Luxury hotels in Hanoi are forecast to be subject to fiercer competition in the coming time.
The survey conducted in Quarter 1, 2012 by CBRE Vietnam on the hotel market in Hanoi shows that as of the end of March 2012, the city had some 8,200 rooms, up by 7.7 percent against the corresponding period. More than half are in Hoan Kiem and Ba Dinh Districts (11 four and five-star hotels and 25 three-star hotels).
The only new supply source in Quarter 1 is by the three-star Windy with 50 rooms, located in Dong Da District and managed by Santa Hotel Management. The hotel market also witnessed Hanel’s acquisition of Daewoo Hotel, although there remain many questions behind this transaction.
There are some bright marks in the hotel market of Hanoi in Quarter 1, especially the increase in the number of tourists to Hanoi compared to the same period last year. Totally, Hanoi welcomed 346,900 international arrivals (up by 5.9 percent) and 2.2 million domestic arrivals (up by 5.5 percent).
In addition, many international conferences and exhibitions took place in Hanoi during Quarter 1, which helps attract tourists and entrepreneurs from other parts of Vietnam and overseas to Hanoi, raising occupancy rates.
February and March are considered high season for luxury hotels. However, global economic recession still continues to exert pressure on guests and forces them to resort to more economical options.
Besides, competition pressure from new hotels holds back the room rate growth of luxury hotels (less than two percent against the corresponding period). The Average Daily Rate (ADR) and Revenue Per Available Room (Rev PAR) of four and five-star hotels both falls, particularly of the four-star hotel segment. Only the three-star hotel segment has a positive growth rate of ADR and Rev PAR, although it is currently low season.
CBRE and specialists broadcast that the two coming quarters will be low season for international hotels, but high season for domestic hotels. Business results of the five-star hotel segment are anticipated to drop, while those of average segment are expected to improve.
The abundant supply of new luxury hotels in the Western area of the city raises the likelihood that the luxury segment including the central area will enter a difficult period in coming time.
According to CBRE’s survey, between now and the end of 2012, Hanoi will add 300 rooms in three to five-star hotels. The Hilton Garden Inn and the Candeo Hotel are two foreign brand names among the new comers. JW Marriott and Landmark 72 also have launching plan in early 2013.
Hotel specialists assess that new supply sources will surely bring pressure on existing hotels and affect business results of the whole market. In the more distant future, CBRE still sees large potential in developing hotels meeting international standards with reasonable prices.
There is a trend among domestic investors of buying foreign –owned hotels. The luxury hotel segment is expected to grow stronger as several new international brand names have been seeking cooperation opportunities with their Vietnamese counterparts.