Vietnam's coastal hospitality real estate poised for a new wave of growth

As competition intensifies and the tourism sector rapidly evolves post-pandemic, hospitality real estate investors and hotel operators are adopting more innovative approaches to optimize operations and tap into new revenue streams, write Avison Young Vietnam analysts.

Vietnam is steadily gaining recognition on the global tourism map. With over 3,260 km of coastline, this S-shaped country offers many pristine beaches with fine white sand – long known as one of Vietnam’s “specialties” for both domestic and international travelers.

The allure of Vietnam’s coastal tourism

In 2024, Vietnam emerged as the fastest tourism recovery destination in Southeast Asia, succeeded by Malaysia, Indonesia, Thailand, Singapore and Philippines.

International arrivals reached 98% of pre-Covid-19 levels, with the largest visitor segment coming from Northeast Asia (South Korea, mainland China, Taiwan, and Japan). Tourists from new source markets such as India, the U.S., Europe, and other Southeast Asian countries also recorded positive growth.

In Q1/2025 alone, international arrivals exceeded six million, a 134% increase compared to the same period in 2019 – marking the highest quarterly figure ever recorded.

With 28 of its 63 provinces and cities bordering the sea, stretching from North to South, Vietnam is a paradise for tropical beach lovers.

According to the 2024 Outbox’s Vietnam Monthly Travel Tracking report, coastal travel is among the most favourite types of trip by Vietnamese. This comes as no surprise, given the country’s coastal regions are renowned for their stunning natural landscapes, unique cultural and historical sites, and vibrant local cuisine.

These attractions also make Vietnam’s coastal destinations highly fascinating to international tourists. In the first two months of 2025, Quang Ninh-Ha Long, Danang, Nha Trang-Khanh Hoa, and Kien Giang-Phu Quoc all recorded strong growth in tourist volumes with year-on-year growth rates ranging from 14-27%.

Throughout 2024, the 14 most popular coastal destinations in Vietnam welcomed a combined 138.6 million domestic and international tourists – a 24.5% increase compared to 2019.

Notably, five localities saw the highest year-on-year tourist growth in 2024, surpassing the country’s top three localities with the highest overall tourist volumes that same year. This growth was partly driven by domestic tourism, expanded direct flight routes, improved maritime connections, and Vietnam’s increasingly open visa exemption and e-visa policies.

Signs of recovery in coastal hospitality real estate

Across the country, the supply of 4-star and 5-star hotels remains concentrated in coastal provinces, with Khanh Hoa and Danang leading the way, offering 25,565 and 20,466 rooms respectively, followed by Kien Giang, Quang Nam, Quang Ninh, and Binh Thuan.

Thanks to the surge in coastal tourism, Vietnam’s coastal hospitality real estate sector (including hotels, resorts, condotels, etc.) has shown recovery indicators after a few quiet years caused by both objective and subjective factors.

In 2024, the average absorption rate reached 57% (based on successful transaction volumes), doubling that of 2023 (according to Vietnam Association of Real Estate Brokers or VARS). Over the next three years, the supply of coastal hotels and resorts is expected to continue growing, with Danang and Ba Ria-Vung Tau projected to see the highest increase.

Looking ahead, there is significant room for further growth. The Vietnamese Government has set a target of welcoming 50 million international arrivals by 2030, while actively diversifying source markets.

Particularly, one of the key priorities is the development of marine tourism and related services, as outlined in Vietnam's “Strategy for Sustainable Marine Economic Development.” The strategy focuses on three pillars: investing in tourism infrastructure, encouraging participation from diverse economic sectors in the development of high-quality coastal resorts, and creating and diversifying marine tourism products.

That said, bottlenecks remain in the hospitality real estate sector. Despite existing spatial plans for marine areas and a supporting legal framework, issues around land use right certificates, lease terms, investment licensing, and environmental regulations sometimes are puzzling.

Furthermore, transportation infrastructure and public amenities are not yet synchronically developed. While air travel infrastructure has improved significantly with more direct flight routes introduced, regional and inter-provincial road networks still lack effective connectivity. This could hamper accessibility and the overall travel experience, especially during peak seasons or in unfavorable weather conditions.

The road ahead

“Vietnam captures the essence of Southeast Asia – offering a wide range of experiences all in one destination thanks to its diverse scenic landscapes. Adding to that is the warmth of the people and the country’s distinctive culture and gastronomy. It’s clear that Vietnam has so much potential for sustainable tourism development. Therefore, it’s definitely a can’t-miss market for hospitality real estate investors.” said David Jackson, principal and CEO of Avison Young Vietnam and Cambodia.

Over the past three decades, the number of international hotel brands in Vietnam has doubled, with rapid acceleration since 2000. Major hotel operators, such as Hilton, Radisson Hotel Group (RHG), Accor and IHG, all have expansion plans in Vietnam to continue to diversify their portfolios and service quality.

For domestic investors, partnering with global brands is a strategic move to upgrade their market offerings to global standards, attract high-income clients and foreign tourists. This synergy has led to increased deal-making activities between hotel operators and property owners.

As competition intensifies and the tourism sector rapidly evolves post-pandemic, hospitality real estate investors and hotel operators are adopting more innovative approaches to optimize operations and tap into new revenue streams. Notable trends include:

1. Investing in emerging destinations:

Places such as Ninh Binh, Binh Dinh, Quang Ngai, Phu Yen, and Ninh Thuan have experienced remarkable increase in total tourist arrivals over the past three years (2022-2024). These emerging destinations offer long-term potential for tourism growth, with large land banks, no signs of tourism over-exploitation; national parks, biosphere reserves, and conservation areas that appeal to nature-focused travellers; as well as diverse and vibrant local cultures.

Early entry into these lesser-visited spots provides investors a competitive edge and long-term brand recognition. However, sustainable development is key, and three core principles should be emphasized: (1) Thorough assessment of environmental, economic, and social impacts; (2) Compliance with planning regulations and a balanced approach between development and conservation; (3) Market research and a long-term vision for supply-demand balance, target segments, and service ecosystems.

2. Continued digitalization and diversified programs for attracting new and returned tourists:

Developers and hotel operators are actively diversifying market offerings, upgrading infrastructure, improving destination ecosystems, investing in data-driven loyalty programs to personalize guest experiences.

Some hotel chains now offer multi-functional spaces and amenities tailored to Millennials and Gen Z – who prioritize experiences, travel frequently, and are price-conscious. According to HotelTech Report, well-crafted loyalty programs are key to unlocking new revenue opportunities.

3. Investment costs control and revision of management contracts:

Coastal hospitality real estate projects often involve higher upfront investment and maintenance costs due to requirements of ecological and environment protection and climate risks.

To improve operational efficiency, developers and operators focus on these costs through optimal design and sustainable building materials and techniques. Management contracts are also being revised to better balance rights and responsibilities, share benefits and risks between hotel operators and owners, especially since the end of the pandemic.

While Vietnam’s hospitality real estate sector offers attractive opportunities and holds strong potential in operational efficiencies, these advantages can’t be fully realized without cohesive destination marketing. Some recommendations include:

- Increase destination marketing in source markets: Leverage cultural and tourism campaigns across both traditional and digital platforms, while capitalizing on newly established direct flight routes, expressways and international seaports.

- Strengthen public-private partnerships in tourism development: Collaborate to create effective platforms for visitor engagement, such as the “2024 International Kite Festival” as part of the tourism stimulus program “Quang Nam – The Green Heritage Land.”

- Diversify tourism offerings to extend guest stay: Integrate local cultural experiences into accommodations or create "experience packages" that encourage deeper cultural immersion at each locality and across regions.