JLL: Bright outlook for Hanoi and HCMC tourism

Latest report from real estate consultants paints a rosy outlook for two cities as hotel supply increases.

Hanoi and Ho Chi Minh City have been listed among 26 key cities in regard to hotel destinations in the Asia Pacific region, according to the latest report from JLL, which includes the latest tourism trends and provides an overview of current supply and demand and a future outlook.

Tourism

In 2016, Hanoi saw 4 million international arrivals, up an impressive 21.2 per cent year-on-year and exceeding the initial expectation of the Vietnam National Administration of Tourism (VNAT) of 3.8 million. This represents a five-year combined annual growth rate (CAGR) of 16.1 per cent from 2011 to 2016. As at March, the city had welcomed 6 million visitors this year, a 7 per cent increase year-on-year, of which over 1 million were international visitors.

Meanwhile, international arrivals to Ho Chi Minh City reached 5.2 million in 2016, a 10.6 per cent increase year-on-year and exceeding the initial expectation of 8.5 per cent. Between 2011 and 2016, the city registered a CAGR of 10.9 per cent. Growth has come as the city has stepped up its efforts to increase arrivals and average spending with more festivals focused on culture and eco-tourism and has attended travel marts and roadshows overseas.

Supply

In 2016, just over 200 new rooms were added to the Hanoi hotel market in addition to rebranded supply, while a larger addition of over 800 branded hotel rooms is expected this year. A further 2,000 rooms will be launched in 2020. Between 2017 and 2020, almost 60 per cent of new room supply, or 1,700 rooms, will be in the luxury segment.

2016 saw 703 new rooms added to the Ho Chi Minh City market. As the city gains traction as an international tourist destination, over 3,500 rooms are expected to be added to the market by 2020, with 1,000 keys expected in 2017.

Demand

Top source markets to Vietnam include mainland China, South Korea, Japan, and the US. While continuing its promotional efforts in Japan, Hanoi also aims to expand its market in Russia and France through cooperation with international agencies and diplomatic representatives. In its tourism drive, Hanoi will position itself as a cultural destination for its food, culture, and relic sites.

While continuing its promotional efforts in Japan, Ho Chi Minh City also aims to expand new markets, targeting Russia and India as future growth in international arrivals of nearly 6 million is expected in 2017. The domestic market relies on the city as a key economic and recreational hub, with 21.8 million visitors in 2016 and 24 million targeted for this year.

Outlook

VNAT continues to strongly market Hanoi as a cultural destination through an advertising campaign with CNN across its international network. The campaign will run on both CNN on air and online media from 2017 to 2018. In addition to ongoing initiatives within Hanoi, to further enhance its tourism offerings, the capital looks to link its tourism coordination with other northern localities to lengthen international stays. VNAT’s initiatives are expected to drive an increase in visitor arrivals, so the outlook for the market remains positive.

Named by Conde Nast Traveler as among the 50 most beautiful cities in the world, Ho Chi Minh City is fast becoming an international tourist destination as the government continues to focus efforts on marketing and on improving tourist attractions and safety. With ongoing upgrades to museums and approval for a safari park and the Saigon Cultural and Tourism Village, the city’s People’s Committee is preparing a tourism development strategy to 2030 and beyond to ensure sustainable tourism development.

by Doanh Doanh / VET