Vietnam’s Hotel’s see increased growth in 2017

Grant Thornton Vietnam has released its annual report on Vietnam’s hotel industry and notes that the average room rates of upscale hotels increased 2.8% in 2017 and averaged $91.80 USD per night.   Grant Thornton has tracked the hotel industry for the last 15 years and noted that after a drop in prices in 2016, 5-star hotels recovered and average room rates were $107.60 USD per night, an increase  of 4.2 per in 2017.  Four-star hotel room rates also rose,  but increased by only 1% to to $75.20 USD per night.

Occupancy rates for 4-Star hotels increased by 4.8% and 5-Star hotels saw their occupancy rates increase by 5%.   Occupancy in central region hotels increased by an average of 7.5%; hotels in the north increased by 6.4% and those in the south increased by 2.2%.

Revenue per available room (RevPAR) in hotels continued to increase with 5-Star hotels averaging 10.2% and 4-Star hotels averaging 7.6%, above the average for hotels in Southeast Asia.  

As Vietnam’s appeal to international tourists has grown over the last several years, leisure travelers, whether Free Independent Travelers (FIT) or those in tour groups, accounted for the highest portion of guests staying at upscale hotels, accounting for 60% of hotel guests.   

Business traveler numbers were flat in 2017.  Overall, corporate and business travelers grew at 0.5%, however those guests that came for Meetings, Incentives, Conferences and Exhibitions (MICE) decreased by 0.2%.  

Two trends noted by Grant Thornton in their annual report include the fact that travel agencies and tour operators remain the biggest reservation channel for hotels and hotels are increasing the digitization of their businesses.  For 4-Star and 5-Star hotels,  tour operators contributed an average of 33% of hotel customers and online travel agencies brought in 21.4% of hotel customers.  

In terms of digitization, almost all hotels have used basic digital marketing technologies, such as database / email marketing and customer loyalty programs for many years, but 2017 saw hotels integrating new technologies into their operations. 

The newest trend for Vietnamese hotels is to apply mobile applications into their systems for guests to use when checking in or out of hotels.  These systems also allow hotels to collect data from different points in the hotel, such as food and beverage outlets, gyms and spas in order to provide personalization for each guest.  It’s estimated that more than 50% of 5-Star hotels, and 30% of 4-Star hotels now use these systems. 

With new hotels continuing to open across the country, its expected that the deployment of these technologies will continue to increase in 2018 and that hotels will experiment with other digital technologies to increase their competitive advantage and unique selling position in the minds of their guests.  

Both domestic travel and international travel continue to grow, with domestic travel up 18% and international travel up 29% in 2017.  Tourism numbers are projected to continue to increase at 10% or more per annum for the next  five years and the hotel industry is receiving massive amounts of new investment.  According to the Ministry of Culture, Sport and Tourism, 79 new upscale hotels opened in 2017, including 10 hotels with a 5-Star rating.   

AirBnB is also an emerging player in the hospitality scene.  According to a spokesman for the company, AirBnB now has over 12,000 places available in Hanoi and Ho chi Minh City and the company expects this number to continue to grow across the country.   However, after the passage of laws in Japan that limit AirBnB activities in that country, the Vietnamese government is looking at AirBnB operations in Vietnam with increased scrutiny and it is anticipated that the government will apply regulations in the future and will also seek to tax individuals who are generating income from apartment and home rental activities.