Despite the slowdown in the real estate industry, the hotel market is experiencing a strong acceleration as both rents and occupancy rates increase sharply. Along with the recovery of tourism, the end of the year is likened to the “harvest season” of this segment.

The latest report of Savills Vietnam shows that, in the third quarter of 2022, the hotel market in Ho Chi Minh City. Ho Chi Minh City is experiencing positive changes. Room occupancy rate averaged 58%, up 19% quarterly. Room rates increased 22% quarterly and 50% yearly, for 4-5 star hotels.

Prices keep going up

Not only the high-end segment, three stars hotels and below also had a strong recovery. Room rental rates in the 2-3 star segment in central districts increased by 10-20% quarter-on-quarter, of which 2-star hotels cost 450 – 700 thousand VND/room/night, 3-star hotels ranged from 750 thousand VND to 1,800 USD. 1 million VND/room/night.

According to Savills, after the first three quarters of the year, Ho Chi Minh City remains the most popular destination for tourists, with 10 million domestic arrivals, up 69% quarter-on-quarter and accounting for 45% of national arrivals. Regarding international visitors, in the third quarter, the city welcomed about 1.6 million arrivals, an increase of 240% compared to the second quarter.

Meanwhile, at the northern end of the bridge, the Hanoi hotel market is also in an accelerated phase, the number of guests renting rooms is increasing, and at the weekend many hotels have an occupancy rate of 90-100%.

Specifically, according to data from the Hanoi Department of Tourism, in the first nine months of 2022, the average occupancy rate of the hotel block reached 34.1%, an increase of 12.7%. The 2 – 4 star hotels in the central neighborhoods recovered well. Particularly in the third quarter, the number of tenants increased by 30-50% over the same period in 2021.

Hoang Quoc Trung, who runs a 4-star hotel on Lo Su Street (Hoan Kiem, Hanoi), shared that the hotel business will need more time to return to its heyday, but compared to occupancy rates of only about 10-20% at the beginning of the year, the current achievements are extremely impressive.

“Many hotel chains are currently at 80-95% capacity. In the time to come when tourists recover, room occupancy will continue to increase. Not to mention the occupancy rate of hotels may be higher when the staff is increased, ”Mr. Trung emphasized.

Notably, in the whole city. In Ho Chi Minh City and Hanoi, 4-5 star hotels are welcoming a large number of delegations in the form of MICE (tourism combined with conferences and seminars). For example, in Hanoi, Melia, Sheraton, and Hilton Opera hotels… currently have a ratio of 50-50 domestic and international guests, sometimes the ratio is 40-60 in favor of foreign guests.

Fierce competition

Along with the increase in occupancy rate and rent, the competition in the hotel market is also forecasted to be increasingly fierce. For example, in the city. In Ho Chi Minh City, the supply of hotel rooms will increase sharply soon, with 15,500 rooms coming from 110 projects.

Familiar hotel brands in Vietnam are constantly returning with determination to expand the market, such as InterContinental Hotels Group, Marriott International, Hyatt Hotels, Accor Hotels, Wyndham Hotel Group, and Best Western International…

Meanwhile, new brands appear to continuously assert their ambitions. Typically, the SOJO Hotels chain has grown rapidly, reaching the scale of nearly 10 hotels in less than a year of its launch. SOJO Hotels impresses with the chain of “contactless hotels”, aiming to have 100 branches in the next 5 years.

Similarly, another young hotel chain, Wink, is also starting construction on its sixth hotel in Vietnam. “We have planned to develop and put into operation 20 hotels in the next five to seven years,” said Peter Ryder, Chairman of Wink Hotels and CEO of Indochina Capital.

The rapidly increasing supply along with the ambition of a series of “giants” both at home and abroad show that the forecast of increasingly fierce hotel market competition is completely grounded. Accordingly, to survive, investors need a smart development strategy and make a difference.

In a recent article by Vnbusiness, Ms. Uyen Nguyen, Head of Consulting Department of Savills Hotels, commented: “With the current growth rate, if the source of tenants cannot be restored and developed in time, it may lead to a situation where the tenants are not able to recover and develop in time in some locations, thereby negatively affecting the business performance of hotels and resorts in the country.”

Sharing the same opinion, Mr. John Gardner, CEO of Archipelago Indochina Group, warned that oversupply may occur, leading to price competition, affecting service quality and customer experience, and ultimately affecting customer experience. The same is the attraction of the wrong type of tourists to Vietnam. In the long run, if every place offers the same products, it will be very difficult to compete.

Therefore, to attract customers, according to experts, hotels need to constantly refresh themselves. In particular, in the context that the market is still heavily dependent on the number of international visitors, improving infrastructure and improving service quality is the “survival” task of hotel investors in Vietnam.

Source: Vnbusiness