hotels & hospitality group | july 2017 vietnam...many local tourism organisations and operators...
TRANSCRIPT
Hotels & Hospitality Group | July 2017
Vietnam Spotlight on the Accommodation & Tourism Industry
THAILAND
CAMBODIA
Hanoi
Sapa
Dalat
Halong
Hue
DanangHoi An
Nha Trang
Phan Thiet
CHINA
GULF OF THAILAND
HAINAN
ISLAND
Ho Chi Minh City
Yangon
Phu Quoc
HanoiCapital of Vietnam
94.4 million Resident Population in 2016
310,070 km2 Land Area
USD205.3 million 2016 Norminal GDP
ForewordVietnam has undergone an astonishing 30 years of development. The World Bank's outlook for the Vietnamese economy remains highly positive, with average GDP growth of around 6% forecast annually until 2020, whilst Oxford Economics forecast that by 2020 Vietnam’s economy will be growing faster than China, Indonesia, Malaysia, Philippines, Singapore and Thailand.
Economic and political reforms have spurred rapid growth, previously high inflation is now under control with the average inflation rate in 2014 – 2016 standing at 2.5% and the exchange rate being stable over recent years. These factors continue to transform the country, with the middle class expected to grow by 18% from 2016 – 2020, providing one of many catalysts for the rapidly growing tourism industry.
Vietnam's wealthiest are also set to get much richer. In fact, the dramatic growth of "Ultra High Net Worth Individuals" in Asia (which is typically regarded as someone with a net worth of above USD 30 million) is set to be reinforced by stellar growth rates in Vietnam, which is expected to see its ultra-wealthy population rise by the highest rate of growth in the world.
Vietnam’s rapid economic development has been led by an industrial renaissance, particularly as multi-national manufacturers look to diverse their operations across developing Asia in a so-called ‘China + 1’ strategy. The political stability, pro-business environment and ‘golden age’ demographics which see 25% of the population being between 10 and 24 years of age has attracted a range of investors from neighbouring Asian’s nations including South Korea, Japan, Taiwan and Singapore.
In terms of Vietnam’s accommodation demand, there were over ten million international arrivals into the country in 2016, a 26% increase on the year prior. This is the first time Vietnam welcomed over ten million foreign visitors, reflecting the country’s growing status as a business destination and tourist hotspot, this is set to double by 2020.
The industrial renaissance has driven corporate demand for hotels across the country, whilst visa exemptions, the introduction of new direct air routes and improved marketing efforts have boosted the country’s appeal to leisure travellers. Like much of Southeast Asia, leisure demand has been driven by Mainland Chinese tourists which hit a record last year in terms of arrivals growth.
2
Forecast International Arrivals
6,014,032
11,500,000
20,000,000
10,012,735
2011 2016 2017F 2020F
Vietnam recently announced it would renew its 15-day visa exemption policy for citizens of Germany, France, Britain, Italy and Spain until the end of June 2018, whilst the majority of Asian nations are already visa exempt and some other European countries are also exempt.
The first five months of 2017 saw the country welcome over five million international travellers according to the Vietnam National Administration of Tourism (VNAT), increasing 26% over the same period last year. The country appears on track to meet its annual target this year of 11.5 million foreign visitors.
We cannot discount the mammoth growth of domestic tourism and what it also means for the country's hospitality sector - complimenting foreign arrivals. In 2015, Vietnam recorded 57 million domestic visitors which was an astonishing 48% growth on the previous year. The domestic tourism stimulus program, themed “Vietnamese travel in Vietnam – Each journey to love the fatherland more” was launched in 2014 and has heavily contributed to the increase of locals travelling domestically.
Many local tourism organisations and operators supported the program by boosting advertising and marketing activities. In addition, Vietnam Airlines, Vietjet Air and JetStar Pacific joined the program, offering discounts to various destinations which has underpinned the tremendous growth in airlift recognised over the past two years.
Vietnam's growing tourism and thriving economy have promoted the hotel and resort market with foreign investors from across the region showing significant interest in Vietnam over the past 18 months - the country has become one of the most talked about markets in Asia Pacific. After the recent rebranding of Hoi An’s The Nam Hai, which is now under Four Seasons management, an ever increasing range of resort locations are expected to gain greater attention from international hotel operators, whilst investors continue to circle for deals.
