06:16 (GMT +7) - Monday 23/10/2017

Property

In for their share

Released at: 08:07, 24/09/2017

In for their share

Photographer: Joel Biletta

Increasing numbers of new international hotel operators are expanding their presence in Vietnam given the level of development in the country’s tourism sector.

by Linh San

Fifty-five years since it opened its first hotel in Tokyo, the Hotel Okura Co. signed an agreement with the Saigon Trading Group (SATRA) to develop and manage The Okura Prestige Saigon in Ho Chi Minh City in 2020. The Okura Prestige Saigon will be the Okura Prestige brand’s first property in Vietnam, featuring 250 spacious guest rooms, Japanese restaurants, all-day dining, a rooftop bar, multi-purpose banquet/meeting rooms, a gymnasium, and an outdoor pool. It will combine meticulous Japanese hospitality with state-of-the-art facilities to deliver the signature Okura Prestige quality and ambience. 

“We are focusing on hotel development in Vietnam because of its stable and highly promising GDP growth rate, which is averaging 6.5 per cent annually, and its affluent and youthful population up to age 30, which accounts for half of the total population,” said Hotel Okura’s President Toshihiro Ogita. “Vietnam suits our business strategy of expanding the scope of our loyal customers’ travel destinations, growing our brand awareness, and further strengthening our customer base and thus competitive advantage in promising markets.” 

The Okura Prestige Saigon is among a wide range of international upscale and luxury hotel brands already planned for opening in Ho Chi Minh City within the next three years. These include Hilton and Ritz-Carlton and well-known brands already with a presence, such as IHG, Accor, Marriott and Hyatt. Over the next three years, approximately 3,500 rooms in 13 individual hotels are set to open in the city, according to real estate consultants JLL. Hotel investors are clearly quite keen to invest in Vietnam. 

Market upbeat

In early June, Hilton CEO and President Mr. Christopher J Nassetta was joined by a key strategic business partner in Vietnam, Ms. Nguyen Thi Nga, Chairwoman of the BRG Group, at a special meeting with Prime Minister Nguyen Xuan Phuc during his visit to the US. Hilton and BRG told the Prime Minister of their view that Vietnam’s tourism sector will be a key pillar of future economic and employment growth, as it already contributes 7.3 per cent to employment and 9.1 per cent to GDP. “Vietnam is an incredible destination with the potential to be a significant beneficiary, and, at Hilton, we are committed to bringing our unique brand of hospitality everywhere our customers want us to be,” said Mr. Nassetta. 

During the meeting, Hilton and BRG outlined the details of their partnership, which includes two hotels in Hanoi, the Hilton Hanoi Opera and the Hilton Garden Inn Hanoi, plus the recently announced dual brand project to develop Hilton Hanoi Westlake and Double Tree by Hilton Hanoi Westlake. Hilton has also previously announced management agreements for Hilton Hai Phong, which is under construction, and the Double Tree by Hilton Doson, also in Hai Phong.

In terms of Vietnam’s accommodation demand, there were over 10 million international arrivals in the country in 2016, a 26 per cent increase against 2015. This is the first time Vietnam has welcomed over 10 million foreign visitors, reflecting the country’s growing status as a business destination and tourism hotspot, and the number is set to double by 2020. In the first half of this year, it welcomed 6,206,336 international arrivals, representing an increase of 30.2 per cent year-on-year, according to the General Statistics Office. The country appears on track to meet its target of 11.5 million foreign visitors this year.

To accommodate the increasing number of arrivals, new hotels have been popping up around the country. As with Ho Chi Minh City, international operators like IHG, Pan Pacific, Accor, Hilton, and Marriott already have hotels in Hanoi. “As observed elsewhere in Southeast Asia, we expect growth beyond international hotel brands,” said Mr. Adam Bury, Senior Vice President, Investment Sales, Asia Pacific, Hotels & Hospitality Group, at JLL. “Homegrown hotel brands are likely to come to the forefront, particularly catering to domestic travelers. We’re seeing domestic hotel brands being established in Ho Chi Minh City and Hanoi in the budget and mid-scale segments, and expect these chains to grow nationwide at a rapid pace.” 

There are also a number of notable projects currently under different stages of planning and construction along the coastline, while several projects remain in various pre-feasibility stages as the market continues to receive solid interest from developers in Da Nang and Hoi An. The soon-to-open Sheraton Hoi Tam Ky Resort and the master-planned Hoiana integrated casino development, which will include Vietnam’s first Rosewood hotel, both to the south of Hoi An, will further expand the length of the coastline accessible to visitors.

