The hotel market in Hanoi is in good shape.

Tourism returns to near pre-pandemic levels

In the first quarter of 2024, Vietnam's tourism industry received many signs of recovery thanks to the number of international visitors to Vietnam in the quarter reaching 4.6 million, up 72% year-on-year and 3% compared to the first quarter of 2019 (before the pandemic). Savills experts assessed that the recovery of tourism has created momentum for the hotel market to improve. In addition, with the closure of poor quality supply, the market is assessed to be in good condition.

According to the Socio-Economic Report for the First Quarter of 2024 released by the General Statistics Office, the gross domestic product (GDP) in the first quarter is estimated to increase by 5.66% over the same period last year, higher than the growth rate of the first quarter of the years from 2020-2023. Of which, the service sector increased by 6.12%, contributing 52.23% to the total added value of the entire economy. Trade activities were vibrant, the tourism industry recovered strongly thanks to the effectiveness of favorable visa policies and tourism stimulus programs, and export turnover of key products increased sharply.

Since the beginning of 2024, Hanoi, one of the key cities for tourism, has welcomed 6.5 million visitors, up 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 figure is only 87% compared to 2019 figures, meaning the market still has room to grow.

Real Estate - Hanoi's hotel market is in good shape — Vietnam's tourism market has continuously recorded positive signs in recent times. (Photo: Suckhoedoisong)

Mr. Matthew Powell, Director, Savills Hanoi, commented: “The tourism industry has recorded a fairly good recovery in recent times. Hotel operations in major cities such as Hanoi and Ho Chi Minh City have returned to near pre-Covid-19 levels. It can be said that domestic tourism, including both leisure and business travel, has contributed largely to this effort. Room occupancy in markets such as Hanoi in particular is considered quite good, at 65% in Q1 2024, up 1 percentage point quarter-on-quarter and 7 percentage points year-on-year.”

Regarding international tourist arrivals to Hanoi in the first 3 months of 2024, the market recorded 4.6 million arrivals, up 72% year-on-year and 3% compared to the first quarter of 2019. Leading the way were Korean visitors with 1.2 million arrivals, up 150% year-on-year. Following were Chinese visitors with 890,000 arrivals, 6 times higher than the first quarter of 2023.

Mr. Matthew Powell said that although the number of Chinese tourists to Vietnam is relatively stable compared to other markets in the region, it is still considered to be less than before the pandemic. However, the market has more diversity in 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 tourism to Vietnam from Indian tourists.

“Vietnam has made remarkable achievements in restoring the tourism industry, with great tourism potential, meeting the diverse travel preferences of tourists such as natural landscapes, from cities to mountains, from blue sea and white sand to vibrant primeval forests accompanied by cultural values and attractive cuisine.

With its advantages, Vietnam is attracting the attention of luxury hotel chains, creating more room for the potential recovery and development of the tourism industry in general and resort real estate in particular," said the director of Savills Hanoi.

Real Estate - The hotel market in Hanoi is in good shape (Figure 2). — Mr. Matthew Powell, Director, Savills Hanoi

There are not many 3-star hotel projects left in Hanoi.

Along with the strong recovery of the tourism industry, the performance of the 4- and 5-star hotel segment is also growing strongly, while the supply of the 3-star hotel segment is gradually disappearing from the market. According to information from Savills, hotel supply in the first quarter of 2024 recorded 11,120 rooms from 67 projects, down 1% quarter-on-quarter. However, with two hotel projects officially granted 4-star status and 4 projects officially granted 5-star status in 2023, supply recorded an increase of 8% year-on-year.

Commenting on the distribution of hotel supply, the Director of Savills Hanoi commented that the trend is gradually shifting to the 4 to 5 star hotel segment. The market has recorded the closure of poor quality supply. In fact, over the past year, Hanoi has welcomed the reopening of many 5-star hotels such as Movenpick, or soon Hilton and Fusion hotels. Some other notable 5-star projects include L7 Westlake, Dusit Tu 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-end 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 in the next 3 years.

Vietnam's tourism market has continuously recorded positive signs in recent times. (Photo: Suckhoedoisong)

Mr. Matthew Powell, Director, Savills Hanoi

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