The sector performed well despite a 4 per cent year-on-year drop in flights, attributed mainly to higher fuel costs and airfares, with price-sensitive travellers most affected.
International, business and MICE demand kept occupancy above 70 per cent, while average room rates rose 20 per cent to about VND 2.4 million (USD 91) per night.
According to Savills Vietnam, the city's hotel supply remained at around 17,000 rooms in the second quarter, with only modest growth from the expansion of domestic three-star hotel chains such as G8 and KiN.
The market is currently seeing more upgrades and renovations than major new developments, with no large hotel projects expected to open in the second half of the year.
Higher rates reflect stronger demand
Martin Koerner, commercial director of The Anam Group, said rising room rates were a positive sign for Vietnam's tourism sector, particularly when driven by stronger demand rather than higher operating costs.
He said the trend suggested Vietnam had room to raise rates while improving its competitiveness as a destination.
HCM City remains an important gateway for international visitors, some of whom combine stays in the city with coastal destinations such as Cam Ranh, Nha Trang and Mui Ne.
Koerner cautioned, however, that room rates should not significantly outpace improvements in the guest experience, as Vietnam has long benefited from offering good value for money.
Higher rates and solid occupancy are also encouraging signs for hotel investors, reflecting stronger demand and revenue potential.
Nguyen Thi Kim Trang, director of Vien Dong Hotel, said room rates at three- and four-star hotels in HCM City began rising in the second quarter, averaging 5-7 per cent, while increases on some online booking platforms reached around 10 per cent.
Guest numbers rose 2-3 per cent year on year in the first two quarters. In July, occupancy at her hotel reached 95 per cent, prompting online rates to rise before traditional sales channels followed.
Hotels are also improving services and offering additional benefits for MICE guests, including conference and dining packages.
Competition shifts towards quality
Industry experts said competition in HCM City's hotel market is increasingly shifting from price towards service quality, branding and guest experience.
Higher room rates can provide operators with additional resources to reinvest in facilities, staff, food and beverage services and the overall guest experience.
However, investors must also consider international air connectivity, infrastructure, accessibility, branding and product quality. Travellers are likely to accept higher prices only when they are matched by better value and service.
Savills Vietnam expects about 900 additional four- and five-star hotel rooms to enter the HCM City market by 2029, all in the former District 1 area. Demand from international, business and MICE travellers is expected to continue improving.
Avison Young data also showed stable performance in the four- and five-star segment in the second quarter, supported mainly by business travellers, foreign professionals and higher-spending international visitors.
New developments expected in the coming years include Nobu Hotel Ho Chi Minh City, Four Points by Sheraton and JW Marriott in Can Gio.
With limited new supply and rising demand and room rates, HCM City's hotel market is expected to have further room for growth, particularly in the upscale segment.
