220overview20of20vietnams20tourism20and20hospitality20landscape

VIETNAMS TOURISM AND HOSPITALITY MARKET Duong Thuy Dung, Associate Director

October 14, 2014

2 CBRE | VIETNAMS TOURISM AND HOSPITALITY LANDSCAPE

CONTENT

1. Regional Hotel Peformance

2. Vietnam Hotel Peformance

3. A glimpse on Phu Quoc

4. Hospitality Investment


REGIONAL HOTEL PERFORMANCE

Tourist Arrivals by Year

Source: Association of Southeast Asian Nations.

Vietnam has one of the smallest number of international visitor per

year in the region

0

5,000

10,000

15,000

20,000

25,000

30,000

Vie

t N

am

Thaila

nd

Ph

ilip

pin

es

Sin

gap

ore

Ma

laysia

Ind

on

esia

Tourist arr

ivals

('0

00)

2010 2011 2012 2013



Occupancy Rate (%) 4-5 star

Source: STR Data.

60%

62%

64%

66%

68%

70%

72%

74%

76%

78%

Dec-11 Jun-12 Dec-12 Jun-13 Dec-13

Hanoi HCMC Kuala Lumpur Bangkok Jakarta

Jun-14

Occupancy level also lowest compared to other cities



Average Daily Rate 4-5 star

Source: STR Data.

80

90

100

110

120

130

140


US

$/r

oo

m/n

igh

t


Jun-14

but ADRs have demonstrated a fair growth



Revenue per Available Room 4-5 star

Source: STR Data.

Jun-14 55

60

65

70

75

80

85

90

95


US

$/r

oo

m/n

igh

t


ensuring RevPAR levels remain above that of many regional competitors

VIETNAM HOTEL PERFORMANCE


INTERNATIONAL ARRIVALS

International Tourist Arrivals

Source: Vietnamese Government Statistical Office, Q3 2014.

-30%

-10%

10%

30%

50%

-

2

4

6

8

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

9M

20

14

Gro

wth

Ra

te (

%)

Arr

iva

ls (

Mill

ion

pe

rso

ns)

International arrivals Growth rate

International visitor arrivals to Vietnam have grown rapidly over the past

few years, but will have problems reaching the VNAT target (8 mil in2014)


China accounts for the largest proportion

INTERNATIONAL ARRIVALS STRUCTURE

Source: Vietnam National Administration of Tourism, Q3 2014.

International Tourist by Top 5 Countries, 9M 2014

0%

4%

8%

12%

16%

20%

-

400

800

1,200

1,600

2,000C

hin

a

Ko

rea

Ja

pa

n

US

A

Ta

iwa

n

% g

row

th y

-o-y

No

. o

f to

urists

('0

00

)

No. of tourists % growth y-o-y


Vacation tourists dominate the market

INTERNATIONAL ARRIVALS STRUCTURE

Source: Vietnam National Administration of Tourism, Q3 2014.

International Tourist by Purpose, 9M 2014

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2007 2008 2009 2010 2011 2012 2013 9M 2014

Inte

rna

tio

na

l To

urist A

rriv

als

('0

00

)

Leisure Business/MICE Others



Total Supply by Hotel rooms (3-5 star)

Source: CBRE Vietnam, Q3 2014.

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

HCMC Hanoi Da Nang Nha Trang Phu Quoc


Recovery on the way


Occupancy Rate (5 star)


30%

40%

50%

60%

70%

80%

90%

Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014

Occu

pa

ncy r

ate



Da Nang and Phu Quoc are leading the ADR growth


Average Daily Rate (5 star)


80

100

120

140

160

180

200

220

Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014

AD

R (

US

$/r

oo

m/n

igh

t)



Phu Quoc in a different class


Revenue per Available Room (5 star)


20

40

60

80

100

120

140

160

180

Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014

Re

vP

ar

(US

$/r

oo

m/n

igh

t)


A GLIMPSE ON PHU QUOC


Opportunities

PHU QUOC HOSPITALITY MARKET

Potential for eco-tourism and eco-resort development

Investors: A few number of top-tier hotels/resorts and no existing second home

villa creates a good opportunity for the hospitality investors

Hotel operators: lack of big brand names also creates a good opportunity for

international operators

eco

sss


150 km Phu Quoc has huge potential to

develop into a

favoured beach

escape

coastal length

99 scenic mountains

62% forest area

With


Concerns


Infrastructure: Poor infrastructure, low progress

on road upgrading

Facilities and amenities : Lack of international

hospitals, supermarkets or retail chains, nightlife,

bars and clubs

Master plan: Too many projects under planning

while local government keeps changing the

islands master plan

Labour force: Lack of skilled workforce

Development cost: High cost of construction

and operation s



New airport raises seat capacity by 60%


Source: Centre for Aviation (CAPA), Q2 2014.

