Hotels: A market-sizing exercise (part 4 of ???)

Today, I am going to combine everything I’ve done so far to get estimates of future guests. I will estimate the foreign and domestic guest nights and use those to come up with a total guests nights. As a reminder, guest nights is how many nights do all guests stay in a hotel. A Japanese couple that stays for 4 night would have 8 guest nights. I take this number and divide it by 1.5 to get to hotel nights. The 1.5 is how many guests stay in one room on average. Basically, the Japanese couple would (probably?) share a room. A single traveler wouldn’t. After reaching the hotel rooms occupied every night, I can use it to make assumptions about occupancy to get the needed hotel rooms and what that would mean for new builds.

First, the foreign visitors. I have already made two different assumptions on growth. The first was to 30m international tourists by 2025, and the second was to 35m. If we use these, and the same assumptions on stay duration (5 nights) then that gets us to between 150m and 175m guest nights for foreign visitors by 2025.

FOREIGN GUEST NIGHTS COULD REACH 175M BY 2025. SOURCE: VIETECON.COM

Second, I did not actually make any forward-looking estimates for domestic travelers, so I need to do that first. The latest stats show that domestic tourists reached 80m in 2018. However, there is greater volatility in domestic travelers, as we have already seen. Some years, the figures rise only a small amount, while in others they rise 48%. The CAGR from 1995 to 2018 is 11.2%, but if I take the figures from 2014 to 2018 (after the big spike in 2014), this falls to 8.8%. Domestic travelers reached 80m in 2018, which is almost 85% of the population. If I assume 7% annual growth, that means by 2025 there will be about 130m travelers, and if I take 10% growth that gets me almost to 160m. These points seem reasonable to me, given the growth in the country overall and the population.

SCENARIO ONE - DOMESTIC TRAVELERS REACH 130M BY 2025. SOURCE: VIETNAMESE GOVERNMENT, VIETECON.COM

SCENARIO TWO - DOMESTIC TRAVELERS REACH 160M BY 2025. SOURCE: VIETNAMESE GOVERNMENT, VIETECON.COM

Tomorrow we will move on to combining these and seeing what it means for foreign growth.