Hanoi’s hotel room rates becoming more expensive

By Tu Anh - Jan 08, 2018 | 03:23 PM GMT+7

TheLEADERHotels in Hanoi is thriving thanks to the surge in international tourist arrivals, which results in a high occupancy rate and sharply rising prices.

Hanoi’s hotel room rates becoming more expensive
Novotel Suites Hanoi, the only four-star hotel in the West of Hanoi (Photo: novotel.com)

According to the property consultancy Savills, hotels in Hanoi have had a bumper year with occupancy rates and prices rising sharply.

More specifically, the average occupancy rate of the whole market reached the highest in the past five years, up to 73% in 2017. In particular, the segment of five-star hotel maintained a strong performance with the average rate of about 80%.

(Photo: Savills)

Savills also noted that Hanoi’s hotel room rates are becoming more expensive (see chart). The average room rate of the market has increased by 3% quarter-on-quarter and 17% year-on-year. The average room revenue has increased 12% quarter-on-quarter and 24% year-on-year.

Several main reasons can explain the great performance of the five-star hotel segment as follows.

First, in the past five years, the supply growth rate of this segment is low.

Second, compared to other major cities in the Asia Pacific, luxury suites in Hanoi have a quite modest price.

Third, the luxury hotel segment relies on foreign arrivals, which are increasing rapidly.

Fourth, the competitive pressure from the four-star segment is not high as most of the four-star hotels in Hanoi were built in several years ago and have been managed by local operators or self-managed.

In 2017, the total arrivals to Hanoi reached approximately 24 million, up 6% compared with 2016.

Foreign arrivals reached a record of 4.95 million, up 23% year-on-year and accounting for 40% of the total arrivals to Vietnam. The average length of their stay in Hanoi is 1.4 days. Approximately 80% of the visitors come to Hanoi for vacation.

In 2017, Hanoi’s hotel market recorded a new supply from a five-star hotel project, two four-star ones, and two three-star ones.

The total hotel room supply reached approximately 10,000 rooms from 68 hotels, up 9% year-on-year. The supply of three- to five-star hotels in Hanoi ranked the fourth in the country, after Ho Chi Minh City, Nha Trang, and Da Nang.

The West of Hanoi has four five-star hotels and four three-star hotels, but only one four-star hotel project with 151 newly-rated rooms is in the fourth quarter of 2017.

The four-star hotel supply in the West comprised the lowest proportion (just 6% of the total supply). Meanwhile, the inner city has the largest four-star hotel supply with ten hotels or 64% of the total supply.

The competitive pressure will increase after 2018 with 42 future projects. However, most projects are still at the planning stage. International management brands, including Four Seasons, Hyatt, Accor, Marriott, and Hilton, will join and increase their presence in the market.

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