New airport

115 Flights per week (current capacity)

187 max pax per flight (current capacity)

760,000 max pax per year (current capacity)

2,700,000 max pax per year (expected capacity in 2020)

Old airport

100 Flights per week

90 max pax per flight

450,000 max pax per year

Only domestic airlines area operating in Phu Quoc International Airport (Vietnam Airline, Vietjet Air and Jetstar Pacific)

New flights open soon:

Phu Quoc - Singapore: 2 flights/week starting

on November 2, 2014 (Airbus 321)

Phu Quoc Siem Reap: 3 flights/week starting December 18, 2014 (ATR-72)


100 establishments offering approximately 2,900 rooms

Only 15 (with 952 rooms in total) are classified as 3-5

hotels

All top-tier hotels in Phu Quoc are on the west side

of the island

Existing supply Limited & Small Scale Accommodation


Location of Top-tier Hotels in Phu Quoc


Operating Cost


ENERGY COST F&B COST

4-STAR

HOTELS IN

MAINLAND

4-STAR

HOTELS IN

PHU QUOC

4-STAR

HOTELS IN

MAINLAND

4-STAR

HOTELS IN

PHU QUOC

6-8%

TOTAL

REVENUE

12-15% TOTAL REVENUE

20-25%

TOTAL REVENUE

30-35%

TOTAL REVENUE


50-60% ENERGY COST DROPS WITH

POWER CONNECTED TO

NATIONAL GRIDLINE

Expected lower ADR => Phu Quoc become more attractive

destination

Increasing operating revenue as energy cost is expected to reduce significantly


Top-tier hotels in Phu Quoc are among the best performers

Small-scale hotels (from 17 to 43 keys) can achieve occupancy rates from 80% upward

Luxury four-star and three-star categories obtained average occupancy rates of above 80%, standard four-star hotels obtained average occupancy rates of around 60%.

Bungalow-style resorts achieve higher occupancy rates than block hotels as most of traveller are holiday-makers and like to stay in a nature-oriented accommodation

Market Leader in Vietnam


RevPAR of Top Hotels in Selected Coastal Provinces

70

80

90

100

110

120

130

Phu Quoc HCMC Nha Trang Phan Thiet Da Nang Hanoi Vung Tau

RevP

AR

(U

S$

/ro

om

/nig

ht)



Salinda Premium Resort and Spa open for booking now

Future supply Big Names Lining Up


VINPEARL PHU QUOC

NOVOTEL PHU QUOC RESORT BY

CEO GROUP

INTERCONTINENTAL BY

BIM GROUP

SUNSET SANATO


HOSPITALITY INVESTMENT


Ho Chi Minh

City

Hanoi

HOSPITALITY INVESTMENT Big investments are seeping into hospitality sector

Acquired project from Ha Do Group Source: Compiled from various sources, Q3 2014.

POSITION INVESTORS /

DEVELOPERS COMPONENTS VALUE

Sapa Sun Group

Fansipan cable car

Hotel

Entertainment complex

$206 mil.

Hanoi Thanh Hoa

Construction Corp. * 4-star Hotel -

Quang

Ninh

Nakheel

Sovico Holding Urban- tourism complex $550 mil.

VinGroup Resort complex $45 mil.

ISC Corporation

Tuan Chau

Casino

Recreation complex $7,000 mil.

Hai Phong VLC 200-room hotel/Accor

24 serviced apartments -

Thanh Hoa FLC Group 18-hole golf course,

Resort complex $257.5 mil.

Phu Yen Vung Ro Petroleum Resort complex $2,500 mil

Phu Quoc

VinGroup 27-hole golf course

Resort complex $796 mil.

CEO Group Resort complex

406-room Hotel (Novotel) $210.7 mil.

BIM Group Resort complex

400-room Hotel (Crowne Plaza) $70.2 mil


36%

29%

6%

7%

21%

1%

Hotel

Office

Development site

Apartment

Retail

Industrial

Hotel accounts for 35%

transactions and 36% value

Office accounts for 20%

transactions and 29% value

Development sites account

for 26% transactions but

only 6% value

Retail accounts for 21%

value although only 6% of

transactions


Proportion is calculated based on transactions made during 2011 1H2014 Source: RCA, Sep 2014

35%

20%

26%

11%

6%

2% Hotel

Office

Development site

Apartment

Retail

Industrial

54

TR

AN

SA

CT

ION

S

TO

TA

L V

AL

UE

US

$1

,498 M

IL

Hotel is the most sought-after property (2011-2014)


The number of hotel sales in Vietnam has dropped in 2009 as a

consequence of lack of liquidity and concern about future performance.

In 2009, lower prices, additional liquidity and more stable economic

conditions have helped increase the sales volume.

