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