Tourism rebound gathers pace

Vietnam’s tourism sector showed strong momentum early in the year, with international arrivals reaching nearly 2.5 million in January, up 21% from the previous month and the highest monthly figure on record, according to the General Statistics Office.

South Korea overtook China to become Vietnam’s largest source market, accounting for nearly 490,000 visitors. Beach destinations with warm climates such as Phu Quoc, Nha Trang and Danang remained popular among Korean travellers.

China ranked second with about 460,000 arrivals, while Cambodia unexpectedly rose to third place, a notable shift from previous years when it typically ranked between sixth and 10th.

The statistics agency attributed the record growth to more liberal visa policies, revamped tourism promotion and marketing efforts, and a broader range of tourism products with improved service quality, all of which have boosted Vietnam’s international appeal.

The strong start to the year underscores a clear recovery in inbound tourism and supports the industry’s target of welcoming around 25 million international visitors in 2026. However, experts cautioned that sustaining growth will require continued improvements in service quality, destination management, and infrastructure capacity.

Shift towards higher-end experiences

Commenting on the outlook for Vietnam’s tourism and resort hotel market, David Jackson, CEO of Avison Young Vietnam, said expanded international flight networks, favorable visa policies, and competition from regional destinations are pushing Vietnamese hotel operators to refresh products and upgrade services to attract global travellers.

Future growth is expected to focus more on the mid- to high-end and luxury segments, rather than rapid expansion in mass-market offerings, as international visitors increasingly prioritize service quality, experiences, and emotional value.

Hotels and resorts are therefore shifting from pure accommodation models towards integrated experiences combining dining, wellness, local culture, and entertainment. Wellness-oriented resorts, retreats, detox programs and “slow travel” concepts are expected to gain traction, particularly in coastal and eco-tourism destinations.

Beyond traditional hotels, hybrid models such as branded residences, resort villas, next-generation condotels, and serviced residences linked to resort living are gradually returning, but with a more cautious approach that prioritizes operational viability and sustainable cash flows rather than short-term sales, Jackson said.

Quiet M&A momentum builds

Data from JLL Vietnam show that by the end of 2025, Vietnam’s hotel and tourism market had staged a strong recovery, with more than 21.2 million international visitors and a compound annual growth rate of 10.1% between 2011 and 2026.

By 2030, international arrivals are forecast to reach 35 million, driving robust demand for accommodation in major cities and coastal destinations.

In Q4/2025, hotel occupancy in Ho Chi Minh City reached 83%, with average daily rates climbing to VND3.6 million ($139) per night. Revenue per available room (RevPAR) not only recovered but surpassed pre-pandemic levels.

Hotels in Vietnam’s two largest cities, Hanoi and HCMC, are seen as offering the strongest growth potential, as demand rebounds while supply remains relatively limited compared with coastal destinations such as Danang and Khanh Hoa.

The market has continued to attract foreign direct investment and large M&A transactions, helping to scale up operations and raise management standards. Many hotels have shifted to international management models, diversifying offerings across traditional hotels, serviced apartments, MICE-focused properties, and long-stay accommodation.

Growing tourism demand is also driving the need for sustainable supply development, incorporating ESG considerations, digital transformation, and personalized services.

Phan Thi Anh Dao, senior director of advisory and research at JLL Vietnam, cited one of the most discreet and unexpected M&A deals of 2025, when the Park Royal Saigon hotel was rebranded as Garden Plaza following an acquisition in Q3. The transaction value was not disclosed.

“The new owner is Kido Group, which shows that domestic conglomerates are starting to pay attention to this sector, recognizing the cash-flow potential of well-located hotels, particularly those near major gateways such as airports,” Dao said.

She added that hotel M&A activity has been quietly active, with few deals publicly announced.

“Behind the scenes, investors - especially domestic ones - have been hunting for distressed assets or properties whose owners are seeking to divest as part of portfolio restructuring,” she said.

Yield gap narrows as tourism recovers

One key issue remains investment yields. In mature markets such as Japan and Australia, hotel yields are relatively low at around 3-4%, reflecting low interest rates and stable market conditions. In contrast, foreign investors, particularly private equity funds entering Vietnam, typically seek returns of 7-9%.

They demand higher yields to compensate for market risks, higher borrowing costs, and lingering concerns over transparency and complex legal procedures, which add a risk premium to return expectations, JLL Vietnam said.

This divergence in pricing expectations has frozen some market segments, as buyers and sellers struggle to reach agreement.

However, Dao said that in 2026, a strong tourism recovery - especially with the return of Chinese and Indian visitors - should improve cash flows at resort hotels and lift investment yields.

As a result, JLL Vietnam expects 2026 to be a breakout year for hotel M&A in Vietnam, led by transactions involving four- and five-star properties in Hanoi and HCMC.