Will tourism stimulus policies help hotels in Hanoi recover?

Hanoi hotels to recover after 2024

According to a report by Savills Vietnam, in the first half of last year, Vietnam welcomed 70 million tourists, reaching 63% of the target for 2023. Of which, domestic visitors increased by 5% year-on-year, reaching 64 million. The number of international visitors increased by 826% year-on-year, reaching 5.6 million. The proportion of Korean visitors led, accounting for 29% of the total number of international visitors, followed by China with 10% and the US with 7%.

Will tourism stimulus policies help Hanoi's hotels recover? — Accommodation services in Hanoi have shown certain signs of recovery but have not yet reached pre-pandemic levels. (Photo: CDu)

Data shows that Hanoi is one of the localities leading in tourism revenue in the first 6 months of 2023. According to the City People's Committee, in the first half of 2023, the capital's tourism industry welcomed 10.3 million domestic visitors, up 22.6% over the same period and 2.03 million international visitors, up 7 times over the same period. Total revenue from tourists in Hanoi is estimated at VND 44,880 billion, up 74.3% over the same period in 2022.

The return of tourism has also had a positive impact on the hotel market. Accordingly, in the second quarter of 2023, the hotel supply in the Hanoi market increased by 7% quarter-on-quarter and 10% year-on-year, reaching 10,962 rooms. The average rental price reached VND2.5 million/room, up 26% year-on-year after a slowdown in recovery.

However, this recovery rate is assessed to be slow, unable to reach pre-pandemic levels. In the Hanoi market, room occupancy in the second quarter of 2023 reached 62%, much lower than the 73% in the same period in 2019.

Similarly, the recovery rate is partly affected by the number of international tourists to Vietnam, which has not met expectations. In the first 6 months of the year, the number of international tourists to the capital increased, but has not reached pre-pandemic levels. Especially for Chinese tourists, after the official reopening of international flights in March 2023, there were only about 55,000 tourists to Vietnam, 77% lower than in the first half of 2019.

To stimulate foreign tourists to Vietnam, the Government and relevant agencies have introduced many preferential policies, especially visa incentives. Specifically, from August 15, 2023, Vietnam will increase the visa duration from 30 days with a single entry to 90 days and multiple entries. This policy is expected to increase the openness of the tourism industry, creating opportunities for breakthrough development in the coming time.

In addition to preferential policies, the capital's tourism industry also has many promotional programs as well as experiential activities to increase its appeal to international and domestic tourists through attractive tourism products and unique cultural discovery tours.

In addition, according to information from the Hanoi Department of Tourism, from now until the end of 2023, to attract tourists to Hanoi, the unit will organize more events, programs, and festivals to promote tourism in the capital.

Commenting on the market’s recent recovery, Mr. Troy Griffiths, Deputy Managing Director, Savills Vietnam, said: International visitors have not fully returned and Chinese visitors are still below 2019 levels. In addition, although the new visa policy will support growth, the hotel market in Hanoi is expected to fully recover only after 2024.

Serviced apartments have strong growth prospects

While the hotel segment needs at least until the end of next year to fully recover, the serviced apartment segment is forecast to have positive prospects.

According to Savills report, registered FDI capital in the first half of 2023 reached 13.4 billion USD nationwide with newly registered FDI capital increasing by 31% year-on-year. Of which, Hanoi recorded the highest registered FDI volume, followed by Ho Chi Minh City, Bac Giang, Binh Duong and Hai Phong. Singapore was the largest investor, accounting for 22% of the proportion, followed by Japan with 16% and China with 15%.

Mr. Matthew Powell, Director of Savills Hanoi, assessed: With a solid amount of FDI inflow, the demand for serviced apartments in the first half of 2023 is quite stable. In addition, the forecast of positive FDI in the northern provinces will bring positive prospects for this segment.

The expert said that the occupancy rate of serviced apartments in Hanoi in the second quarter of 2023 reached 82%, up 2 points quarter-on-quarter and 6% points year-on-year. The average rental price reached VND572,000/m2/month, up 3% quarter-on-quarter and year-on-year. Regarding future prospects, 4,013 apartments will be introduced to the market. Of which, Tay Ho district will account for the largest proportion with 45% of the total future supply.

In addition, Mr. Matthew also predicted that the Beltway 4 project, which is expected to be started and open to traffic in 2027, will help increase connectivity between Hanoi and industrial provinces such as Bac Ninh and Hung Yen, creating an attractive demand for serviced apartments for foreign experts working in these localities.

It can be seen that although the accommodation service segment in Hanoi has not yet really returned to pre-pandemic levels, it has recorded a fairly good recovery with positive prospects in the future.

Source