Largest Source Markets (2016) Highest Growth Source Markets (2016)
2,696,848 51.4% y-o-y
67.5% y-o-y
1,543,883 38.7% y-o-y
51.4% y-o-y
740,592 10.3% y-o-y
38.7% y-o-y
3
Mirroring the activity occurring on ground, Vietnam's skies are seeing brisk transformation. Majority state-owned Vietnam Airlines was the second airline in the world to be operating both the Boeing 787 Dreamliner and the Airbus A350-900. Whilst VietJet Air has transformed the low cost carrier scene in Vietnam, the group which operates both domestically and internationally alongside competitors including JetStar, placed an order for 100 Boeing jets in 2016 as it targets to operate 200 aircraft by 2023.
The precipitous growth rate in demand for air travel is unlikely to slow. AirAsia boss Tony Fernandes is said to be planning the launch of AirAsia Vietnam to tap into the increasing spending power. To cope with this growth the government is investing heavily on its airport infrastructure in both the financial hubs of Hanoi and Ho Chi Minh City, as well as in coastal resort areas and provincial cities across the country.
Infrastructure
Vietnam’s rapid economic development has been underpinned by significant infrastructure and transport spending. In a country famous for its motorbike usage, automobile sales have surged in recent years, as wealth has grown and tariffs on cars have been reduced. Car sales reached 304,427 in 2016, a 24% increase on the previous year.
Recognising this demand, the 2020 Transport Master Plan is targeting to construct 2,000 km of highways, including the much anticipated North-South highway linking Ho Chi Minh City and Hanoi, which is envisaged to complete in approximately three years. Further, the addition of numerous over-passes in both Hanoi and HCMC is accommodating the ever increasing number of vehicles on the roads.
Source: Asia Development Bank
Infrastructure Spending as a % of GDP
China
Vietnam
India
Indonesia
Myanmar
Singapore
Philippines
Malaysia
Thailand
6.8 %
5.8 %5.5 %
2.6 %
2.5 %
2.3 %
2.3 %
1.8 %
1.6 %
Investment
4
5
Rail & Metro A high-speed railway between Ho Chi Minh City and Hanoi is
being considered in a bid to significantly reduce travel times and
provide an alternative to flying. There are also plans to update
the country’s existing railway system to increase travelling speeds
to 80-90 km/h from the existing 60-70 km/h.
Enhancing the already popular Ho Chi Minh City – Phan Thiet
Mui Ne route, a new five-star service was launched in March 2017
which will increase domestic and international arrivals to the
coastal destination.
With a total of eight lines, construction is now underway for
Hanoi’s first metro system, of which six lines are expected to be
fully operational by 2030. Upon its commission, the pilot Nhon-
Hanoi line is expected to transport around 157,000 passengers a
day, reaching full capacity of up to 750,000.
Ho Chi Minh City’s first metro system is also underway, with two
of the eight planned lines scheduled for completion in three
years. Metro Line 1 will connect Ben Thanh Market and Suoi Tien
Theme Park, linking Districts 1 and 9. Metro Line 2 will connect
Districts 1, 3, 10 and 12 as well as Tan Binh and Tan Phu Districts.
Road Hanoi’s opening of the Noi Bai–Lao Cai expressway in 2014 has
drastically improved connectivity and reduced travel times
between Hanoi and Lao Cai. The road is part of the Kunming –
Hai Phong Transport Corridor linking Vietnam with China, that
also includes the recently completed Hanoi – Hai Phong Highway
which has reduced the travel time between the capital and the
strategically important port city from 2.5 hours to 1.5 hours.
Further expressways have been built providing direct connectivity
between the major industrial zones of Bac Ninh and Thai Nguyen.
These investments will continue to dramatically enhance the
industrial landscape and potential of northern Vietnam, as well
as potentially facilitating overland travel for Mainland Chinese
tourists into Vietnam.
In Ho Chi Minh City, an upgrading and widening of National
Highway 22 has been proposed. A new expressway running
parallel to the Highway has also been recommended. Once
completed, the expressway, together with National Highway
22 and belt roads No.3 and 4 will better connect Vietnam with
Thailand and Cambodia.
Also on the outskirts of Ho Chi Minh City, the new HCMC – Long
Thanh – Dau Giay Highway has dramatically reduced travel times
to Phan Thiet Mui Ne – a journey know to often take 5 – 6 hours
can now be completed in less than 4 years. A further extension of
this highway has been proposed which will further reduce travel
time.
accommodate greater tourism demand in the Hai Phong region,
renowned for its proximity to Ha Long Bay. This expansion, which
caters for four million passengers and wide body aircraft also
seeks to reduce existing pressure on Noi Bai Airport. The airport
currently serves direct flights mainly to key source markets of
China, South Korea, Japan and Thailand.
