APPROVAL PROCESS BY THE MINISTRY OF FINANCE, AND EFFORTS TO DATE HAVE TAKEN PLACE ALMOST ENTIRELY IN VIETNAM. A HONG KONG MARKETING FIRM ESTIMATES VIETNAM SHOULD SPEND BETWEEN USD 8 MILLION AND USD 28 MILLION TO HAVE AN EFFECTIVE PROMOTIONAL CAMPAIGN. VNAT, HOWEVER, ONLY MANAGED TO SPEND HALF OF THE USD 1.3 MILLION EARMARKED FOR IT IN 1999 AND 2000 FOR MARKETING BECAUSE OF THE COMPLICATED PROCEDURES FOR DISBURSEMENT. FOR EXAMPLE, THE HEAD OF A FOREIGN HOTEL MANAGEMENT COMPANY RELATED TO CONGEN THAT VNAT TOOK NEARLY A YEAR TO SETTLE BILLS TOTALING LESS THAN USD 20,000 FOR A DELEGATION WHICH WENT TO A COUNTRY IN THE ASIA-PACIFIC REGION AND STAGED EVENTS AT HOTELS MANAGED BY THE FOREIGN COMPANY IN 2000. IN THE FUTURE, HE SAID, HIS COMPANY WOULD REQUIRE PAYMENT UP FRONT. UNCLASSIFIED PAGE 04 HO CHI 00197 280506Z RAY UNCLASSIFIED