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|The streets of the Hanoi Old Quarter are near empty since the pandemic|
The COVID-19 outbreak has dealt a hard blow to the local economy, causing the heaviest damage to the tourism sector since the pandemic broke out. With foreign arrivals few and far between, businesses depending on them for survival such as hotels, restaurants, and souvenir shops have been struggling.
The owner of eight hotels across the area admitted that they have lost billions of VND since the health crisis broke out. Previously, their average occupancy was 70-80 per cent. During the travelling season (June-September), the rate was often up to 90 per cent.
“This is the first time in the past ten years that I see the streets that are so popular among Western guests so quiet. Currently, my two hotels that are open offer a 50 per cent discount on all services and rooms but we get less than 10 customers a day,” he said.
He had to shut down six of the eight hotels and let go 150 employees. The remaining two hotels are still running at a loss and are desperately waiting for the economy to fully recover.
“Foreign visitors made up 90 per cent of our income. If the hotel sector does not recover soon, I might as well switch to another job. Rental fees, employees' paychecks, and insurance fees are starting to be heavy.”
The pandemic has caused a chain reaction, causing many hotels and travel agents to switch business models or shut down entirely. Many people had to take on temporary jobs until normalcy returns.
Bui Van Luong, CEO of Penny Travel on Ma May Street said hehas to work as a real estate broker while his wife runs an online cosmetics store to pay rent for their travel agency.
According to Savills Vietnam, more than half of businesses returned their lease to their landlords due to being unable to continue payments.
Along with the less-favourable areas, golden destinations across the Old Quarter such as Hang Tre, Dong Kinh Nghia Thuc, Phan Trau Trinh, Ma May, Hang Bong, Hang Trong, Hang Ngang, and Hang Dao streets have been quiet despite constant advertisements.
As small hotels were closing down, major hotel groups have started selling assets.
Atlanta Hotel, a 5-star hotel brand is selling one of its 16-storey, 560 square metre building for VND480 billion ($20.87 million). Grand Vista Hanoi, another 5-star hotel is also selling their building on Giang Vo street. The hotel has 23 floors, 170 rooms and is up for sale for VND1 trillion ($43.48 million).
Hotel owners are struggling to find an investor during the current financial woes.
Experts believe resort real estate will not bounce back for quite some time as in the fourth quarter many hotels rely on foreign visitors and no one wants to go anywhere.
Le Xuan Vinh, CEO of Solaria Hotel Hanoi, said that after a long time people were stuck in their houses, travel demand will explode. For developed countries such as the US, Australia, or Germany, domestic travel is supposedly less safe than travelling to Vietnam. A vaccine will trigger an immense wave of travellers from around the world.
“We are focusing on advertising our brand and our tourism industry to the world. We have to show them that it is safe to come to Vietnam. At the same time, the government has to come up with a solution to reduce travel procedures to boost the economy after COVID-19," said Vinh.