Vietnam hotel market enjoys strong growth
The hotel market is experiencing impressive growth with significant Revenue Per Available Room improvements, according to hospitality advisory and investment Savills Hotels.
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| Beachfront hotels in Da Nang city. (Source: VNA) |
In the first seven months of the year, the RevPAR index surged by 15% compared to the same period last year, among the strongest growth rates in Southeast Asia.
This has been primarily fuelled by a sharp increase in occupancy rates.
The recovery in occupancy rates is particularly strong at popular beach destinations such as Nha Trang-Cam Ranh and Phu Quoc, where they have been 40-50%, driven by a big rebound in international tourist arrivals.
But despite the higher occupancy, average room rates remain 3% lower compared to last year, largely due to softer rates in key markets like Nha Trang and Phu Quoc, where properties that opened post-pandemic are still working to establish their market presence.
Mauro Gasparotti, director of Savills Hotels, said: "Competition among properties will be fierce again, and hotels are beginning to look to 2025 as a year to rebuild margins. As a result of market maturity and the desire to gain a competitive advantage, we are starting to see increased interest from owners in rebranding their properties and repositioning to higher tiers.”
Recent years have seen an increase in hotel management brand conversions, with 2022-23 marking a peak with new hotel openings in the midscale segment and above at 52% of new branded openings, he said.
This trend is expected to continue, with 30% of new branded openings in 2024 anticipated to be conversion properties, he said.
“The first wave of branded hotel development in Vietnam began in 2008-10, with several developers signing hotel management agreements with international hotel operators to secure a brand.
“Since a typical contract lasts 10 to 15 years, many of these management agreements are now nearing expiration. More developers will be able to renew their contracts or find alternatives, especially if renovations are needed, and there is potential for rebranding to higher-tier brands.
“Since the market is now more mature than 10 years ago, operators are more willing to upgrade their brand offerings if the property’s quality meets their standards. As a result, we will likely see more hotels changing brands.”
Uyen Nguyen, head of consultancy at Savills Hotels, said: “Some projects are collaborating with operators to revitalise long-stalled developments and refresh their branding.
“This includes major projects in Da Nang and Hanoi that are restarting construction and proposing international brand cooperation.
“Additionally, after years of operation, certain properties are considering upgrading within the same brand portfolio of hotel operators to align with market maturity.”
Brand cooperation extends to the residential sector, where developers seek to provide elevated product quality under the branded residence concept, she said.
Gasparotti said: “Branded residences, whether in beachfront villas or urban luxury condominiums, are becoming a popular choice globally for developers and buyers. Hospitality services and brand construction standards are believed to add value to residents through enhanced services and increased trust.”
In Vietnam, six projects under development could be considered ultra-luxury branded residences, he said.
Following the handover of Marriott Grand Marina Saigon and The Ritz-Carlton Hanoi, the recent announcement of the launch of Nobu Residences in Da Nang, Mandarin Oriental Residences in Phu Yen and Da Nang demonstrates continued interest, he said.
With the recovery of international tourism, Vietnam has also experienced a resumption in hotel and resort development, he said.
In the Asia Pacific region (excluding China), Vietnam is second in the pipeline behind only India.
It boasts 191 projects with 49,800 rooms under construction by 2028, making it a significant player in the region’s hotel development landscape. Nearly three-quarters of the projects fall within the midscale to upscale segment, and nearly 70% are chain-branded.
“The ultra-luxury segment is expected to grow exponentially, doubling its base of seven properties. All these properties are associated with long-standing international brands.
“Currently the majority of luxury and ultra-luxury properties are concentrated in HCM City, Hanoi and Phu Quoc, representing 50% of the total luxury properties in Vietnam.
“In the next four years the market also anticipates an increased presence of luxury properties in emerging destinations such as Phu Yen, Sa Pa, Ninh Binh, and Vinh Phuc. These destinations are ideal for luxury travellers for their rich cultural heritage, scenic landscapes, and captivating coastlines."
(Source: VNA)
