Vietnam’s Pandemic Mitigation Efforts Stall Recovery and Impact Pipeline Development – STR

While the APAC region grew supply at 4.1% in 2019, Vietnam has emerged as a power player in the region, with over 5% supply growth in both 2018 and 2019. The country has handled the COVID-19 pandemic with aplomb, much to the detriment of the hospitality industry, but a thriving tourist trade and brand proliferation make the country one to watch once border reopen.

Developer darling

Vietnam’s hotel industry has historically been populated by independent properties: Nearly 73% of hotel supply was unflagged as of 2014. Brands have sought to change the status quo in recent years, and chain hotel supply growth increasingly outpaced independent hotel supply growth from 2015 to 2019.

By 2019, branded hotels accounted for 32% of total supply, up from 27.5% in 2014. The growth was concentrated among Luxury, Upper Upscale, and Upscale chains; combined, the three chain scales increased supply 9.1% in 2019 compared to Upper Midscale and Midscale chains’ 5.0% rooms growth during the same period.

COVID-19 impacts

Vietnam reported its first COVID-19 case on 23 January 2020, and by mid-March, the country locked down and closed its borders to control the virus’s spread, effectively tanking hotel performance. Occupancy began a slow recovery in early May and reached a high of 31% for the week ending 25 July. A second wave and the corresponding lockdown at the end of July set back recovery, and occupancy dropped to 14.3% in early August before beginning another long, slow climb.

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