Lodging in Vietnam (2018)

HEADLINES

 Lodging value sales grow by 14% to reach VND124 trillion in 2018

 Short-term rentals, and luxury and upscale hotels record the fastest growth

 Over the forecast period lodging value sales will record a 7% CAGR at 2018 constant prices to reach VND176 trillion in 2023

PROSPECTS

Short-term Rentals Record Substantial Growth

Thanks to the rising popularity of Airbnb and other players with similar formats, short-term rentals continued to record outstanding growth rates in 2017 and 2018. Due to weak law enforcement by the government, local people can easily rent out their rooms or houses without much regulatory restriction. In addition, an increasing percentage of foreign tourists, especially leisure travellers, prefer to stay in short-term rentals rather than hotels. Many short-term rentals attract tourists for their more affordable prices, closer contact with local hosts and friends, and more boutique-like feeling.

There is an increasing number of local players that have joined the market in recent years, such as westay.org and luxstay.net. However, Airbnb remained the market leader in 2018. Being the industry pioneer, Airbnb has accumulated the highest number of rentals and hosts among all industry players. Therefore, most people can easily find a place that suits their needs on Airbnb.

Luxury and Upscale Is the Most Dynamic Segment in Hotels

Luxury and upscale hotels in Vietnam continued to outgrow other price platforms in 2017 and 2018. New international brands that opened in 2017-2018 include the Intercontinental Phu Quoc Long Beach Resort and Sheraton Grand Da Nang Resort. Most notably, local brand Vinpearl opened 10 new outlets in 2017, and is expected to open another five outlets by the end of 2018.

The strong growth of luxury and upscale hotels in Vietnam is attributable to the surging number of inbound tourists, with arrivals having recorded double-digit annual growth rates since 2016. Furthermore, the percentage of luxury and upscale hotel outlets in Vietnam is still low compared to neighbouring countries, leaving significant potential for growth.

To tap into the rising market potential, leading industry players have shown an interest in developing new luxury and upscale hotels in Vietnam over the forecast period. For example, Hilton has announced plans to open Hilton Da Nang in October 2018, and two more hotels in Ho Chi Minh City in the upcoming years. As Vietnam’s economy is expected to soar and foreign investment to increase, a rising number of business travellers will help to boost the development of luxury and upscale hotels over the next five years.

Vinpearl Jsc Is the New Industry Leader

Local player Vinpearl JSC has emerged as the new industry leader in 2018. Vinpearl JSC is part of VinGroup JSC, a local conglomerate which owns businesses in a wide range of industries, including hotels, theme parks, medical care, education, automobiles and retailing. With a strong influence in the local economy and robust investment capital, the player was able to open many new outlets in 2017 and 2018. Many of its luxury and upscale hotels are located in new cities or towns that still lack other brands, such as Can Tho, Ha Tinh, Nghe An and Hai Phong. With this strategy, it was able to avoid direct competition with other, well-established luxury brands.

Another strategy that contributes to Vinpearl’s success is its locations close to Vinpearl Land theme parks, or golf courses in a particular area. This creates a complete relaxation and recreation destination for families or groups of friends. With these key strategies, Vinpearl is

expected to maintain its leading positing over the forecast period, despite the entrance international luxury hotel brands.