Horwath HTL Reports on State of Hotel Industry in Vientiane, Laos

Poor access and the lack of infrastructure, compounded by the perception of Vientiane and Laos as a low cost and undeveloped destination, is restricting the growth of the hotel and tourism industry in the city, reports Horwath HTL in a market overview of upper- tier hotels in Vientiane released this week.

The upper-tier hotels market, made up of about 9 mostly independently owned and managed properties, reported an average occupancy of about 59% at an ADR of about US$61 in 2010.

Poor access, lack of sophistication of the hotel industry, general low quality of hotels and the strong demand contribution of non-profit government organizations with controlled travel budgets were stated as some of the key reasons for the challenging business conditions in Vientiane.

Access to the city is currently limited - only 5 airlines serve the Wattay International Airport, from regional cities such as Bangkok, Hanoi, Kuala Lumpur and Phnom Penh.

The silver lining in the cloud is a reported steady growth in meetings demand in recent years. The market has seen an increase in large meeting groups, some involving up to 1,000 participants.

Meeting facilities in Vientiane are currently limited, with only few hotels equipped with the capacity to hold meeting events for more than 100 participants.

On the other hand, leisure travel to Vientiane has been impacted since the introduction of direct international flights to Luang Prabang. Hotels have reported an increase in leisure travellers who bypass Vientiane to reach Luang Prabang.

Corporate demand is currently the strongest source of business for the economic capital of the Republic of Laos, accounting for about 47% of total room nights, followed by leisure groups and MICE.

The need to improve access to the country was also highlighted at the Annual Mekong Tourism Forum, which was held in May in the Southern City of Pakse. More than 250 industry experts congregated to discuss and exchange ideas on promoting tourism in the Greater Mekong Subregion (GMS).

The Lao National Tourism Administration (LNTA) forecasts Laos' total tourism revenue at almost 400 million U.S. dollars in 2011, to be generated by over 2.6 million visitors.

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