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Hospitality sector buoyant
The Grant Thornton International Business Report (IBR) 2010, which was released on Monday, reveals that privately held businesses (PHBs) in the hospitality sector globally are more confident about their economic prospects for the year.
A balance of 32 per cent were optimistic this year compared to 2 per cent last year, the report said.
The hospitality sectors of most economies were hit hard by the global slowdown, however the emerging markets, and their respective sectors, have shown a much more robust recovery in comparison with the more mature economies, according to the report.
Viet Nam, for example, experienced an average decline in room rates of 31.9 per cent in 2009. Meanwhile, Europe lost around 6 per cent of its visitor volumes across 2009, wiping out many of the gains it had made in 2007-08, and any recovery in 2010 has been hampered by the cloud of volcanic ash and the cold weather.
Kenneth Atkinson, Managing Partner of Grant Thornton Viet Nam emphasized that "Occupancy rates have been quite low over the last 12 months so businesses are looking at geographic diversification in order to get a better mix and access new market opportunities to drive demand."
Expectations
A balance of 40 per cent of businesses in the hospitality sector expect their revenue to increase across 2010, compared to 19 per cent last year, the report said.
In terms of profitability expectations, the balance of businesses in the hospitality sector expecting to increase profits in 2010 is 30 per cent, an increase of 37 percentage points from last year.
The proportion of businesses in the hospitality sector planning to grow through acquisition fell by 16 percentage points this year, to 24 per cent; this followed a 10 per cent drop the previous year, from 50 per cent in 2008 to 40 per cent in 2009;
Matthew Lourey, Corporate Finance Director at Grant Thornton Viet Nam noted that "Businesses are trying to combat the lack of loyalty by working their existing customer base, looking after them well and offering discounts and promotions to keep them coming."
The hospitality sector globally is forecast to remain fairly flat across 2010, particularly in more mature markets, as companies continue to hold back on corporate hospitality expenditure by cutting down face-to-face meetings and length of stay, and consumers look for cheaper, low-cost holiday options closer to home.
"The ‘low cost, high touch' digital media space provides the avenue but focusing efforts on customer loyalty over discounting promotions is essential," Nguyen Vinh Ha, Assurance Partner at Grant Thornton Viet Nam, said.
In Europe numbers of visitors are set to increase only modestly in the short-term, as unemployment and fiscal retrenchment squeeze consumer spending, with 2008 visitor levels unlikely to be reached until the end of next year.
In Viet Nam, however, international arrivals appear to have returned to pre-financial crisis levels, supported by increases in domestic travel.
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