Tourism recovery brings Hanoi’s hotel segment back to its prime

DNHN - According to experts, the recovery of tourism has boosted the hotel market. In addition, with the closure of low-quality supply, the market is considered to be in good shape.

Tourism returns to pre-pandemic levels

The Vietnamese tourism market has been showing positive signs recently. According to the Socio-Economic Report for the first quarter of 2024 published by the General Statistics Office, the gross domestic product (GDP) in the first quarter is estimated to have increased by 5.66% year-on-year, higher than the growth rate in the first quarter of 2020-2023. In particular, the service sector increased by 6.12%, contributing 52.23% to the total added value of the entire economy. Business activities are bustling, the tourism industry is recovering strongly thanks to the effectiveness of the favourable visa policy and tourism stimulus programmes, and the export turnover of key products is increasing.

Since the beginning of 2024, Hanoi, one of the key tourism and travel cities, has welcomed 6.5 million visitors, an increase of 11% year-on-year. Of which, international visitors reached 1.4 million, up 40% year-on-year; domestic visitors reached 5.1 million, up 5% year-on-year. The increase in the number of tourists has opened up great opportunities for the hotel industry. Especially when this number is only 87% of the figure in 2019, meaning that the market still has room for development.

Mr Matthew Powell, Director of Savills Hanoi, commented: “The tourism industry has recently recorded a fairly good recovery. The operation of hotels in big cities such as Hanoi and Ho Chi Minh City has almost returned to pre-COVID levels. It can be said that domestic tourism, including both leisure and business travel, has contributed greatly to this effort. Room occupancy in markets such as Hanoi in particular is considered quite good, at 65% in the first quarter of 2024, up 1 percentage point quarter-on-quarter and 7 percentage points year-on-year.”

Regarding the number of international tourists to Hanoi in the first three months of 2024, the market recorded 4.6 million arrivals, an increase of 72% year-on-year and 3% compared to the first quarter of 2019. Leading the way is the number of South Korean visitors with 1.2 million, up 150% year-on-year. Following that is the number of Chinese visitors with 890,000 arrivals, six times higher than in the first quarter of 2023.

Mr Matthew Powell said that although the number of Chinese tourists to Vietnam is relatively stable in comparison with other markets in the region, it is still considered to be less than in the pre-pandemic period. However, the market has become more diverse in terms of international visitors, including Japan, Malaysia, Australia, Thailand, Cambodia and the US. In particular, the growth in the number of Indian visitors is also noteworthy. Currently, the market has welcomed a large number of flights from major cities in India to Vietnam, and it is expected that in the future there will be more direct flights to meet the growing demand for travel to Vietnam from Indian tourists.

“Vietnam has made significant achievements in recovering the tourism industry, with great tourism potential, meeting the diverse travel preferences of tourists such as natural landscapes, from cities to mountains, from the blue sea and white sand to vibrant primaeval forests along with cultural values and attractive cuisine. With its advantages, Vietnam is attracting the attention of luxury hotel chains, creating more room for the recovery and development potential of the tourism industry in general and resort real estate in particular,” said the Director of Savills Hanoi.

Not many 3-star hotel projects left in Hanoi

Besides the strong recovery of the tourism industry, the operation of the 4-5-star hotel segment is also developing strongly, while the supply of 3-star hotels is gradually disappearing from the market. According to information from Savills, the hotel supply in the first quarter of 2024 recorded 11,120 rooms from 67 projects, a decrease of 1% quarter-on-quarter. However, with two hotel projects officially classified as 4-star and four projects officially classified as 5-star in 2023, the supply recorded an increase of 8% year-on-year.

Commenting on the supply allocation of the hotel segment, the Director of Savills Hanoi said that the trend is gradually shifting towards the 4- to 5-star hotel segment. The market has witnessed the closure of low-quality supply. In fact, in the past year, Hanoi has welcomed the reopening of many 5-star hotels such as Movenpick, and shortly, the Hilton and Fusion hotels. Some other notable 5-star projects include L7 Westlake, Dusit Từ Hoa Palace, The Ritz Carlton, Four Seasons, Waldorf Astoria Hanoi and Fairmont.

It can be seen that the development of the 4- to 5-star segments will reflect the increasing demand of customers for high-class and fully-equipped accommodation experiences. It is expected that nine 5-star projects will account for 76% of the future supply market share, and 4-star projects will account for 24% of the market share. No 3-star projects are expected to come into operation in Hanoi within the next three years.

Nhan Ha