Significant pipelines of hotels under construction across major destinations will present new options to tourists, while posing competition concerns to existing hotels, according to CBRE.
After the opening of one new 5-star hotel, the InterContinental Landmark 72 in 2017, the Hanoi hotel market experienced a quiet year with no new supply in 2018. Total room count of upscale hotels in Hanoi remained stable at 7,770 rooms.
Two new 4-star hotels, Novotel Thai Ha and Wyndham Garden Hanoi, are most likely to be completed in 2019, adding 457 rooms to the market.
In addition to Tay Ho and Dong Da districts with large development pipeline by 2021, Ha Dong district will welcome one internationally branded 4-star hotel for the first time with the opening of Wyndham Garden Hanoi in 2019.
The opening of two 4-star hotels will help ease supply shortage to a certain extent. On the other hand, demand is forecast to remain robust. The city is expected to welcome more than 28 million tourists during 2019, of which more than 6 million are international arrivals.
The Trump-Kim summit in February 2019 and its lasting effects will continue to boost the image of Hanoi’s tourism as the “City of Peace”. Also notably, hosting the first Formula 1 racing in 2020 in My Dinh area is expected to draw even more attention to Hanoi tourism.
With robust hotel performance and high growth of international tourist arrivals, the Hanoi hotel market is expected to further draw investment interests.
Overall, Hanoi upscale hotel supply is forecast to grow at 12.3 per cent per annum over the next three years.
Other than the above, several hotel developments are under construction with completion dates beyond 2019, including Westin Hanoi, Grand Mercure Hotel, and Dolce Hanoi Golden Lake in midtown area.
Prime sites with announced operator brands including Four Seasons, Hilton Westlake and Doubletree by Hilton appear to be in the stage of planning.
Meanwhile, in Ho Chi Minh City, the number of 4-5 star hotels was stable at 45 properties, with 9,775 room count in 2018. Considering the fact that several hotels were going through interior renovation, supply level actually had a contraction in 2018.
However, with six properties in the pipeline, 2019 is going to mark an exciting year for the hotel market in Ho Chi Minh City with many firsts.
Vinpearl Luxury Landmark 81, the hotel component of Vietnam’s tallest building, will be the first 5-star hotel in Binh Thanh District, and the first foray of the Vinpearl brand into the city.
Melia Hotels chain is also looking to roll out the first Innside-branded property in Vietnam, which is located on Ton That Dam street, while IHG is going to open the first Holiday Inn in Vietnam in Tan Binh district.
Lodgis, a major hotelier, is about to launch its new inner-city concept called Fusion Original, whose first property will be inspired by the scientist Darwin.
From 2019 onwards, the market is also expecting a strong pipeline, with supply level to grow at a compound annual growth rate of 11 per cent in the next three years.
In the mid-term, the hotel market in the southern city is expecting entrances from prestigious brands, targeting high-spending guests such as Mandarin Oriental, Ritz-Carlton, Okura Prestige, Hotel Indigo and Hilton, which will intensify competition in the 5-star segment, but at the same time help to bring the market in general to a new level.
On the other hand, the market will also witness introduction of new urban concepts such as Fusion Original (by Lodgis), Sage (by Next Story Group) and Wink (by Indochina Kajima), which aim to meet diversifying needs of modern tourists, especially the millennial population.
Announcements of future hotel openings in decentralised areas such as Holiday Inn Saigon Hi-tech Park (District 9) or Movenpick Kenton Node Hotel (Nha Be District) are early signs of decentralisation trend in the Ho Chi Minh City hotel market.
With Metro Line No. 1 expected to be running from 2021, connectivity between CBD and the East of the city will be significantly enhanced, which presents opportunities for hotel development in the East.
Thu Thiem area, zoned to be the city’s future CBD, is expected to be a development hotspot for hotels in the coming years.
Along with future supply coming up from 2019-2021, as well as competition from channels like Airbnb and Luxstay (which are getting their supply from a significant influx of high-end condominiums), 4-star hotels are expected to face more pressure in the future.
Hotel room rates and occupancy in Hanoi and Ho Chi Minh City remained at positive levels.
Average daily room rates in Hanoi during 2018 reached $113, a 2.3 per cent growth y-o-y whereas occupancy averaged 79 p, 2.7 percentage points lower than the previous year’s.
Average daily room rates in Ho Chi Minh City in 2018 reached $115, an increase of 5.7 per cent y-o-y whereas occupancy averaged 73.1 per cent, 1.8 percentage points lower than the previous year’s.