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|Tourism is a major factor behind Vietnam’s fast-growing economy|
With a bright outlook forecast for Vietnam’s tourism industry, international hotel operators and investors are flocking to the country to benefit from its increasing potential and diverse arrivals.
The market is developing remarkably, with international arrivals in 2018 reaching more than 15.4 million, an increase of 19.9 per cent on-year.
According to Do Thi Hong Xoan, chairman of the Vietnam Hotel Association, more international hotel operators have flocked to Vietnam in recent years. “Operators are bringing high standards and professional services to the country, meeting the needs of customers. The successful hosting of the APEC 2017 in Vietnam especially helped the growth of the hospitality sector,” Xoan said.
According to Ramzy Fenianos, chief development officer for Radisson Hotel Group in Asia-Pacific, Vietnam is a strong emerging market that the group has strong vested interest in. “The growth in the market has also been robust. Radisson Hotel Group is committed to continuing its growth strategy across various brands in the region. We see immense growth opportunities in Vietnam and are proud to be part of the country’s economic growth story,” said Fenianos. “Vietnamese government has made travel and tourism a national growth and development priority, resulting in significant capital being invested into infrastructure, connectivity, and growth acceleration. In addition to the key gateway cities of Ho Chi Minh City and Hanoi, resort destinations on the shores also show high growth potential.”
On top of that, infrastructure improvement in terms of new highways, airports, and direct flights have helped enhance connectivity among local tourist cities, and between local and international destinations.
Visa policies from the government have also made considerable progress, with exemptions for some European countries, and the implementation of online visas for citizens from 40 countries.
Increase in operators
While long-established global operators, such as InterContinental Hotel Group (IHG) and Marriott, are expanding their footholds, there are also plenty of newcomers. These include Mandarin Oriental in Ho Chi Minh City and Best Western Premier in the central province of Quang Binh.
Radisson Hotel Group has recently opened an office in Ho Chi Minh City to manage its first resort on Phu Quoc Island.
Spanish company Melia Hotels International, meanwhile, has strengthened its presence with the recent signing of three new properties in Ho Chi Minh City, namely Melia Saigon Central, INNSIDE Saigon Central, and INNSIDE Saigon Mariamman.
New brands have also been introduced to the market in the last three years, including Ozo and X2 Vibe in the New Hoi An City project; DoubleTree by Hilton in Halong, Vung Tau and Hanoi; Four Seasons in the central province of Quang Nam and Hanoi; Oakwood and Mai House in Ho Chi Minh City; and Glow in the central city of Danang.
Recently, IHG acquired a 51 per cent stake in Regent Hotels and Resorts for $39 million. Regent has a contract for BIM Group’s Regent Residences Phu Quoc, which will open this year. With this transaction, IHG expanded its portfolio to all three major cities of the country.
Indochina Capital recently joined with Japan’s Kajima (ICC-Kajima) to build a chain of hotels in Hanoi, Ho Chi Minh City, and Danang under the Wink Hotels brand. With an investment mandate of $1 billion plus spread over the next several years, ICC-Kajima is committed to develop 20 innovative and high-quality projects throughout Vietnam and then expand into neighbouring markets such as Cambodia and Laos.
Mauro Gasparotti, director of Savills Hotels Asia-Pacific, said that he has observed a large increase in interest from operators in the country since 2015, following the expansion of the hospitality market.
“Vietnamese developers are still new to hospitality products, but with the large amount of supply coming, more quality assets are expected to be under way. We forecast that a total of more than 30,000 rooms will be opened by the end of 2019,” said Gasparotti.
Karl Hudson, Marriott International’s area vice president for Thailand, Vietnam, Cambodia, and Myanmar, also sees great potential in Vietnam.
“Vietnam is poised to continue on this growth trajectory, with continued government spending of over $1.3 billion on tourism infrastructure. We see all these initiatives as promising signs that, in conjunction with the rise of foreign direct investment, Vietnam will remain among the world’s fastest-growing economies,” said Hudson.
Domestic players share cake
In the development of the hospitality sector in Vietnam, along with international brands, domestic developers and operators are increasing capacity and becoming an indispensable part of the market. Among those, Muong Thanh Hotels has become one of the top names, with a chain of more than 50 hotels stretching from the top to the bottom of Vietnam. The two latest hotels, Muong Thanh Luxury Son La and Muong Thanh Luxury Khanh Hoa, have both received warm welcome from customers.
According to Pham Hong Dung, deputy general director of Muong Thanh Group, the group’s investment strategy has been to preserve traditional styles while adding modern facilities. “Tourists would like to understand the culture and traditions of the countries they visit, rather than have it all in the modern way, and that is why all of Muong Thanh’s hotels are following this trend,” Dung said.
Pham Ha, CEO of Luxury Travel, said, “Vietnam’s tourism infrastructure has improved dramatically and with its iconic colonial properties, a fast-growing list of modern luxury and spa destinations and recently-opened golf courses, as well as the launch of luxury yacht and river cruise services, the country ensures stress-free journeys away from busy roads. Such improvements account for the country’s recent growth in popularity.”
Meanwhile, the southern beach province of Ba Ria-Vung Tau is catching the eyes of domestic property developers. DIC and Hung Thinh Corporation are also actively looking for projects in the southern coast city. Duc Long Gia Lai Group, meanwhile, has proposed to invest in five large-scale ventures with high-end resorts in Ba Ria and Con Dao islands.
Leading housing developer Novaland Group has recently signed strategic co-operation agreements with Minor Hotels to operate seven hotels and resorts, and a Greg Norman golf course designed to help develop its four incoming golf courses in Can Tho, Ba Ria–Vung Tau, and Binh Thuan provinces.
According to Bui Xuan Huy, general director of Novaland, the group has also been expanding in tourism in many other areas such as Ho Chi Minh City, Cam Ranh-Khanh Hoa, Phu Yen, Quy Nhon-Binh Dinh, and Dalat-Lam Dong.
Condo hotel units, or condotels, have spearheaded a new type of holiday facility in Vietnam with investment from both foreign and domestic investors. Halong, Danang, Nha Trang, and Phu Quoc are providing a large proportion of properties to the market with a huge supply of more than 30,000 condotels and 5,500 villas so far.
Condotel ownership, however, has not been regulated so far, despite booming investment. According to the Vietnam Association of Real Estate Brokers, condotels recently saw a slowdown in supply, with transactions in the third quarter of 2018 totalling at only 1,000. The association said that it is time to halt the development of new condotel projects and focus on completing existing ones, putting them into operation to boost tourism infrastructure and consolidate investor confidence.