Hotels in foreign-tourist area unoccupied despite sharp fall in rent

Hotels on Bui Vien street in HCM City have become dorms, while Japanese-style restaurants have shut down after incurring big losses.

The number of foreign travelers fell dramatically over the last few years because of COVID-19.

Bui Vien street in district 1, HCM City, is called ‘western street’, ‘backpackers’ street’ or ‘street of bars’ as it’s a famous attraction for foreign travelers.

Minh Hang, 39, lives in a rented dorm room on Bui Vien street. She pays VND2.2 million a month in rent, electricity and water bills. This is a reasonable cost and Hang is satisfied about her choice. 

The room where Hang lives was once a hotel room. The owner of the hotel, which could not attract guests because of COVID-19, decided to turn hotel rooms into dorm rooms to rent to students and office workers.

Cao Phi Yen, the owner of Bui Vien Street Hostel, admitted that she has tried to maintain the hotel’s operation by leasing dorms at reasonable fees. Monthly tenants have helped keep the hotel busy and offset   the sharp falls in the number of foreign travelers. Backpackers also like dorm rooms as these allow to save money.

Tenants pay US$5-US$6 a day for each bed (VND120,000). The hotel now has 50 beds. 

Many hotel owners on Bui Vien street said the number of foreign travelers renting rooms is just equal to 30%-40% of that in pre-pandemic period. 

Accommodation establishments are trying every possible measure to cut costs and reduce room rates to attract guests.

Nguyen Gia Hao from New York Thien Phuc Hotel said the room rate was lowered from VND1-VND3 million per night to VND600,000-VND800,000, but the occupancy rate is still low at 70%. The guests are mostly from Russia, the US and Taiwan.

After the pandemic, travelers tend to be more sparing of money and research carefully about destinations before making decisions, so hotels have to reduce room rates to attract them.

About an eight-minute motorbike drive away from Bui Vien walking street is a small alley leading to Japantown on Thai Van Lung street. Four restaurants there have closed. Their owners could not maintain the restaurants because of the pandemic and landlords are seeking new tenants.

Vo Thi Be Quynh, manager of Torisho, said that five years ago, the restaurant was crowded all the time and guests had to book tables on weekends. The current number of guests is just 40% of that in the pre-pandemic period. 

Meanwhile, Nguyen Cam Tu, manager of Fujiro, said the number of foreign guests has dropped by two-thirds. The number of guests at another restaurant of the same chain, located in district 7, is even lower.

The restaurants there mostly serve Japanese, Korean and Taiwanese who live and work in Vietnam, and there are very few foreign travelers.

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