Khanh Hoa province is planning to build an additional
terminal by 2018 at the Cam Ranh International Airport (Nha
Trang), which will be used exclusively for international flights.
Its current terminal will be converted for domestic use. Phu
Quoc International Airport’s passenger terminal is also set for
expansion to increase the terminal’s capacity to four million
passengers.
Phan Thiet is also likely to benefit from a new airport over the
coming years to facilitate airlift to this dynamic coastal city and
resort destination. Initially scheduled to complete in 2019, the
airport will have a capacity at opening of 500,000 and rising to
one million in subsequent expansions.
Air Expansion plans are underway for a “Noi Bai 2” airport in Hanoi
which will allow for 35 million passengers a year by 2030 and
up to 50 million thereafter. A USD 1.7 billion expansion plan has
been announced for the existing Noi Bai International Airport.
In Ho Chi Minh City, expansion plans for the existing Tan Son
Nhat International Airport are set to increase passenger capacity
to 45 million from the current 25 million by 2025.
A new airport, Long Thanh International Airport, will be built in
the southern province of Dong Nai to share the load with Tan
Son Nhat International Airport. Construction is expected to begin
in 2019. With capacity potentially reaching 100 million arrivals
per annum the new airport will not only support arrivals into
Ho Chi Minh City, but facilitate increased demand for tourism
destinations in the south of Vietnam including the Ho Tram Strip
and Phan Thiet Mui Ne by reducing travel time from the current
airport and Ho Chi Minh City.
Cat Bi International Airport, located 105 km away from Noi Bai
International Airport in Hai Phong, was also recently expanded to
76
76
Vietnam Tourism
Approved in 2013, Vietnam’s Tourism Master Plan 2020 was designed to provide a blueprint guiding Vietnam’s future tourism development.
By 2020, Vietnam is looking to host 20 million international visitors. The tourism industry is envisaged to create 3.5 million jobs in the tourism sector, generating a total revenue of USD 35 billion which will account for approximately 10% of Vietnam’s GDP. By 2030, total tourism revenue is expected to double that of 2020.
Seven tourism areas have been earmarked for further development due to their unique destination offerings. The seven key tourism areas will seek to provide a host of attractions that will cater to a wider range of tourists.
2020Master Plan
988
Map of Vietnam
Midland & Mountainous areas in North Vietnam Hoa Binh, Son La, Dien Bien, Lai Chau, Yen Bai, Phu Tho, Lao Cai, Tuyen Quang, Ha Giang, Bac Kan, Thai Nguyen, Cao Bang, Lang Son & Bac Giang Provinces
Proposed Product Offerings Eco-cultural tourism Ethnic minority tourism
Red River Delta & Coastal North-East VietnamHa Noi, Hai Phong City, Vinh Phuc, Bac Ninh, Hai Duong, Hung Yen, Thai Binh, Ha Nam, Ninh Binh, Nam Dinh and Quang Ninh Provinces
Proposed Product Offerings Sea & water attractions Cultural tourism –
Local activities & wet rice cultivation Urban city tourism MICE
North-Central VietnamThanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri & Thua Thien-Hue Provinces
Proposed Product Offerings World heritage sites Marine tourism Eco-cultural tourism Historical tourism
South-Eastern VietnamHo Chi Minh City, Dong Nai, Binh Duong, Ba Ria-Vung Tau, Binh Phuoc, & Tay Ninh Provinces
Proposed Product Offerings Historical tourism
Marine & ecological tourism
Resorts
Urban city tourism
MICE
Coastal South-Central VietnamDa Nang City, Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ninh Thuan & Binh Thuan Provinces
Proposed Product Offerings Marine & ecological tourism
Resorts
Food, beverage & dining tours
Heritage tourism
Mekong DeltaLong An, Dong Thap, An Giang, Kien Giang, Ca Mau, Bac Lieu, Soc Trang, Ben Tre, Tra Vinh, Vinh Long, Tien Giang, Hau Giang Provinces & Can Tho City
Proposed Product Offerings Eco-tourism
River life
Marine & ecological tourism
MICE
Central HighlandsKon Tum, Gia Lai, Dak Lak, Dak Nong & Lam Dong Provinces
Proposed Product Offerings Eco-cultural tourism
Ethnic minority tourism
98 9
Ho Chi Minh CityInternational visitor arrivals have consistently been on an upward trend in Ho Chi Minh City and 2016 was a record breaking year reaching 5.2 million arrivals, an uplift of almost 11% year on year.
