The Vietnam National Administration of Tourism (VNAT) expects hotel occupancy rates to plummet this year due to the coronavirus pandemic, and a recovery is not expected until the end of 2021 or early 2022.
VNAT expects that international tourist arrivals will fall by 70% from 18 million last year, if the global pandemic is contained by June. However, if the pandemic continues, then the drop will be 75% by September and 85% by December.
Recently, property consultancy CBRE Vietnam said in a recent report that no matter what the scenario is, that there will be a huge decline in the number of tourists this year, and that hotel occupancy rates in all parts of the country are plummeting.
CBRE estimates that in Hanoi, occupancy rates could fall from over 80% in 2019 to about 29% this year with a decline in rates of 13%. If the pandemic continues into the fall, then occupancy will decline to 25% with a concurrent drop in prices of 20%or more. In Ho Chi Minh City, rates could drop to 25% and 2`% respectively from over 70% last year, and rents could fall 15% and 22%.
Complicating the business outlook for hotels, at least fifteen new hospitality projects with 3,000 rooms are scheduled to enter the market by 2023. However, many of these hotels have seen construction delays because of the coronavirus and some developments have said that they might slow-down construction and their planned openings while the market recovers.
Mauro Gasparotti, Director of Savills Hotels Asia Pacific, said most hotels have closed partially or fully to reduce costs, and only key personnel are still working to prepare for reopening.
Since international air services have yet to resume, in the short term domestic tourism, events held in the hotels and food and beverage businesses will be the only source of revenue for hotels.
Gasparotti added that younger people and free independent travelers (FIT’s), would play a key role in the recovery of the industry, but there is uncertainty about when tourist numbers will return to pre-pandemic levels.