Five-star hotels now sell street food
Upscale hotels are facing enormous difficulties due to the recent Covid-19 pandemic. Their solutions to the dilemma have been very creative.
This summer, Sofitel Legend Metropole hotel introduced a home-delivered catering service. The menu consists of popular dishes like Australian steak, Norwegian salmon, French cheese… Likewise, JW Marriott is also offering a similar service, serving lunch and dinner with special promotions like free shipping and discounts. Other hotels, namely Pan Pacific and Melia, even sell street food like fried rice, pho, porridge with prices starting from only 25,000 VND (1 USD).
Another solution is changing their business model to providing authorized quarantine facilities or long-term accommodations. In Hanoi, over half of the 20 hotels participating in this business are luxury hotels, with prices among the highest in the city, notably Hyatt Regency West, Sofitel Legend Metropole, InterContinental and Muong Thanh. In the South, Ho Chi Minh City also is in the same situation where its highest-end hotels have reached a 78% capacity, a result of being utilized as quarantine facilities.
Declining room prices
As the pandemic continues to transpire, it greatly influences the economy, especially the tourism industry. According to CBRE, the current average hotel room price in Hanoi is 94 USD, which is 3.9% less than in Q3 2020 and 16.4% less than 2019 during the same period.
However, the average performance is only 26% of their capacities, which is a 3% and 54.7 % decline from the same periods in 2020 and 2019, respectively. These numbers translate to a 72.9 % decrease in revenue per room compared to Q3 2019, right before the pandemic.
In Ho Chi Minh City, things are looking a bit brighter, but not much more promising: the average revenue per room saw a 71.8 % decrease compared to Q3 2019.
Over three months of social distancing and aggressive quarantine rules put even more pressure on the tourism industry and the hotel market, since they have suffered the most damage throughout 2020 as a result of the pandemic. In the first nine months of 2021, domestic tourism continued to drop, while foreign tourism was almost non-existent.
in the current situation, the high-end hotel market will continue to face many challenges due to low prices. Until the end of the year, the main source of customers are still professionals, politicians and businesspeople. Hanoi’s vaccination campaign and easing of social distancing regulations are the keys to reviving Vietnam’s tourism.
In HCM City, the plan to restore everything to the ‘new normal’ is estimated to complete in Q4 2021. Hence the tourism industry is expected to improve the next year, when international commercial airways are scheduled to reopen.
In the years going forward, competition in the high-end hotel market is going to be fierce. Hotels have to stay vigilant and be quick to adapt in order to keep their place in the market.
As Ho Chi Minh City grapples with the COVID-19 outbreak, hotels have actively adapted to the situation by offering paid quarantine services to maintain their operation.
Despite recording an average occupancy rate of 27% in Q2 2021, the Hanoi hotel sector is still holding on well during the pandemic and is expected to welcome more investors in all segments this year, said Director of Savills Hanoi Matthew Powell.