The city enjoys strong corporate support and is increasingly recognised as a centre for business in Vietnam. Ho Chi Minh City is also a leisure destination with its many museums, shopping and developing food and beverage scene.
A wide range of international upscale and luxury hotel brands are already well represented in Ho Chi Minh City. These include IHG, Accor, Marriott and Hyatt. Domestic hotel brands in the upscale and luxury segment are more prevalent compared to Hanoi, providing some competition to these international operators. These include the Reverie Hotel, Caravelle Hotel, Hotel Majestic and the Rex Hotel.
Similar to trends witnessed in neighbouring countries including China, Indonesia and Thailand, there is an emerging budget and mid-scale travel scene, with local operators such as A & Em, Alagon, Odyssea and SilverLand being just a few of the groups participating in this segment. It is expected that this trend will continue to grow across the country.
Over the next three years, approximately 3,500 rooms across thirteen individual hotels are set to open across the city.
Hotels in Ho Chi Minh City are witnessing growth in demand from Chinese independent travellers and groups which are increasingly booking through online travel agents (OTAs). Other growth markets include Australia, Malaysia, Singapore and Hong Kong.
While Japan and Korea remain key source markets, brand recognition is a factor in where a guest ultimately chooses to stay. In terms of corporate source markets, a high proportion of total inbound arrivals comes via these two countries which both have a history of heavily investing in local real estate and manufacturing.
Tourism initiatives within the city are also driving demand over the short to medium term. A key initiative is the proposed revamp of the city’s waterway tourism programme, which aims to leverage on Ho Chi Minh City’s vast canals and rivers to develop waterway tourism, potentially including floating markets.
Local authorities are also expanding in new areas such as farm and sports tourism. An example is the proposed partnering with nearby outlying areas such as Can Gio and Hoc Mon districts to promote leisure and culinary attractions.
10
Project Name Planned Year of Opening Positioning No. of Rooms
Ascott Waterfront Saigon 2017 Upscale 217
Citadines Regency Saigon 2018 Upscale 200
Hotel Majestic (Expansion) 2018 Upscale 325
Holiday Inn & Suite Saigon Airport 2018 Midscale 350
VinPearl Hotel (Landmark 81) 2018 Luxury / Upscale 450
Dragon Tower 2019 Upscale 120
Hilton Saigon 2019 Upscale 350
Okura Prestige Saigon 2020 Luxury 250
Ritz-Carlton Saigon 2020 Luxury 250
Ibis Ben Thanh Palace TBC Midscale 338
Eden Hotel (Union Square Hotel) TBC Luxury / Upscale 300
Source: JLL
11
In Hanoi, international visitor arrivals reached a record four million in 2016, an increase of 21% year on year. Around 3,000 rooms in 12 hotels are due to open in Hanoi, with most of this new supply in the upscale segment, which will support increasing corporate demand.
International operators IHG, Pan Pacific, Accor, Hilton and Marriott currently have their hotel brands in the market. In contrast to Ho Chi Minh City, there are very few domestically operated hotels in the upscale and luxury segments, with the Apricot Hotel, a boutique luxury hotel located on the west of Hoan Kiem Lake, one of the few to compete with the international brands on average room rates.
The majority of locally operated hotels cater to the midscale and budget segments, especially in the popular ‘Old Quarter’ which is dominated by low cost and backpacker accommodation.
Samsung is a major driver of corporate room demand. The Korean electronics giant produces almost half of its smartphones at two factory complexes in Bac Ninh Province and Thai Nguyen Province, near Hanoi. Samsung has
invested USD $14.5 billion in Vietnam, according to Vietnam's Association of Foreign Invested Enterprises, equivalent to 10% of the country's total foreign investment over the past three decades.
There does however appear to be an element of dependence on Samsung from selected Hanoi hotel owners with some accommodation operations thought to generate as much 80% of their total room nights sold from the group. To achieve sustainability, diversification of room night sources will be key as the market continues to mature.
Local government authorities have recently called on potential investors to focus on further developing existing tourism areas of West Lake and Red River in Hanoi, which comes on the back of ongoing plans to establish an exclusive tourist zone in Dong Anh District.
