The structures for domestic travellers

As mentioned in Chapters Four and Five, patterns of domestic demand and distribution were analysed, and the current diagrams of distribution channels of different hotel ownership modes were depicted based on data collected from secondary sources such as hotel websites, Vietnamese online newspapers and local international tour operators’ websites. Due to the validity and richness of data, discussions on channel members, channel length, channel functions as well as channel width of the structure for domestic travellers conducted by each hotel ownership modes were limited.

As Table 6.1 indicated, the market shares of the domestic guests accounted for only small proportion of room sales of most hotel ownership modes. To gain bookings from this market mix, most of the hotels shared a commonality in using a wide range of direct and indirect channel members to approach these domestic travellers. The trend of using conventional travel companies was seen in all the hotel ownership modes, but OTAs were recorded as the only electronic channel used to meet the domestic guests’ demands.

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As with the structures for international guests, the notable difference in terms of domestic channel was that unlicensed travel companies were used by SOHs and DPOHs but not by the IJVHs and FOHs. The SOHs and DPOHs also took advantage of their social relationships with local organisations and government departments to get bookings.

In terms of the channel length and channel functions, different hotel ownership modes represented relatively the same. The width of channels, particularly for travel agents and tour operators, was accordingly large with the participation of hundreds of both domestic and international tour operators in the structures of distribution channels to reach domestic tourists.

6.4. Conclusion

This chapter has identified the key commonalities and differences of hotel ownership modes in terms of hotel capacity and patterns of demand as well as distribution channel structure. By providing four comparative tables of patterns of demand and distribution, key similarities and differences of using channel members, aspects of distribution across four hotel ownership modes, this chapter indicates insights into patterns of demand and distribution channel structures used by the hotels to reach tourism markets.

In general, patterns of demand for different hotel ownership modes showed a commonality regarding the average number of rooms, market mix, types of guests and proportion of sales via direct and indirect channels. The average size of the four hotel ownership modes was much bigger than the country average and the government minimum requirement to be classified as four- and five-star hotels (80 and 100 rooms per hotel, respectively). Across the three cities, hotel size and occupancy rate of the four- and five-star groups were almost the same. Domestic guests also accounted for a lesser proportion of sales than that of the international travellers. Among international tourists, the leisure-packaged tourists constituted the largest proportion of total room nights sold by most of the hotel ownership modes, and the FITs contributed approximately 20 percent of room nights of all ownership modes regardless of their location or star rating. Most of the hotel ownership modes were reliant on travel intermediaries to get bookings.

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However, key differences were found in terms of hotel size, room occupancy rate and other patterns of demand across the four ownership modes. The average room size of 21 five-star hotels was double that of the four-star ones (322 and 153 rooms respectively). The SOHs had the highest room occupancy rate and the hotels in Danang recorded the lowest annual room occupancy rate. Regarding the market mix, the DPOHs welcomed a higher proportion of Vietnamese guests compared to: SOH (15 percent), IJVHs (8 percent) and the FOHs (five percent). Some of the SOHs and DPOHs were particularly dependent on domestic tourists, such as the Victory Hotel Hanoi and the Green Plaza Danang, and nearly 50 percent of room nights of the hotels in Danang were purchased by the Vietnamese travellers. Five-star hotels attracted proportionally more international guests than four-star ones.

Variations were also seen in terms of types of guests and proportion of room nights sold via direct and indirect distribution channels by these hotel ownership modes. While the leisure-packaged tourists were the largest international market for all hotel ownership modes, they were particularly important for DPOHs (62 percent) compared with 44 percent to 55 percent of the other ownership modes. This type of guests was also dominant at the four-star hotels rather than the five-star ones, with 60 percent and 47 percent, respectively. The IJVHs attracted more business travellers, followed by the SOHs. The up-market hotels in Ho Chi Minh City welcomed the largest proportion of business tourists, followed by Hanoi then Danang. Regarding the channels that hotels used to get bookings, direct distribution channels generated the highest room nights sold to the end tourists compared with SOHs and DPOHs. These channels also constituted a higher volume of room night sales of the five-star hotels than that of the four-star ones. For the two FOHs, meanwhile, the Duxton Saigon Hotel sold about 55 percent of total room nights via direct channels, the Grand Plaza Hotel in Hanoi recorded as low as 17 percent.

The structure of distribution channels conducted by the four hotel ownership modes also represented similarities and differences regarding channel mix, channel members, length, channel width, channel functions and channel mix. It appeared that all of the hotel ownership modes worked with popular conventional and electronic channel members to structure their own distribution channels. However, most of the private hotels did not use the GDS service that was effectively used by the IJVHs. The SOHs

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contracted with some GDS service providers to link with the end guests, but as some of representatives from this hotel mode noted, the efficiency was low because this type of service normally required global call centres or CROs with 24-hour operation to handle bookings. Notably, both the SOHs and domestic hotels used unlicensed TAs and TOs in Vietnam to sell rooms to international and domestic guests, whereas the foreign invested hotels only signed contracts with fully licensed travel companies. For channel length, it was found to be different across types of hotel ownership. Although the two FOHs were connected with their target markets by a CRO and a sales offices, the IJVHs were strongly supported by a wide number of global sales offices operated by management hotel chains, creating for them the great advantages of approaching guests at the long-haul markets; therefore the channel length of this hotel ownership mode was considered to be shorter than other modes. In terms of channel width, all types of hotels were likely to sign contracts with hundreds of conventional tour operators in Vietnam to collect bookings. Regarding channel functions, paying illegal commissions to certain types of guests in direct channels appeared to be normal with the SOHs and DPOHs, but this form of payment was not seen at the IJVHs or FOHs. The IJVHs are also seen to apply effectively channel mix to reach tourism markets.

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