The resumption of international flights and the border reopening in March will not only benefit Vietnam’s hospitality sector but also drive demand for serviced apartments, according to Savills Vietnam.
Domestic travel boomed in early 2022, thanks to Lunar New Year travel.
According to the Vietnam National Administration of Tourism, there were more than 6.1 million domestic tourists during the nine-day festival, generating revenue of VND25 trillion. These numbers represent a genuine demand and an optimistic outlook for the revival of domestic tourism.
Matthew Powell, Director of Savills Hanoi, said, “Northern Vietnam has an interesting hospitality market. Apart from thriving tourist destinations like Ha Long, we are witnessing development in Hanoi’s suburbs and surrounding provinces like Hoa Binh and Thanh Hoa.”
“This trend is understandable, given that transportation links to these areas continue to improve, as such, people can easily travel to surrounding provinces for weekend trips.”
“While domestic travellers currently drive Vietnam’s hospitality sector, we cannot forget how important foreign tourists are for the market. There are positive signs though, as Vietnam’s vaccination rate is high and authorities plan to reopen the borders to international travellers from mid-March,” he added.
As part of Vietnam’s plan to reopen to international guests, the authorities have announced that international flights will resume from March 15, 2022. This reopening will not only benefit the country’s tourism and hospitality segment but is forecast to benefit serviced apartments too.
Foreign experts are the predominant occupiers of serviced apartments in Hanoi.
Japanese and Korean expatriates are the main tenants in Grade A serviced apartments, accounting for 84% in the second half of 2021.
Neil MacGregor, Managing Director of Savills Vietnam, said, “There is a strong correlation between foreign direct investment (FDI) flows and serviced apartments. As such, it is no surprise that countries leading FDI investments, such as Japan and the Republic of Korea, also drive serviced apartment demand.”
“In 2021, many international experts could not enter Vietnam due to strict border controls; however, once international flights resume, many foreign experts will be able to return, which will greatly enhance tenant pools for serviced apartments.”
According to a 2021 Global Buyer Survey, good health care, air quality, and green spaces are top priorities when selecting accommodation. As such, branded serviced apartments could take full advantage of global health initiatives that the brands rolled out, collaborating with sanitisation experts to create safer and healthier projects.
Currently, the outlook for hotels and serviced apartments is good, with the borders set to open in the middle of March. However, both sectors will continue to rely heavily on how well the pandemic is managed and the authorities’ strategies to do so, Savills Vietnam reports.
After two dormant years, tourism in Vietnam is slowly coming back to life. After social distancing restrictions eased in October 2021, Vietnamese airlines completed 8,383 flights in December, 538% more than the 1,311 flights in September.
Hotel occupancy also improved in the last quarter of 2021, along with the average room rate, which reached VND1.8 million, increasing 12% compared to the last quarter of 2020.
Between 2022 and 2023, supply is also expected to increase with the entry of 2,900 rooms, demonstrating the rekindling of investor confidence in the hospitality sector, according to Savills Vietnam.