Five-star hotel supply continues to increase in the second quarter

In a recent report, real estate services consultancy Savills said that hotel market activities in the North have improved positively. In Hanoi, the total supply reached more than 11,000 rooms, coming from 67 projects.

However, the proportions between segments have been mixed. For example, the supply of 5-star hotels continued to increase by 3% quarter-on-quarter, while the 4-star segment tended to decrease, about 7%. The reason, according to Savills, is that many hotel projects have proactively changed their brands, upgrading their quality from 4-star to 5-star. For example, last quarter, the Movenpick Living West project (rebranded from Eastin Hotel & Residences) in Cau Giay district, was upgraded from 4-star to 5-star.

Mr. Mauro Gasparotti, Director of Savills Hotels, said that hotel projects with international operators are increasing in Vietnam. Because many hotel and condotel investors want to boost their competitiveness and increase their market share. Therefore, many units seize the moment when the tourism market recovers to reposition their brands or develop new projects, upgrading the customer experience.

This trend is taking place in Hanoi, Ho Chi Minh City and other cities with many advantages for tourism development. In Hai Phong, the 6th hotel of the Wink Hotels chain was just topped out in Hong Bang district in August with a total investment of 50 million USD. The project was developed by Indochina Kajima Development, a brand from Japan, providing nearly 230 hotel rooms and nearly 80 serviced apartments. Or in Quang Ninh, the resort hotel complex with a total investment of 1,700 billion VND, managed by the global hotel group Banyan Group (Singapore), has been operating since July.

Savills experts predict that in the next three years, the number of hotels with international brands will account for 40% of the total supply of mid- and high-end hotels in the market. This level has increased sharply compared to the proportion of 25% in 2013.

In addition to supply, hotel occupancy and room rates also recovered positively. According to Savills data, the second quarter recorded room occupancy of 67%, up 2% quarter-on-quarter and 3% year-on-year. Average rents also increased by 11%, mainly in the 5-star segment.

Similarly, CBRE - a unit specializing in providing real estate consulting and investment management services - said that in the first half of this year, the hotel market in Hanoi and Ho Chi Minh City recorded a significant improvement in room revenue, reaching 80% compared to before the Covid-19 pandemic. Meanwhile, in the same period last year, the recovery rate was only nearly 70%.

The positive recovery of the tourism industry has boosted the supply and prices of hotel rooms. Mr. Michael Piro, General Director of Indochina Capital, said that in the first half of this year, Vietnam welcomed more than 8.8 million international visitors, up 58% over the same period last year, surpassing the 8.5 million visitors before the pandemic. This shows a positive recovery trend in the hospitality industry.

The positive growth of the Vietnamese hotel market also follows the general trend of the Asia-Pacific region. Many other markets have also seen growth in hotel room rates thanks to the recovery of international visitors such as South Korea, Japan, Thailand, and Singapore. According to the forecast of the World Travel and Tourism Council (WTTC), the number of visitors to Asian countries this year could increase by more than 33% compared to last year.

However, experts say that this segment in Vietnam still faces challenges. Mr. Mauro Gasparotti said that some coastal markets still have excess supply from large-scale projects, creating pressure on occupancy and maintaining good profit margins. Because in the previous period, many investors rushed to develop projects without carefully considering suitable product models.

Experts recommend that during this period, investors need to optimize operational efficiency, improve service quality and diversify products to seize opportunities when the tourism market recovers.