• The Ha Noi hotel industry is experiencing a robust recovery in the first half of 2024, with increases in tourist arrivals, room rates, and occupancy.
• Hotel supply is anticipated to keep expanding in the coming years, particularly in the 5-star segment and the inner-city area.

According to the Q2/2024 Market Brief by Savills Viet Nam, the hotel market in Ha Noi remains stable, with 11,120 rooms across 67 projects. The supply of 5-star hotels increased by 3%, while the supply of 4-star hotels decreased by 7% quarter-on-quarter (QoQ). Notably, the Movenpick Living West, previously known as Eastin Hotel & Residences, has been upgraded from a 4-star to a 5-star rating, reflecting positive growth and rising demand in Ha Noi's high-end hotel segment. However, the reduction in 4-star hotel supply may impact accessibility for middle-income tourists.

In Q2/2024, the Ha Noi hotel market demonstrated positive signs with increased occupancy rates. The occupancy rate in Q1/2024 was 65%, up 1 percentage point (ppt) QoQ. By Q2/2024, the rate had further increased to 67%, up 2 ppts QoQ, and 3 ppts YoY.

Matthew Powell, Director of Savills Ha Noi, explained the factors contributing to the positive progress in the hotel industry in the capital city: “The tourism industry is experiencing a strong recovery with a rise in international visitors. Additionally, MICE (meetings, incentives, conferences, and exhibitions) activities are also advancing. This development is supported by a stable macroeconomic and political context, which significantly boosts the growth of the hotel industry both nationwide and in Ha Noi.”

In the first six months of 2024, Viet Nam welcomed 8.8 million international tourists, a 58% increase year-on-year (YoY) and a 4% rise compared to the same period in 2019.

During the same period, Ha Noi welcomed 14 million visitors, marking a 13.7% increase YoY. Of these, domestic tourists reached 10.9 million with a 6% rise YoY, making up a significant portion of the total visitors to the capital. Although international tourists numbered only 3.1 million visits, they achieved a notable growth rate of 52.6% YoY. According to the Viet Nam National Administration of Tourism, the largest international markets include China, South Korea, Taiwan, Japan, the US, Cambodia, India, Thailand, Australia, and Malaysia.

In June 2024, Ha Noi’s Department of Tourism estimated that the total number of tourists to the capital was 2.49 million visits, an increase of 12.5% compared to the same period in 2023. Among these, international tourists numbered approximately 496,000, marking a 55.9% increase YoY. In June 2024, the average room occupancy rate for hotels was estimated at 66%, up by 1.3% from May 2024 and 0.1% from June 2023.

With the increase in tourist numbers, the total revenue from tourism reached VND 55.4 trillion, marking a 23% YoY increase. Thus, after six months, Ha Noi has achieved 52% of its annual visitor target and 51% of its tourism revenue target for 2024.

These figures result from efforts to promote and develop tourism products that exploit Ha Noi’s distinctive cultural values. Renowned for its rich cultural and historical heritage, Ha Noi is favored by both international and domestic tourists as a top destination in the country and is increasingly competitive on a global scale. Ha Noi is also focusing on training human resources, improving infrastructure, tourism services, enhancing promotion and other key factors to attract investment and tourists. Consequently, Ha Noi is gradually establishing its leading position in the domestic and international tourism markets.

For instance, in Q2/2024, Ha Noi’s Department of Tourism launched the “Nam Thang Long - Ha Noi Heritage Road” and a community tourism destination in Ba Vi. Ha Noi, along with other localities, is developing linked tourism routes, such as the cultural and spiritual tourism route Ha Noi - Ha Nam - Ninh Binh and the exploration route Son La - Lao Cai - Lai Chau.

Besides cultural tourism, Ha Noi’s Department of Tourism is actively organizing different programs to further promote and develop Ha Noi’s strengths in tourism, including culinary tourism, MICE, and wellness tourism.

Additionally, the Ministry of Culture, Sports, and Tourism is also actively developing domestic tourism stimulus programs. This directly impacts the rental prices of 4- and 5-star hotels in Ha Noi. Many 4- and 5-star hotels in Ha Noi are offering attractive promotions, including room discounts, accommodation-meal-tea party-gala combos, accommodation-conference-transportation combos, dining-swimming combos, and discount vouchers for other services.

According to Savills Q2/2024 Market Report, the average hotel rental price in Ha Noi decreased by 7% QoQ but increased by 11% YoY. The average rental price of 4- and 5-star projects contributes to this trend, with a 6% ppts decrease quarter-over-quarter and a 9% ppts increase year-over-year. The development of tourism positively impacts rental prices, but tourism stimulus programs and seasonal factors also create attractive rental rates for tourists.

Given the positive market changes and demand, Mr Powell anticipates continued growth in the hotel segment supply. A new project is set to commence operations in 2024, providing 207 rooms in a 5-star hotel. Between 2025 and 2026, a total of 2,689 rooms from 12 new projects is expected. Of this new supply, eight 5-star projects will contribute 74%, while 4-star projects will account for 26%. Additionally, 60% of the new supply will be in the inner city, providing 1,732 rooms for eight projects. Both international and domestic operators will each account for a similar proportion of future supply, with 1,179 and 1,177 rooms respectively. International operators for future supply include well-known brands such as Hilton, Fusion, Accor, and Four Seasons.