Vietnam's luxury hotels survive on domestic tourism wave

By Anh Ky   August 13, 2023 | 05:00 am PT
Vietnam's luxury hotels survive on domestic tourism wave
Wink Hotel Saigon Center on Nguyen Binh Khiem Street in Ho Chi Minh City. Photo courtesy of the hotel
The hospitality industry has been buoyed by glimmers of hope brought about by recent streams of domestic tourists hitting the road in the absence of international visitors, insiders say.

Earlier this month, hospitality giant The Grand Ho Tram Strip in the southern province of Ba Ria - Vung Tau launched a new project featuring 164 apartments and 46 villas, in addition to 1,100 rooms that have already been catering to high-spending tourists.

Akshay Moza, vice president of The Grand Ho Tram Strip, said his resort complex wants to expand thanks to the strong recovery of the domestic tourism market post-Covid.

Before the pandemic, international visitors to the resort complex dominated the hotel’s clientele demographic, mainly customers from South Korea, China, India and Indonesia, while Vietnamese tourists were limited to 7-8% of the total.

But since the Covid outbreak, Vietnamese bookings at the resort have accounted for 80% of all reservations.

Even after the restoration of international flights post-lockdown, little more than half of the resort’s guests have been foreigners, while the rest were all domestic arrivals.

A unit operating a hotel with more than 1,000 rooms in the central beach city of Nha Trang also reported that average occupancy rates have been nearly 90% over the last three months. About 85% of its guests are domestic tourists, twice as many as in the peak period before the pandemic.

Michael Wirz, general director of Zannier Hotels Bai San Ho in Phu Yen, which neighbors Nha Trang, did not reveal specific numbers but said domestic tourists have become the main source of guests at the resort while international guest numbers are still on the way to recovering to pre-pandemic levels.

Hyper-modern hotel chain Wink Hotels, which has one hotel in Ho Chi Minh City and two in Da Nang, recorded an average occupancy rate of 55% in the first half of 2023, an increase of 26% compared to the second half of 2022.

Nguyen Hoang Nhu Thao, Wink regional marketing manager, said the chain’s local proportion of international and domestic guests is almost equal.

After Vietnam reopened international tourism, the hotel industry has set high expectations for an influx of international visitors. However, high inflation rates and lack of direct international routes have forced the hospitality industry to redirect its hope on domestic tourism demand.

"While waiting for changes from the international market, we still believe that the domestic market will continue to play a key role and be an integral part of the overall development picture," said Wirz.

Data has revealed a surprisingly quick rebound of domestic arrivals despite Vietnam’s lastingly bleak economic picture.

According to the Vietnam National Administration of Tourism, domestic tourists staying overnight in the first seven months of this year reached 46.7 million, exceeding the figure for the whole of 2019, the year before the pandemic, which saw numbers of 43.5 million.

According to online data platform Statista, hotel market revenues in Vietnam are forecast to reach US$1 billion this year.

In the first half of 2023, the average hotel occupancy rate in Hanoi reached more than 57%, up 25.5% over the same period last year.

Some popular tourist localities recorded an increase of over 70% in seven-month accommodation service revenue, including Da Nang (70%), Ba Ria - Vung Tau (76%) and Binh Thuan (76.5%).

In the pre-epidemic period, international guests were the main source of maintaining room capacity during the domestic visitor low season. But in the past seven months, the number of international arrivals has been only 67% of pre-pandemic levels: 6.6 million arrivals compared to 9.8 million.

Recently, a few new signals have begun to spark hope that foreign guests will soon join the "rescue" of the hotel industry.

Last month, for the first time in more than three years, Vietnam welcomed more than one million international visitors in a month. The rate of Chinese tourists returning to Vietnam was the highest, surpassing Thailand in second place.

According to HSBC, Vietnam's tourism outlook continues to be positive thanks to the recent relaxation of visa policies.

On June 24, the National Assembly approved extending tourist visas from 30 to 90 days and prolonging visa-free periods for selected countries to 45 days, all beginning August 15.

Walt Power, general director of The Grand Ho Tram Strip, said that the tourism industry itself has not yet fully recovered, so there is still a lot of room for development.

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