‘Facing the third and fourth wave of Covid-19 pandemics which took place right in the peak tourist season, Vietnam’s accommodation service industry has faced many difficulties. Industry revenue decreased by 2.7% yoy with the number of tourists being only half of what it was before the epidemic. Under the pressure of the pandemic, can the accommodation industry survive?’
Vietnam accommodation service has been heavily affected from Travel and tourism
The number of tourists in Vietnam has increased steadily over the years. In 2019, Vietnam welcomed more than 103 million tourists, including more than 18 million international visitors. Entering 2020, under the influence of the pandemic, the number of tourists in Vietnam recorded a decrease for the first time in many years. The total amount is only about 65% compared to last year.
In 6M/2021, Vietnam’s tourism industry continues to be seriously affected by the Covid-19 pandemic. As the result, the government’s tourism stimulus policy had to be paused to implement prevention and control measures, not yet open to international tourism. Although the number of domestic tourists increased by more than 30% yoy, the total international tourists were not significant, mainly long-stay or business guests. Total revenue from tourists fell 24.2% yoy.
Accommodation service has been in a difficult situation
As a type of business associated with tourism, the accommodation service industry is also affected when the tourism industry weakens. Many accommodation establishments had to close or operate in moderation. The prolonged pandemic situation has caused some accommodation establishments to suffer huge losses, even putting up for sale, despite focusing on minimizing costs,
In total, revenue of Vietnam’s accommodation and F&B service industry in 6M/2021 is estimated at 224.0 trillionVND, declined 2.7% yoy.
Hotel rental prices remain stable.
The average room rate increased by 1% qoq but decreased by 9% yoy. Three-star hotels lead the way with an average room revenue of $28/room/night thanks to the main group of business and long-stay tourists.
Apartment rental prices drop
Apartment rental prices decreased by 8% yoy. In the past 5 years, Cau Giay district has maintained the highest rental rate, reaching 32 USD/m2/month in Q2/2021. Dong Da district rose to second place, after the Grade A project Novotel Hanoi Thai Ha came into operation.
In Ho Chi Minh City,
Hotel supply plummets, rental prices increase slightly
Facing the suspension of tourism activities, in Q2/2021,17 hotel projects were forced to suspend operations. There are 103 hotels in operation, causing supply in the market, down 10.7% qoq. However, half of them are used as centralized isolation facilities for a fee. From Q3/2020, average room rates increased by 3% qoq.
Apartment rental prices fall down
Average rental price decreases by 4% qoq and 11% yoy. Moreover, grade B rents fell the most due to the early termination of contracts. Nearly 30% of projects reduced prices by up to 30% for long-term lease contracts. Many other incentives are provided. For instance, free car parking, support for electricity and water bills, or upgrading the apartment to a larger rental area.
Is there any sign of prosperity for Vietnam accommodation service industry in the near future?
The 4th wave of Covid-19 outbreak since the end of April 2021 has caused the number of infections in the community to be at a record level. Ho Chi Minh City and Hanoi have implemented social distancing orders according to Directive 16/CT-TTg of the Prime Minister. Accordingly, accommodation and F&B services must be temporarily suspended. Therefore, the revenue of accommodation and F&B services in Vietnam in Q3/2021 is forecast to decrease sharply, leading to a decrease in revenue for the whole year of 2021 by 7% yoy.
Vietnam’s accommodation service industry is forecasted to start recovering from 2022. CAGR should be nearly 9% in the 2021-2025 period. Due to the complicated development of the Covid-19 pandemic in the world with many new strains, if the pandemic situation in the country is controlled soon, domestic tourists will still play a key role. However, the international tourism market will need a longer recovery time even after the epidemic ends.