As Vietnamese people feel confident and safe enough to travel, recovery of the hospitality industry will truly be underway, according to Mauro Gasparotti, Director of Savills Hotels APAC.

The Vietnamese hospitality market in 2021 is expected to be broadly similar with most of 2020, at least until borders reopen to leisure and business trade, Gasparotti said. Local hotels have adapted by considerably reducing operating costs to establish lower breakeven points. “The good news is that several destinations are still performing at acceptable levels,” he added.

Performance in December 2020 and January 2021 was positive for beach destinations like Phu Quoc or Vung Tau, which have the essential appeals to both local leisure travelers and year-end company trips. 

In the past few months, there has been very encouraging growth of meetings, incentives, conferences and exhibitions (MICE) demand in city hotels. Some businesses have used promotions, such as “staycation” packages, or food & beverage deals to nurture local demand, which have supported performance. 

“With the government speeding up vaccine testing and imports, I hope the situation would soon be under control,” Gasparotti said.

Covid-19 hit hotels hard again

The third-wave of Covid-19 outbreak, starting in the northern provinces of Hai Duong and Quang Ninh, have led to reinstated preventative measures  across the country. The Van Don International Airport was closed, until at least February 13, after ten security personnel there were found to be infected. 

Ha Long Bay, Quang Ninh province. Photo: Bamboo Airways

In many localities, containment measures are back, with greater focus on hygiene, mask wearing, hand washing, travel precautions, and restrictions on social gatherings. 

Hanoi's authority has ordered events and festivals celebrating Tet to be canceled while the administration of Ho Chi Minh City immediately raised public awareness following a string of confirmed infections. 

The Covid-19 resurgence has resulted in an immediate impact on the hospitality business with several cancellations across the country, not only in the affected destinations but anywhere with access via an airport,” Gasparotti said.

Travel interests are diminishing in a mist of uncertainty with demand for air travel dropping 15% immediately after the news on local infections broke. Tan Son Nhat International Airport is expected to see a sharp 26.5% drop in air passenger traffic during the Tet holiday compared to last year. 

Online search for flights to Danang and Ho Chi Minh City during this “peak period of the year” dropped 35%, and 34% week-on-week respectively, according to OTA Insight. 

Some companies immediately enforced travel restrictions, with requests to limit attending events or large gatherings. This has directly affected MICE business in city hotels, where several conferences have been put on hold or delayed, according to Savills Hotels. 

“Drive-to destinations have also been affected by weekend cancellations,” Gasparotti said.