Vietnam’s real estate and hospitality market is currently going through tremendous changes and short-term challenges, analysts told a hospitality and real estate conference entitled “Meet the Experts 2022” on November 10 in Hanoi.

Hospitality in Vietnam is indeed recovering. Domestic tourism rebounded well in the first ten months of the year, welcoming 91.8 million domestic travelers and exceeding the 85 million posted in 2019.

However, the return of international visitors has been underwhelming, with only 2.3 million arrivals in the first ten months, or just 16 per cent of performance in the first ten months of 2019. This was mainly due to considerable declines in key markets like China and Russia.

South Korea became the largest source of international arrivals in 2022, with 620,000, or 26 per cent of the total. There was a strong uptick in the number of Indian arrivals, with 82,000, for average monthly growth of 51 per cent.

Mr. Mauro Gasparotti, Director of Savills Hotels Asia Pacific and host of “Meet The Experts”, said Vietnam’s hospitality industry is going through a period of transition. “We will witness short-term difficulties, especially in the second home segment, but this will give the market a great opportunity to briefly pause on strong growth and focus on structural improvements that will benefit the long-term,” he added. “The recovery of coastal resorts has been slower than anticipated because of limp international demand.”

During discussion sessions at the conference, representatives from Perceptions Hospitality, the BIM Group,, The Ascott Ltd., the Fusion Hotel Group, Archipelago, VinHMS, and Cityland Education Vietnam shared their thoughts on the outlook for the hospitality market next year and the potential challenges for near-term growth.

Speakers from QUO Global, TUI BLUE Hotels & Resorts, Pico Play, and WT Partnership discussed various emerging business models, including theme parks and all-inclusive resorts, and looked at the power of branding and how construction costs are changing.

Mr. Gasparotti added that besides the slow recovery in international demand, the large pipeline of projects under construction are a threat because they will add additional pressure on rates and occupancy. “In the next three years, we expect 47,000 hotel and condotel keys to enter the market, though the current credit space control may mean some of these will be delayed,” he said.

Mr. Matthew Powell, Director of Savills Hanoi, commented that Vietnam’s market for branded residences is continuing to expand, especially the urban and resort segments, which have very strong potential. “There is live interest for brands to enter the new market and look for new locations to grow their portfolios,” he noted. “The same goes for developers, who are also looking to explore this sector.”