Hotels in Ho Chi Minh City are suffering from low occupancy rates due to a sharp drop in international visitor arrivals and domestic tourists’ preference for traveling to beaches.
In May, amid a wave of hotel closures and conversions into office buildings, the Norfolk Hotel in District 1 with over 100 rooms stopped operating.
In mid-June many hotels in tourist areas such as Bui Vien Street, Bui Thi Xuan Street and Le Thanh Ton – Ly Tu Trong in District 1 temporarily closed due to lack of customers.
The latest accommodation market report by real estate consultancy Savills Vietnam said hotel occupancy rates in the second quarter were down 8 percentage points quarter-on-quarter.
All segments suffered as foreign visitor arrivals to the city fell by 13% quarter-on-quarter. The rate of overnight guests in the city was only 19%, the lowest in the country.
Hotels are currently relying on business guests since the city is a transit point between various provinces and cities.
Troy Griffiths, deputy general director of Savills, said recovery in international tourism has been slower in Vietnam than other countries in the region.
He pointed out that the number of visitors from China, the second biggest market, was 78% down in the first half from 2019, the year before Covid.
Trang Minh Ha, chairman of investment firm North Stars Asia, said the third quarter, when it is the rainy season, is the low tourist season in HCMC, and so occupancy and room rates would continue to be low.
The number of hotels that close permanently or temporarily could rise sharply, he said.
The economic difficulties post-pandemic, boring and monotonous tourism products and Vietnam’s difficult visa policies have kept tourists away, he said.
The city needs to strengthen programs on attracting visitors to compete with countries such as Thailand, Singapore and Indonesia, he said.
“HCMC’s hotel industry is waiting for an optimistic signal from the economy for recovery. However, the market may have to wait until the end of 2024 for a solid positive signal.”