The Swiss hotel company Mövenpick Hotels & Resorts has recently signed up for a new property in Vietnam. Located in Da Nang, the property will have 150 rooms as well as 354 residences, a rooftop bar and restaurant, several other bars, a swimming pool, a fitness center, a spa, and a kids club, as well as a reception hall and meeting rooms. To open at the end of 2019, the new property is part of the Swiss hotelier’s widespread ambitions. 

“The property is being specifically designed to serve Vietnam’s rapidly developing tourism and business and MICE sector, while also meeting emerging demand for extended and long-term stays,” explained Mr. Andrew Langdon, CDO and Senior VP, Asia, at Mövenpick. “The growth within the country’s economy and a general increase in disposable incomes are driving domestic tourism and the property market simultaneously.” After the opening of the Mövenpick Hotel Hanoi, it has four hotels currently under development in Vietnam: Mövenpick Resort Cam Ranh Bay (2018), Mövenpick Hotel Quang Binh (2019), Mövenpick Resort Phu Quoc (2019), and Mövenpick Hotel Quy Nhon (2020). 

Development and investment in Nha Trang and Cam Ranh have historically been driven by domestic groups, but the growing profile of the two destinations is now starting to attract the attention of international investors, such as Westin Resort & Spa Cam Ranh, Mövenpick Cam Ranh Resort, and Champarama Resort & Spa, to name just a few. 

“Tourism in Vietnam has really been booming, particularly in the last two years, and the country is now on the fast-track to becoming an extremely popular destination,” Mr. Patrick Basset, Chief Operating Officer for AccorHotels Upper Southeast and Northeast Asia, told VET. 

Accordingly, AccorHotels will be opening another 15 hotels in the country by 2020, bringing its total portfolio to 39. The group is growing its presence in locations such as Phu Quoc Island, Hai Phong, Sapa, Nha Trang, and Hanoi. 

Solid prospects

The Vietnam National Administration of Tourism (VNAT) is forecasting a further 15 per cent increase in international tourist arrivals this year, to 11.5 million, and for the tourism sector to generate $20 billion in revenue. To facilitate these increases, the government has introduced an online visa system for short-term and business travelers from leading source markets and is also extending the waiver of visa requirements to more countries. The new e-visa granting procedures for foreign citizens implemented this year and new low-cost airlines are encouraging people to travel to Vietnam, boosting the need for quality accommodation and facilitating the growth of international hotels.

In the meantime, the dramatic rise in arrivals has gone hand-in-hand with significant infrastructure investment, as Vietnam is spending a greater amount of its GDP on infrastructure than any other Southeast Asian nation, according to JLL. The investment will lead to 2,000 km of new highways, urban railway networks in Hanoi and Ho Chi Minh City, and a slew of airport expansions and new builds. This is complimented by investments from both State and private airlines to expand and improve their fleets. 

According to Vietnam’s Tourism Master Plan to 2020, the country is looking to host 20 million international visitors by that time. The tourism sector is envisaged to create 3.5 million jobs and generate total revenue of $30 billion, which would represent approximately 10 per cent of GDP. These figures are growing into a much larger blip on the radar that’s drawing hotel investors and developers from around the world. 

“Vietnam’s growing tourism sector and thriving economy have promoted the hotel and resort market among foreign developers and investors,” Mr. Frank Sorgiovanni, Head of Research, Asia Pacific, at JLL Hotels and Hospitality Group, told VET. “As a result, a number of new hotel developments remain in the pipeline. Given the recent rapid growth in international visitor arrivals, continued marketing efforts, improvements to infrastructure, and the further development of human resources and services in Vietnam, the outlook for the tourism and accommodation sector is bright. New hotel supply will continue to be announced.”

“With the emerging tourism market expected to continue growing strongly over the next few years, the strong brand loyalty that exists will see more tourists continue to visit Vietnam. International brands have the power to heavily market their properties and in turn attract guests to Vietnam.”

Mr. Frank Sorgiovanni, Head of Research, Asia Pacific, JLL Hotels and Hospitality Group

“Vietnam is famous for its amazing natural scenery, friendly people, and cuisine. We look forward to seeing more destination-driven marketing campaigns by the Vietnam Tourism Board as well as TV series and write-ups on international media channels to promote Vietnam not only as a tourist destination but also an attractive MICE destination.”

Mr. Patrick Basset, Chief Operating Officer, AccorHotels Upper Southeast and Northeast Asia

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