Which scenario for the post COVID-19 hotel market?

No matter what recovery scenarios occur as the nation begins to emerge from the effects of the novel coronavirus (COVID-19), this year’s hotel market is expected to witness a sharp decline in terms of room capacity and will only get back to normal levels in 2021.

CBRE Vietnam, Savills Vietnam, hotel market, room rate, room occupancy, COVID-19
This comes after Savills Vietnam, the nation’s largest property consultancy with real estate services running since 1995 stated that most hotels must move to suspend parts or all of their business operations in a bid to cut costs while keeping on only key personnel as they prepare plans to resume operations.

According to Savills Vietnam, these strategies will partly offset the revenue decline faced in the short term. However, hotel owners have not been able to map out longer term plans due to the uncertainty over how long it will take for the tourism industry to return to pre-epidemic levels.

Savills believes that the global economic impact and complex developments of the COVID-19 will make it challenging for the hotel industry to fully recovery in 2020, with a full recovery likely to take place by 2021.

Moreover, domestic tourism demand, especially among young travelers, is set to play an important role in the process of the hotel industry’s recovery.

Elsewhere, CBRE Vietnam stated that the situation with regard to the hotel market in Hanoi is more positive than that of Ho Chi Minh City.

The segment of four to five star hotels in Hanoi will enjoy a faster recovery as international businesses begin to get operations back to normal.

In addition, domestic guests and a small number of international visitors from Northeast Asia are poised to serve as contributory factors that drive the recovery of the Hanoi hotel market once the epidemic has been fully brought under control.

According to CBRE forecast for the country, if the disease is controlled by June, the average room rate this year will drop by between 8% and 13% compared to 2019’s figure, with the occupancy rate falling by between 46% to 51%. If the epidemic is successfully contained by September, the average room rate will decrease by between 15% to 20%, with the room capacity dropping by between 50% and 55% from last year.

Following this, the Vietnam National Administration of Tourism has outlined a slow recovery scenario for the country’s tourism industry with the number of international arrivals to the nation in 2020 anticipated to fall by 70% compared to 2019, providing the epidemic is brought under control in June. In a worse-case scenario, the number of international visitors will be reduced by up to 75% if the epidemic is not controlled until September.

In all of the scenarios, the year will see an unprecedented slowdown in terms of the number of tourists visiting the nation, leading to a serious decline in room occupancy in the hotel market, the Vietnam National Administration of Tourism notes.

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