Poor access and a lack of infrastructure is restricting the growth of the hotel and tourism industry in the Lao capital Vientiane, according a new report from Horwath HTL. The upper-tier hotel market, comprising nine mostly independently owned and managed properties, reported an average daily rate (ADR) of about US$61 in 2010. This compares to ADR of US$94 in Bangkok, in what was widely considered to be a poor year for average rates in the Thai capital. Occupancy in Vientiane averaged just 59% last year.
Horwath cited poor access, lack of sophistication in the Lao hotel industry, a general low quality of hotels and the strong demand contribution of non-governmental organisations with controlled travel budgets as some of the key reasons for the challenging business conditions in Vientiane. Access to the city is currently limited, with only five airlines serving the city’s 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 report added. The market has seen an increase in large meeting groups, some involving up to 1,000 participants. Horwath did note however, that meeting facilities in Vientiane are currently limited, with only few hotels equipped with the capacity to hold events for more than 100 delegates. Leisure travel to Vientiane has also been impacted since the introduction of direct international flights to Luang Prabang – Laos’ UNESCO-listed former Royal capital in the north – allowing travellers to bypass Vientiane.
Corporate demand is currently the strongest source of business for the Lao capital, accounting for about 47% of total room nights, followed by leisure groups and MICE.
The Lao National Tourism Administration (LNTA) forecasts Laos’ total tourism revenue will reach US$400 million in 2011, to be generated by over 2.6 million visitors.
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