After 2024, Hanoi's accommodation service is anticipated to recover fully.

DNHN - In the past six months, the accommodation service in Hanoi has shown signs of improvement but has not yet returned to its previous level. The hotel and serviced apartment market is expected to fully recover by 2024.

Vietnam's tourism industry continues to receive positive signals in the first half of 2023. According to a report by Savills Vietnam, Vietnam welcomed 70 million tourists in the first half of the year, achieving 63% of its target for 2023. The year in which domestic arrivals increased by 5% year-over-year to reach 64 million. The number of international arrivals increased by 826 percent year-over-year to reach 5.6 million. The percentage of Korean tourists is the highest, accounting for 29% of all international arrivals, followed by China (10%) and the United States (7%).

In the first six months of 2023, according to available data, Hanoi is one of the top-earning tourist destinations. According to the City People's Committee, the capital's tourism industry welcomed 10.3 million visitors in the first half of 2023. domestic, an increase of 22.6% over the same period, and 2.03 million international arrivals, an increase of 7 times over the same period. The estimated total revenue from tourists in Hanoi is 44,880 billion VND, a 74.3% increase over the same period in 2022.

The revival of the tourism industry has had a positive impact on the hotel industry. According to Savills' market report for the second quarter of 2023, the number of hotel rooms in Hanoi increased by 7% quarter-over-quarter and 10% year-over-year to 10,962. The average annual rent for a room is now 2.5 million VND, a 26% increase year-over-year as the economy continues to slow.

However, this rate of recovery is considered to be slow, as it has not yet returned to pre-pandemic levels. In the second quarter of 2023, room occupancy in the Hanoi market reached 62%, significantly lower than the rate of 73% during the same period in 2019. The number of international tourists visiting Vietnam had an impact on the recovery rate. South continues to defy expectations. The number of international tourists to the capital has increased during the first half of the year but has not yet reached the pre-epidemic level. After the official reopening of international routes in March 2023, there were only about 55,000 Chinese visitors to Vietnam, a decrease of 77 percent from the first half of 2019.

To attract foreign tourists to Vietnam, the government and relevant agencies have implemented numerous preferential policies, particularly visa incentives. Vietnam will increase the visa duration from 30 days with a single entry to 90 days with multiple entries on August 15, 2023. This policy is anticipated to increase the tourism industry's openness, creating opportunities for revolutionary development shortly.

In addition to preferential policies, the tourism industry in the capital has numerous promotional programs and experiential activities to attract international and domestic tourists through unique cultural discovery tours and other attractive tourism products. In addition, according to information from the Hanoi Department of Tourism, the unit will organize more events, programs, and festivals from now until the end of 2023 to attract tourists to Hanoi.

Commenting on the recent market recovery, Mr. Troy Griffiths, Deputy Managing Director of Savills Vietnam, stated, "International visitors have not fully returned, and Chinese tourists are still below their five-year average." 2019. In addition, the hotel market in Hanoi is not expected to fully recover until 2024, even though the new visa policy will stimulate growth. From now until the end of 2023, Hanoi will receive new supplies from international hotel brands. In the Tay Ho district, the L7 West Lake Hanoi, operated by Lotte, will open with 264 rooms. During 2024 and 2025, the market is anticipated to welcome over 2,600 rooms from a variety of international brands. Dusit Hanoi – Tu Hoa Palace, Fairmont Hotel, Shilla Hotel, Four Seasons, and Hyatt Regency are typical examples.

While the hotel segment will not fully recover until at least the end of next year, the outlook for the serviced apartment segment is positive. According to a report by Savills, registered FDI reached USD 13.4 billion in the first half of 2023, with newly registered FDI increasing by 31% year-over-year. The city with the highest amount of registered FDI was Hanoi, followed by Ho Chi Minh City. Ho Chi Minh, Bac Giang, Binh Duong, and Hai Phong are the four provinces of Vietnam. Singapore accounts for 22% of global investment, followed by Japan with 16% and China with 15%. Matthew Powell, Director of Savills Hanoi, estimated: "With robust FDI inflows, demand for serviced apartments in the first half of 2023 will be quite stable. In addition, the optimistic forecast for foreign direct investment in the northern provinces will provide a positive outlook for this segment."

According to the expert, the occupancy rate of serviced apartments in Hanoi reached 82% in the second quarter of 2023, up 2 percentage points quarter-over-quarter and 6% year-over-year. The average rent was VND 572,000/m2/month, an increase of 3% quarterly and annually. In the foreseeable future, 4,013 apartments will be introduced to the market. In which the Tay Ho district will account for 45% of the total future supply, the largest proportion.

In addition, Mr. Matthew predicted that the Ring 4 project, which is expected to open to traffic in 2027, will increase connectivity between Hanoi and industrial provinces such as Bac Ninh and Hung Yen, thereby creating an attractive demand source for serviced apartments among foreign experts operating in these areas.

It can be seen that the accommodation service sector in Hanoi has not yet returned to its pre-epidemic levels, but it has experienced a strong recovery and a positive outlook for the future.

Nghe Nhan