Hanoi
12
Project Name Planned Year of Opening Positioning No. of Rooms
Novotel Ciputra Hanoi 2017 Midscale 250
Mercure Hanoi 2017 Upscale 100
Novotel Hanoi Thai Ha 2017 Midscale 345
Somerset West Point Hanoi 2017 Upscale 247
Somerset West Central Hanoi 2018 Upscale 252
Park Hyatt Hanoi 2018 Luxury 300
Westin Hanoi 2019 Upscale 212
InterContinental Hotel Landmark 72 2020 Luxury 359
Holiday Inn Hanoi Dong Da 2020 Upscale 300
Hilton Hanoi West Lake 2020 Upscale 240
DoubleTree by Hilton Hanoi West Lake 2020 Midscale 370
Four Seasons Hanoi 2020 Luxury 100
Vietin Bank Tower 2020 Upscale TBC
Source: JLL
13
Danang City is the major economic hub of central Vietnam. Like Ho Chi Minh City and Hanoi, recent years have seen improved economic fortunes, predominantly driven by industrial manufacturing and production. The city is also slowly gaining a reputation for its tech-savvy workforce with some referring to it as the Silicon Valley of Vietnam. Danang City and the surrounding areas are also one of the major resort destinations in Vietnam.
The area features a coastline of scenic beaches, including the famous My Khe Beach. There are three UNESCO World Heritage Sites located within 100 km of Danang, namely the 16th century silk route trading port of Hoi An, My Son Valley which features the remains of the ancient Cham civilization, as well as the ancient imperial city of Hue.
Other attractions in the area include the Marble Mountains, Hai Van Pass Son Tra peninsula and the Ba Na Hills resort area. In addition, Danang features numerous world-class golf courses including Montgomerie Links and a thriving casino connected to the Crowne Plaza hotel and forth coming JW Marriott.
Danang City and the adjacent province of Quang Nam have agreed to co-operate to develop into a major economic hub, with a focus on tourism. Danang and Quang Nam have also joined Thua Thien-Hue Province for the "Three localities, One Destination" program, promoting popular tourist products, natural attractions, and the historical and cultural heritage of the central region.
There are a number of notable projects currently under different stages of planning and construction along the coastline whilst several projects remain in various pre-
feasibility stages as the market continues to receive solid interest from developers. The soon to be open Sheraton Hoi Tam Ky Resort and master-planned Hoiana integrated casino development that will include Vietnam’s first Rosewood hotel, both to the south of Hoi An old town, will further expand the length of coastline accessible to visitors.
In addition to the forthcoming second casino, Hoi An’s credibility was further enhanced in late 2016, when the newly-rebranded Four Seasons Resort The Nam Hai, Hoi An, started welcoming guests, marking the group’s first foray into Vietnam.
International airlift has grown substantially as the airport, freshly expanded with a new terminal opening in the first quarter of 2017 that now has a capacity of circa. 6.5 million arrivals per year. The airport is the third largest in the country after Noi Bai International in Hanoi and Ton Son Nhat in Ho Chi Minh City. A key opportunity for Danang is in further improving flight connectivity, AirAsia Thailand started operating a Bangkok-Danang route in April 2017, and further growth in such flights to larger travel hubs with European connections are welcomed.
The expanded airport is part of Danang’s preparations to host the 2017 Asia Pacific Economic Conference (APEC) Summit in November. Hosting APEC will bring much focus to Vietnam's stellar growth as one of Asia's emerging economies further promoting its MICE capabilities nationally. By hosting the forum, Vietnam hopes it can make practical contributions to APEC’s development and increase the efficiency of APEC cooperation, while boosting the country’s partnership with other member economies.
Danang & Hoi An
1514
Project Name Planned Year of Opening Positioning No. of Rooms
Hilton Danang 2017 Upscale 226
Sheraton Danang 2017 Upscale 250
CocoBay Project 2017 Midscale TBC
Mercure Son Tra Resort 2018 Upscale 142
The Empire Residences & Resorts 2018 Upscale 350
Hoi An Marriott Resort & Spa 2018 Upscale 250
Wyndham Hotel 2019 Upscale 568
Source: JLL1514
Whilst supply remains in the pipeline, the presence of a greater variety of international brands and accommodation is expected to attract more demand to Nha Trang and Cam Ranh. However, the success of this destination will remain dependent on the volume of inbound flights and airport air capacity.
Cam Ranh International Airport currently connects Nha Trang to international destinations including Russia, Mainland China and Korea. Moving forward, more air connectivity is expected, both in the form of domestic flights and international connections to regional Asian destinations, when a new runway is added.
