Average occupancy fell 36 percentage points to 32 percent, while room rates fell 13 percent year-on-year to $74 per night, according to a recent report by real estate consultancy Savills Vietnam.

Supply fell 23 percent year-on-year to 12,400 rooms as many hotels had to close temporarily, it said.

"Closed borders resulted in the weakest H1 performance on record," the report said.

Five-star hotels were the most affected as most of their customers are foreigners, whose arrival numbers dropped 69 percent year-on-year in the first half.

The falling hotel figures go alongside dampening reports in other sectors in the city. Revenue from tourism dropped 71 percent year-on-year, while that of accommodation and catering fell 47 percent.

Savills expects "travel bubbles," a network of flights between Vietnam and countries that have contained the pandemic which is being discussed, could boost tourism in the future with more Asian tourists coming in.

For now, hopes will continue to rely on domestic travelers, the report said.

It also said that over 4,000 hotel rooms are set to enter the market in the second half of the year.

Mauro Gasparotti, director of Savills Hotels Asia Pacific, had said earlier that a full recovery in the hotel market is unlikely until next year, as there is still uncertainty about when tourist numbers will return to pre-pandemic levels.