While high-end apartment supply is limited and mostly focuses on leaders of foreign enterprises, online bookings are increasing their share with more competitive prices in Grade B and C accommodations, says a report prepared by Savills Ho Chi Minh City.

Online booking services like Airbnb are becoming strong competitors to traditional apartment services because of flexible lease durations and prices, it says.

Real estate firm CBRE Vietnam had confirmed the trend in a report last year that said three-star hotels were losing market share to Airbnb which was growing fast.

It said that demand for three-star hotels have been gradually falling because of growth of Airbnb in both HCMC and Hanoi.

As of last Tuesday, the average daily rates in HCMC and Hanoi, $47 and $34 respectively, were lower than the average hotel rates in the same areas, according to data from market research firm AirDNA.

Another reason for the growth of Airbnb-like services is the surge in apartment supply in the last five years. Last year, 35,000 apartments came to the market, with 60 percent of them in Grade A and B. This figure is set to be equal or higher this year.

This has boosted the number of homestays. In Hanoi and HCMC, rentals rose 36 percent year-on-year to over 29,000 apartments in the first quarter of this year, AirDNA says.

Industry insiders say that apart from the rising quantity, homestay quality is also improving as owners invest in other conveniences to attract customers, like cleaning services, high speed wifi, cable TV, swimming pool, cooking and laundry.