Increasing number of hotel transactions since 2009


3

7

3

1

3

7

3

5

2

0

1

2

3

4

5

6

7

8

-

50

100

150

200

250

300

350

2006 2007 2008 2009 2010 2011 2012 2013 YTD2014

US

$ M

illio

ns

Total Value Number of transactions

Source: RCA, Sep 2014


The market experienced the highest transacted price per room in 2013

Highest transacted price per key recorded in 2013



-

100,000

200,000

300,000

400,000

500,000

600,000

2006 2007 2008 2009 2010 2011 2012 2013 YTD2014

Tra

nsa

ctio

n p

rice

pe

r ke

y

(US

$)

Transaction price per key (min-max range)


Key indicators


Hotel Office Retail Apartment Dev Site

No. of

transactions 19 11 3 6 14

Size No. of rooms sqm sqm No. of apartments Sqm/ ha

Range 54-411 2,240 - 31,562 6,880 - 55,000 260 - 550 2,994 sqm - 7.8ha

Average 171 18,261 33,778 407 18,521 sqm (*)

Value

Range US$5.2-$155.2 mil US$5.1-$67.4 mil US$5.3-$314 mil US$10.7-$43.2 mil US$7.3-26.7 mil

Average US$31.81 mil US$43.87 mil US$159.65 mil US$20.62 mil USS$12.56 mil

Value per unit per room per sqm per sqm per apartment per sqm

Range US$38,267-$531,652 US$1,428 - $3,749 US$776-$7,958 US$24,280 - $78,596 US$185-$2,036

Average US$153,352 US$2,514 US$4,367 US$47,422 US$936

Key markets HCMC, Hanoi, Hoi An HCMC, Hanoi HCMC HCMC, Hanoi HCMC, Hanoi

Cap Rate N/A 8.5%-13.6% N/A N/A N/A

(*) Exclude Alaska Garden of 7.8ha



HOSPITALITY TRANSACTIONS 2012 - YTD2014

Source: RCA, retrieved September 2014.

MOVEMPICK SAIGON

LIFE WELLNESS RESORT LOTTE LEGEND HOTEL HANOI DAEWOO HOTEL

Location: HCMC

Seller: VinaCapital

Buyer: Tung Shing

Amount: $30.4 mil

Location: Hanoi

Seller: Daewoo

Buyer: Hanel

Amount: $114.0 million

Location: HCMC

Seller: Vinaland + Kotobuki

Buyer: Lotte

Amount: 65.1

Location: Quy Nhon

Seller: IBUS

Buyer: Minor International


VINPEARL LUXURY SHERATON NHA TRANG

Location: HCMC

Seller: Vingroup

Buyer: VIPD Group


Location: Nha Trang

Seller: Vinaland

Buyer: n/a

Amount: $42 million

LIFE HERITAGE RESORT

Location: Hoi An

Seller: IBUS

Buyer: Minor International


CENTURY RIVERSIDE HOTEL

Location: Hue

Seller: Crowndale International

Buyer: Hue People Committeel



Domestic Players Dominate both Buyers and Sellers

VIETNAM INVESTMENT

Domestic 63%

Japan 6%

Korea 13%

Offshore 4%

Singapore 8%

Taiwan 2%

Thailand 4%

Domestic 54%

Hong Kong 15%

Japan 2%

Korea 13%

Malaysia 3%

Netherlands 5%

Offshore 8%

Domestic

Hong Kong

Japan

Korea

Malaysia

Netherlands

Offshore

(blank)

Data recorded during the period of 2011- YTD 2014


BUYERS SELLERS

Singapore

Taiwan

Thailand

Koreans are active in both selling (Kumho Asiana, Daewoo) and buying (Lotte, CJ, Asiana Airlines).

Singaporeans have become active buyers (Keppel, Mapletree, Capitaland, Ascott).

Proportion is calculated based on transactions made during 2011 1H2014 Source: RCA, Sep 2014


VIETNAM INVESTMENT Continued pockets of interest from overseas investors

VALUATION TRANSPARENCY STRUCTURING TRACK RECORD

Significant and varied interest in Vietnam but investors (and agents) frustrated by limited deal opportunities;

Demand for deals continues to significantly outstrip supply particularly for operating assets in city centre (HN and HCMC);

For the majority of deals the big four questions still remain - Without a realistic and honest approach to these, foreign investors will look elsewhere.

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2014 CBRE (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CBRE (Vietnam) Co., Ltd. We obtained some of the information above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make no guarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for example only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.

For more information regarding this presentation please contact: CBRE Vietnam Co., Ltd. Research & Consulting T +84 8 3824 6125

F +84 8 3823 8418

[email protected]

220overview20of20vietnams20tourism20and20hospitality20landscape

Documents

y10 cbre vietnams tourism

hospitality landscape

hospitality landscape

vietnam hotel peformance

star source

hospitality investment

regional hotel peformance

hotel rooms