Ha Noi Hotel Market Remains Stable in Q3/2024

• In Q3/2024, the Ha Noi hotel market recorded no new projects, while rental rates saw a slight decline due to promotional programmes aimed at attracting guests amid a robustly growing domestic tourism sector.

• Ha Noi is expected to welcome several new hotel projects, with many managed by international brands, enhancing accommodation services and offering diverse options for travellers.

According to Savills Q3/2024 report, there were no new hotel projects recorded in Ha Noi. The current supply remained stable quarter-on-quarter (QoQ), with 11,120 rooms across 67 projects. Most of the supply is concentrated in the inner city, with approximately 5,500 rooms available.

Five-star hotels account for 59% of the total supply, marking an 8% year-on-year (YoY) increase, while the supply of four-star hotels decreased by 7% following the rebranding of Eastin Hotel & Residences to Movenpick Living West, which was upgraded from a four-star to a five-star rating. The supply of three-star hotels declined by 3% YoY due to the removal of A25 Asean and Minh Cuong projects from the graded list.

The average rental rate for the quarter was VND 2.7 million per room per night, representing a 2% decrease compared to the previous quarter. The five-star segment also recorded a 2% QoQ drop and a 1% YoY decline. Meanwhile, rental rates for four-star hotels saw a slight increase of 2% QoQ and 1% YoY.

Explaining the decrease in hotel rental rates, Mr Matthew Powell, Director of Savills Ha Noi, stated: “The third quarter is typically a low season for tourism and hospitality activities. As a result, many hotel projects launched promotional offers and travel packages to stimulate demand, attract tourists during the autumn season, and support the domestic tourism promotion programmes initiated by the Ministry of Culture, Sports, and Tourism.”

These stimulus efforts contributed to positive growth in the tourism sector during Q3. By the end of September 2024, Ha Noi’s total tourism revenue had reached VND 81.9 trillion, an 18.5% increase compared to the same period last year. The city welcomed 21.1 million visitors, up 11.7% year-on-year (YoY), including 4.4 million international tourists, a 40.8% YoY increase, and 16.7 million domestic visitors, representing a 5.8% YoY rise.

In September alone, Ha Noi saw 510,600 international visitors, with 360,000 staying guests, marking a 3% QoQ increase and a 32% YoY rise.

Although the overall tourism industry is showing promising signs, the hotel market in Q3 has yet to achieve a significant breakthrough, with an occupancy rate of 67%, unchanged from the previous quarter and up 6 percentage points YoY.

However, Mr Powell noted that the hotel market still holds substantial short-term recovery potential. To drive this recovery and boost momentum, the Department of Tourism has launched a variety of activities from October through to the end of the year to attract tourists. Notable initiatives include the 2024 Ha Noi Tourism Ao Dai Festival and various campaigns promoting the capital's destinations. At the same time, Ha Noi's tourism image is being actively promoted through a collaboration with the international television channel CNN.

In addition to these promotional efforts, Ha Noi is focusing on preserving and enhancing its cultural heritage. The city's People's Committee has established a Steering Committee to implement a project for improving the management and preservation of the Huong Son (Perfume Pagoda) complex in My Duc District. These efforts play an important role in driving the sustainable development of the tourism sector, thereby increasing demand in the hotel market.

As tourism stimulus activities lay a stable foundation for market recovery, the outlook for new supply is also noteworthy. From 2024, Ha Noi is expected to see 68 new hotel projects, adding approximately 12,115 rooms. Among them is a five-star hotel project, anticipated to be operational in 2024, which will provide an additional 207 rooms.

Between 2025 to 2026, the market is projected to introduce 3,035 rooms from 12 new projects. Five-star hotels will dominate, accounting for 77% of the supply, while four-star hotels will represent 23%, promising to enhance the quality of accommodation in the city.

In terms of location, the inner-city area is expected to account for 41% of the total new supply, equivalent to 5,027 rooms from 22 projects. International brands such as Hilton, Fusion, Accor, and Four Seasons will continue to dominate, managing 66% of the new supply, while domestic operators will manage the remaining 34%, offering travellers a broad range of brand choices.