Tourism has gradually recovered after Covid 19, with Hanoi’s hospitality market prospering from improvements in occupancy rates and room tariffs, according to Savills.

Its research noted that eight new hotel projects with 1,300 rooms are scheduled to come to the capital this year and 60 new projects in 2024 with an estimated 10,300 rooms.

Developers have paid more attention to design, the customer experience, and service quality since the pandemic, instead of solely focusing on project scale. This is a positive sign as the Vietnamese market requires a variety of options such as wellness resorts, poshtels, retirement resorts, co-living spaces, and high-quality serviced apartments.

According to Savills, tourism demand among domestic and foreign tourists is still not enough to increase occupancy to 100 per cent at hotels. Central Da Nang city has only reached about 50 per cent compared to its capacity levels in 2019. “Identifying a reasonable operating strategy to gradually increase capacity and build and renovate projects in phases is a strategy developers should apply to effectively take advantage of this opportunity,” said Ms. Do Thu Hang, Senior Director of Research & Consulting at Savills Hanoi.

She added that to catch up with development trends, one important factor is the completion of the legal framework to strengthen investor confidence. “At the same time, developers need to actively prepare contingency plans to quickly resolve problems in legal procedures and maintain confidence,” she said. “This will be key to bringing investors closer to projects and driving growth in the hospitality sector in the future.”

Figures from Savills for the fourth quarter of 2022 show that hotels of up to three stars in Hanoi saw a significant improvement in occupancy rates and room tariffs.

Occupancy rose 16 percentage points last year to 39 per cent and average room tariffs reached VND2.2 million ($93.5), up 23 per cent compared to 2021.