Vietnam‘s Hospitality Sector Rebounds with Tourism Surge
Vietnam’s hospitality industry is experiencing a strong recovery, fueled by a significant increase in tourism. Hanoi is leading the charge, with projected average occupancy rates expected too exceed 78% in 2023 – a dramatic rise from 45% in 2022, according to a recent report by Avison Young. This level indicates a complete restoration of pre-pandemic accommodation demand.
The rebound is also reflected in average daily rates (ADR). Hanoi’s ADR is forecast to surpass US$111 per room this year, slightly exceeding levels seen in 2019, before the onset of the COVID-19 pandemic.
Ho Chi Minh City (HCMC) currently boasts over 16,600 hotel rooms with a 61% occupancy rate as of this year, with an additional 200 rooms slated to come online in the near future. New hotel developments are also occurring outside of the major cities; the northern coastal city of Hai Phong recently welcomed a 225-room Wink hotel featuring energy-efficient design and integrated smart technology. In the central region, Da Nang has seen the opening of the 300-room Courtyard by Marriott Danang Han River, housed in a 45-story building.
Vietnam has welcomed nearly 14 million foreign visitors in the first eight months of 2023, representing a 22% increase year-on-year – a record number. Michael Piro, CEO of Indochina Capital, attributes this growth to both the tourism boom and supportive government policies. “This is a very positive signal,as tourism is truly becoming a key driver of economic growth,especially in the two major hubs of Hanoi and HCMC,” he stated.
Contributing factors to the increased visitor numbers include relaxed visa policies, promotional campaigns, and events commemorating the 80th National Day.hanoi, for example, saw over 640,000 visitors during the September 2nd National Day celebrations, pushing hotel occupancy rates in many establishments to 90%.
Despite the positive outlook, the sector faces ongoing challenges. Avison Young highlights the need for improvements to transport infrastructure and public amenities. While the number of direct international flights has increased, road conditions require attention to enhance accessibility and the overall guest experience, especially during peak seasons and inclement weather.
Piro also pointed to operating costs and access to funding as hurdles, especially for smaller developers. He noted that resort properties are vulnerable to global economic shifts and changes in visa regulations due to their reliance on foreign tourists and seasonal demand, leading to inconsistent cash flow.
He advises developers to prioritize locations with strong connectivity and well-defined tourism plans, focusing on lasting practices, culturally immersive experiences, and aligning product design with actual market demand rather than fleeting trends.
