80TH Anniversary August Revolution and National Day
Log in
Business

Domestic and int'l travelers to drive Hanoi hotel business’ recovery

International tourists from Northeast Asia are expected to be the first to return to Vietnam, once flights are resumed.

The overall performance for Hanoi’s hotel segment is expected to recover once the outbreak is successfully contained, being driven in the early phase mainly by the domestic visitors and to some extent international travelers from Northeast Asia, according to the latest report by CBRE Vietnam.

 Source: Hanoi Statistics Office, CBRE Research, Q1 2020. Chart: Nhat Minh

2020 will see an unprecedented drop in terms of tourist volume, and consequently a plunge in occupancy levels at hotels, in any scenario. However, “this will be a refining period to select only those resilient and capable investors/developers, helping the market to rebound stronger once the pandemic is over,” said Thuc Nguyen, associate director of CBRE Hotels Vietnam. 

According to CBRE’s latest hotel report for the first quarter, after the end of nationwide social isolation period, the general decline of wealth level of foreign travelers and limited international flight connections will push the domestic tourism demand. Corporate transient segment will also be among the first to recover, due to pent-up demand caused by Covid-19. International tourists from Northeast Asia are expected to be the first to return to Vietnam, once flights are resumed.

4-5-star hotel segment in Hanoi

Prior to the Covid-19 outbreak, Hanoi was expected to welcome one 4-star project, Novotel Hanoi Thai Ha Hotel, with 343 keys in the first quarter and two other projects in the remainder of 2020. The rapid spread of the disease caused the city’s government to suspend all hospitality businesses since late March and to halt all construction works in Hanoi during 14 days from April 1. 

With heightened uncertainty in market conditions, the opening of pipeline projects in 2020 is unpredictable. As of the first quarter, Hanoi 4-5-star hotel supply stood at 7,882 keys from 35 properties.

In the first quarter, the city recorded a sharp decrease in international tourist arrivals, down 36.9% year-on-year (y-o-y). Due to international travel restrictions and widespread concerns over the pandemic, the city’s major sports and tourism event of 2020, the Hanoi Formula 1 Grand Prix, was put on hold.

As nationwide social isolation was in place throughout most of April, along with reluctance to travel, it is expected that the city’s tourism sector will take some time to recover. 

However, as many projects in Midtown and the West are the ideal location for many foreign corporate clients, the market is expected to pick up its recovery rate once international businesses get back to normal.

 Source: CBRE Research, Q1 2020. Chart: Nhat Minh

Average Daily Rate (ADR) of Hanoi in the first quarter was recorded at US$115.2, down 6.6% y-o-y. Occupancy was averaged at 51.2%, a drop of 28.9 percentage points (ppts) y-o-y. 

Revenue Per Available Room (RevPAR) in the first quarter decreased to US$60.3, down 38.9% y-o-y, which was still better than Ho Chi Minh City. 

For scenario one - the disease is contained by June, ADR for 2020 to decrease by 8-13% y-o-y and occupancy rate for 2020 to decrease by 46-51 ppts y-o-y.

For scenario two - the disease is contained by September, ADR for 2020 to decrease by 15-20% y-o-y and occupancy rate for 2020 to decrease by 50-55 ppts y-o-y.

Whole hotel segment

In early the second quarter, CBRE Vietnam observed that there was an increase in inquiries from investors looking for distressed assets, while the number of properties for sale in the 4- and 5-star segments is not significant. 

The owners in these segments tend to be big groups with sufficient capital to weather this crisis, the report noted. Some upscale hotels that are currently for sale on the market were actually launched for sale before the outbreak.

Reactions:
Share:
Trending
Most Viewed
Related news
Hotels in Hanoi support fight against Covid-19

Hotels in Hanoi support fight against Covid-19

28 Mar, 11:46

Hanoi’s accommodations are willing to host quarantined people and reduce the overload of in mass isolation centers. However, criteria for hosting quarantined people have not been released.

Hanoi works to improve competitiveness

Hanoi works to improve competitiveness

The partnership with the Vietnam Chamber of Commerce and Industry (VCCI) is expected to drive Hanoi’s progress as a leading hub for innovation and sustainable development.

Hanoi advances circular farming for green agriculture

Hanoi advances circular farming for green agriculture

Circular farming reduces emissions and builds sustainable value chains for long-term agricultural resilience and environmental protection.

Vietnam strengthens trademark protections as export risks grow

Vietnam strengthens trademark protections as export risks grow

Vietnamese exporters are under mounting pressure to protect their brands abroad.

Coherent expands semiconductor investment in Vietnam

Coherent expands semiconductor investment in Vietnam

The new semiconductor plant, which specializes in producing silicon carbide substrates, optical glass, and advanced photonics components, sits in Nhon Trach Commune in the southern province of Dong Nai.

HCMC certifies five tons of dragon fruit for EU export amid backlog crisis

HCMC certifies five tons of dragon fruit for EU export amid backlog crisis

Hundreds of tons of fruit and spices have been left stranded in Vietnam due to bureaucratic delays, prompting immediate government intervention.

Hanoi attracts global talent for tech breakthroughs

Hanoi attracts global talent for tech breakthroughs

The city is devising policies to unlock innovation potential and fuel science-driven economic growth.

Sun Group to launch US$574-million development in Hanoi’s suburbs

Sun Group to launch US$574-million development in Hanoi’s suburbs

The northern suburbs of Hanoi are identified as a new growth hub in the city's urban expansion plan, helping to balance development between the city center and satellite areas.

Vietnam's manufacturing targets breakthroughs in global value chains

Vietnam's manufacturing targets breakthroughs in global value chains

As the global manufacturing landscape evolves, Vietnam’s growth hinges on shifting its focus from volume to stronger capabilities, strategic partnerships, and greater professionalism.