Summary

With World Travel Awards 2018 Vietnam as Asia’s leading destination, and the United Nations World Tourism Organization (UNWTO) ranked Vietnam as the third fastest-growing tourist destination in the world, Vietnam has been experiencing a boom in both domestic and international tourism over the past decade. The number of domestic tourist number has increased from 20.5 million in 2008 to 80 million in 2018 and the international tourist arrivals to Vietnam has almost quadrupled to 15.5 million in 2018 from 4.2 million in 2008. There is a significant growth in international visitors in the past 3 years to the region, with an average of around 9% per annum between 2008 to 2015 to an average of 25% between 2016 and 2018. Domestic tourism in Vietnam is also significantly greater in volume than inbound tourism from abroad. This has experienced a similar increase in the number of domestic trips owing to factors like Vietnam’s rapidly growing middle class, and their desire to travel, improving the affordability of air transport amidst the growth of low-cost domestic air carriers among others. Vietnam managed to record doubled amounts of revenues from international visitor spending from 2013 - 2017 which resulted to rise as a share of the country’s GDP and of total goods and services exports.

Key Market Trends

Growing Tourism to the Country is Driving the Hospitality Industry

The tourism industry in Vietnam continues to rank amongst the fastest growing tourist destinations in the world, with revenue in 2018 reaching USD 26.75 billion (VND 620 trillion), which is more than USD 4.75 billion (VND 110 billion) compared to 2017. The number of international tourists has grown three-fold since 2010, from 5 million to more than 15 million in 2018. With 36.5 million visitors Ho Chi Minh City recorded the highest number of visitors in 2018 among all the cities and provinces. This included 29 million domestic visitors and around 7.5 million international visitors. The capital city Hanoi attracted 28 million tourists in total which accounted for 5.5 million international tourists. Both of these cities have also recently featured amongst the top 10 most dynamically growing cities in the world in JLL’s Short-Term City Momentum Index in 2019.

Luxury Segment of the Industry is Leading the Market

The hospitality industry has been performing particularly well with significant movement in terms of both the occupancy and revenue per room. Vietnam is recording an average room rate which has been increased with 21% quarter over quarter growth and 41 % year over year. The annual occupancy rate of luxury hotels is increasing and is forecasted to increase in the future as well. The region has more than 150 luxury hotel properties that are set to be open in 2020. In the major tourist destination cities, Ho Chi Minh City and Hanoi, majority hotels are operating with at most capacity and occupancy, while the new destinations such as Da Nang and Phu Quoc have limited number of accommodation facilities available and are becoming potential investment opportunities for investors to cater the growing number of tourists.

Competitive Landscape

The hospitality industry in Vietnam is a combination of both the international and domestic brands and their chain hotels. The industry is still in a developing stage and a majority of the hotels/chains are either being independent or homegrown brand chains. The domestic brand Vinpearl has the largest portfolio in the country with around 19 hotels and more than 7,100 rooms whereas the international brand Accor Hotels has 24 hotels with around 5,000 rooms. The international brands have been penetrating at a steady rate and have a presence across major tourist locations in the country. However, the domestic chains dominate the overall supply with a total of more than 22,000 rooms as of 2018.

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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