Outside the APEC period, rates in Vietnam 's two main cities – Hanoi and Ho Chi Minh City – which receive the highest number of tourists in the country, are going up, with hoteliers estimating increases of between 15 and 25 per cent for the next contracting season. This comes as no surprise as Vietnam is experiencing an unprecedented increase in the number of tourists and with no new hotels expected to come online any time soon, both cities are full.

This year, even in the traditional low summer months of July to September, hotels are experiencing average monthly occupancies ranging from 75 per cent to the high-90s.

VNAT's Mr Phuong said there were only about 20 five-star properties throughout the country.

There is renewed interest from markets such as the US , Europe and Australia along with traditional markets from the region.

Hilton Hanoi Opera director of business development, Ms Gomi Suppiah, said: “We are all expecting a general rate increase of between 15 and 25 per cent. The city has not had a soft period yet – a clear indicator a rate increase is due.”

The average room rate for Hilton is US$80.

Meliá Hanoi director of sales and marketing, Mr Nguyen Duc Quynh, said: “Another reason is the shortage of five-star rooms. Many hotels opened during the Asian financial crisis so the base we started out with was very low and we have not had any major rate increases for a long time because we were trying to make our mark. We will be raising our rates by 20 to 25 per cent. There are no new hotels opening other than the InterContinental at the end of next year, and even then there is still excess demand.”

Sofitel Metropole Hanoi spokesman, Ms Nguyen Thanh Thuy, said: “We started increasing our rates this year. But as we will finish our renovations by September, we expect to increase them by another 25 per cent.”

Over in Ho Chi Minh City , hoteliers share the same sentiments as their Hanoi counterparts about the business climate.

Windsor Plaza Hotel Saigon director of sales and marketing, Mr Steve Raymond, said rates should be growing at the same rate as visitor arrivals and that is 20 to 25 per cent per year.

“The soft opening of the Park Hyatt Saigon in July with opening rates

at between US$150 and US$200 is putting upward pressure on all the top hotels in the city. Rates during next year's contracting season are going to be at pre-1997 levels, close to rack. It is no longer a buyers' market and we are going to see a natural increase,”Mr Raymond said.

Caravelle Hotel conference and banquet sales manager, Ms Nguyen Thi Hong Oanh, said: “Our average room rate is about US$102. It is definitely going up but we haven't yet decided by how much.”

For the Sheraton Saigon, whose average room rate is between US$120 and US$140, spokesman Ms Dang Tu Anh, said: “We will be increasing our rates by an estimated 10 per cent.”

But Indochina Services consultant, Ms Irene Ploeg, is against too high an increase. “ Vietnam is not the only country in the world travellers want to see.

“ Thailand is its main competitor for the leisure and incentive travel business.

“I understand why rates have to go up but travellers have many destination choices. The corporate business here is growing and they are not as sensitive about prices.

“But the leisure and incentive travel businesses are.

“However, given the tight room situation here and with prices increasing but infrastructure, quality and services remaining poor, people may go elsewhere and Vietnam will lose out.

“The industry must be aware expectations will increase with prices.”

Nha Trang out to get a slice of international market

Hanoi and Ho Chi Minh City almost always come to mind when visitors think about Vietnam . Although secondary cities such as Danang, Dalat, Hue , Hoi An and Nha Trang are fast gaining a name for themselves, they are still far behind in terms of destination awareness among corporate meeting planners.

In the central coastal province of Kanh Hoa , the planned conversion of the domestic Cam Ranh Airport in its capital of Nha Trang, to an international one by 2010, has given the trade reason to get excited about the prospects this could bring to the leisure and corporate meetings business.

The Sofitel Vinpearl Resort & Spa on the island of Hon Tre , just five minutes by speedboat from mainland Nha Trang, is already starting to target the corporate meetings market during the off-peak season between April and October. Barely two years old, the property has been under the management of Accor Hotels and Resorts since January 1, 2005.

The resort has opened only one of its two wings consisting of 230 rooms as current arrival figures to the destination cannot provide the critical mass needed to sustain the operation of its other wing, which has another 270 rooms.

General manager, Mr Nigel Harper, said corporate meetings contributed about five to eight per cent of its business now but from next year, he expected the segment to grow to 30 per cent from both the domestic and international markets.

He said: “The lack of an international airport is a limiting factor right now and has cost us opportunities. Some of the groups that have enquired about coming here are too large even for the existing Vietnam Airlines aircraft serving Nha Trang, making it too inconvenient to organise a trip.

“The ideal group size for us is 100 to 150 right now because of the lack of air accessibility, but the hotel can handle much more. This is a possibility if the groups charter their own flights.

“We will open our other wing only when Cam Ranh Airport is fully international. Airlines such as Australian Airlines, or any others that can hub out of Singapore , might be interested in the destination.

“We are doing a lot of work overseas through the Accor network to increase awareness of the resort. There is a lot of interest because Vietnam is a new destination, a new frontier.”

The resort recently hosted a 150-strong Vodafone event and had been the venue of Honda's motorcycles launches in the past.

The first golf course on the island is now being built next to the resort

and a new dive centre will open in two months. All these will go towards

making it a self-contained resort for corporate meetings groups, and

participants will not have to leave the island if they do not wish to.

Activities in idyllic Nha Trang include water sports and boat trips to various islands but many visitors are happy to relax by the beach.

Attractions include a Giant Stone Pagoda and an Indian temple. – Wrisney Tan