Vietnam hospitality requires innovative products: Experts
Vietnam hospitality requires innovative products that can cater to the demands of young domestic and international travellers, such as poshtels, entertainment-integrated complexes, limited-service accommodations, and co-living and co-working spaces, experts said.
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| Vietnam hospitality requires innovative products: Vinpearl Resort & Spa on Phu Quoc island. (Photo: VNA) |
In the latest Savills’ report, Mauro Gasparotti, Director, Savills Hotels APAC, said: “major cities and coastal destinations have promising prospects for ultra-luxury products, with decent branded residence offerings.”
“Vietnam suffers from a shortage of high-quality offerings and product diversity. Many developers tend to replicate existing designs or concepts without adequately considering market trends or product identity. Despite the intensifying competition, development prospects remain available for those who can effectively respond to market dynamics,” he said.
Sharing her point of view about the situation, Uyen Nguyen, Head of Consultancy, Savills Hotels APAC, said: “There is a growing trend for wellness-related offerings that should be explored because this trend can manifest in various forms, from yoga and meditation retreats to senior living residences, medical tourism complexes, or nature-immersed resorts located in areas close to major cities.”
“The market anticipates a shift towards quality, with a heightened emphasis on details that can contribute to the success and character of resort operations,” Uyen added.
Vietnam has experienced remarkable growth in the past 10 years with international travellers increasing by 16.9% per annum between 2009 and 2019. High demand boosted confidence in the sector, with a strong development pipeline.
According to Savills, on average, about 10,000 rooms entered each year between 2017 and 2019. This strong growth was interrupted by the pandemic, and it will take time to recreate the necessary momentum to reach pre-pandemic levels.
Given the strong pipeline, even pre-pandemic, Vietnam needed a 20% to 30% growth in annual demand to keep pace with new openings.
In the first two months of 2023, the country welcomed 1.8 million international travellers, which is 40% lower than the pre-pandemic level. There were 560,000 travellers from the Republic of Korea and 148,000 from the US. The domestic market continued to dominate with 20 million travellers.
“Domestic and Korean markets supported the recovery of certain areas like Da Nang, with some beachfront properties able to exceed 50% occupancy. However, other destinations, like Nha Trang, have been heavily affected by the drop in Chinese tourists and the significant number of openings in the past few years,” said Gasparotti.
According to Savills Hotels statistics, Nha Trang provides 24,000 mid to luxury rooms, 50% of which entered between 2017 and 2019. This destination may require greater joint efforts from business owners and local authorities to reposition its tourist image and catch international attention and demand.
Certain cities have experienced significant recovery, particularly Ho Chi Minh City, where occupancy is fast reaching 2019 levels.
“Though occupancy is improving, average daily rates are between 15% and 20% lower than pre-pandemic levels. But it is worth noting that in certain cases, luxury and boutique hotels that were well-positioned have reached or even surpassed 2019 rates,” said Uyen.
Reflecting on development in 2023, Gasparotti said: "Financing has become more challenging, but there is a strong interest from foreign investors in the right product.”
“Beach villas and condominiums can be a valuable source of funding, but the entire process must be managed effectively to deliver value to both developers and residents and guests. Projects must be capable of generating capital gains, which is only possible if there is a greater emphasis on quality and operations rather than development scale. This year, there are considerably more hotels and resorts for sale than last year. However, the price expectations may not accurately reflect the market conditions and risks associated with expected future volatility," he said.
Globally, the hotel industry started 2023 off strong, with more than 60% of properties reaching 2019 revenue per available room levels.
(Source: VNA)
