Hanoi hoteliers have high hopes for the market reopening

Movenpick Hotel Hanoi

The hospitality industry in Vietnam is a combination of both the international and domestic brands and their chain hotels. This industry is still in a developing stage and a majority of the hotels/chains are either being independent or homegrown brand chains. The international brands have been penetrating at a steady rate and have a presence across major tourist locations in the country.

Vietnam has been trying to get herd immunity with 70 percent of the population vaccinated by end-yearr or earlier in 2022. The application of vaccination passport in some countries around the world is also important to revitalise this sector.

In fact, the market openning of the tourism industry in general and the accommodation service in particular depends on the government’s pandemic control.

According to Savills Vietnam, investor confidence remains high with approximately 2,600 rooms expected between H2/2021-2023, althought Covid-19 pandemic continues to disrupt the hotel sector. In Q2/2021, the average room rate was US$77/room/night, down 9% year-on-year; 315 3-star rooms remained closed, and ten hotels (ranging from 3-5-star) were quarantine facilities. In H1/2021, there were only 2.9 million domestic visitors, 25% less than the previous year.

With limit ed travel and global lockdowns dominating the last year, travellers are keen to break free from the monotony of the pandemic and start travelling again.

Mr. Matthew Powell, Director of Savills Hanoi, shared, “The Hanoi hotel sector is surviving with an occupancy of only 27 percent. However, there are high hopes for “revenge hospitality” as vaccine rollouts progressively permit borders reopening.”

As vaccine rollouts increase traveller confidence, Viet Nam’s plan to trial vaccine passport programs in Phu Quoc and Quang Ninh is an important step in welcoming international visitors back to the country.

While hotels are eager for the influx of travellers, they must be prepared to avoid the shortfalls faced by other markets. Mr Powell mentioned, “In the US, hoteliers are struggling with staff and supply chain shortages. Patrons also have high expectations because of price gouging due to the whiplash high demand.” This being said, he believes that Viet Nam is well positioned to absorb these reopening shocks.

The outlook for hotels looks promising as they are well placed for a post-pandemic comeback and have increasing investor interest, locally and internationally. Future supply reflects investor interest as from H2/2021-2023, approximately 2,600 rooms from 14 projects are expected to launch.

“International investors are interested in Viet Nam’s hospitality sector as they are confident in its market recovery after the pandemic. International hotels will provide nearly 1,300 rooms or 48% of future supply, including major brands such as Eastin, Grand Mercure, Fairmont, Four Seasons, Lotte, Dusit and Wink”, Mr Powell said.