Development in the area has historically being concentrated around Nha Trang City, with properties fronting the beach front promenade of Tran Phu street, or the roads running parallel to and behind it. Recent years has seen a growth in development of the Cam Ranh area. Cam Ranh is known for its natural surroundings, most obviously pristine beaches, recent development have included the Fusion Maya resort whilst international operators including Movenpick and Radisson will shortly see arrivals to the market.
Development and investment in Nha Trang and Cam Ranh has historically been driven by domestic groups, but the growing profile of the destinations is now starting to attract the attention of international investors also.
Like elsewhere in the country, the local economy is strengthening. The recent revival of the Van Phong Port Project, set to be located in Van Phong Bay in Khanh Hoa province, north of Nha Trang, will bring further commercial development to the area. Once completed, the project is targeted to be the largest port in Vietnam.
Given its proximity to the port, Nha Trang is well-positioned to receive any spill over in corporate demand which is anticipated to increase following the completion of the port. This will likely diversify demand to a destination currently known more for its leisure tourism offerings, as well as opportunities to develop MICE tourism.
Nha Trang & Cam Ranh
1716
Project Name Planned Year of Opening Positioning No. of Rooms
Eastin Duyen Ha Resort 2017 Upscale 651
Westin Resort & Spa Cam Ranh 2018 Upscale 330
Movenpick Cam Ranh Resort 2018 Upscale 488
Alma Resort Nha Trang 2018 Upscale 600
Champarama Resort & Spa 2018 Luxury 134
Dusit Thani 2019 Upscale 276
A&B Central Square 2019 Upscale 484
Radisson Blu Cam Ranh Bay 2019 Upscale 290
Vogue Resort Cam Ranh 2020 Upscale 250
Source: JLL
1716
Previously a relatively untouched resort destination, Phu Quoc has seen dramatic development over the past couple of years with some of the nation’s largest developers having targeted the island. The small amount of internationally branded product which previously existed has increased with recent openings and will do so further with those in the pipeline.
Several infrastructure projects are under construction on the island, namely major road works, as well as plans to increase the capacity of the airport. Work continues on Phu Quoc International Passenger Port, set to be built in Duong Dong Town, Phu Quoc’s main town. The new port is designed to handle cruise liners carrying 5,000 to 6,000 visitors and 20,000 tonne cargo ships.
Phu Quoc is unique across Vietnam in offering a 30-day visa exemption for all nationalities – a move directly aimed at promoting leisure travel to the island. The visa exemption has undoubtedly helped to put Phu Quoc on the radar of visitors and therefore created demand for more flights to the island.
Currently, there are approximately 6,000 hotel rooms and guesthouses located in Phu Quoc. The majority of the
accommodation can be categorised as small guesthouses, economy and midscale hotels which are owner operated. It is notable that the hotel industry in the upscale segment is likely to be challenged in the short term, as this existing supply will be added to by a notable pipeline of new developments just entering or set to enter the market over the next three years.
Key source markets include Europeans from France, Germany, Switzerland, Scandinavian countries, the UK and Sweden as well as expatriates working in Vietnam and regional visitors from Singapore, South Korea and Japanese. Direct charter flights from China, Guangzhou in particular, have also seen an increase in Mainland Chinese visitors to the island.
There is also some supply side pressure in the second home market, especially the "condotel" model where barriers to entry are lower as compared to some other real estate developments. This condotel or condominium market began to flourish around two years ago in Vietnam resulting in new supply in some coastal cities and resorts, including Phu Quoc. If infrastructure and health care services improve, the opportunities for retirees to relocate to these more agreeable living conditions may provide further demand for this accommodation.
Phu Quoc
1918
Project Name Planned Year of Opening Positioning No. of Rooms
Novotel Phu Quoc Resort 2017 Upscale 366
JW Marriott Phu Quoc Emerald Bay Resort & Spa 2017 Luxury 243
Sol Beach House Phu Quoc 2017 Upscale 284
Moevenpick Phu Quoc 2017 Upscale 300
Crowne Plaza Phu Quoc Starbay 2017 Upscale 300
InterContinental Phu Quoc Long Beach Resort 2018 Luxury 459
Regent Phu Quoc 2018 Upscale 150
Pullman Phu Quoc 2019 Upscale 313
Fusion Suites Phu Quoc 2019 Upscale 97
Soansea Villa & Resort 2019 Midscale 360
Eastin Resort Phu Quoc 2020 Upscale 220
Premier Village Phu Quoc 2020 Luxury 120
Sunset Sanato TBC Midscale 99
Sailing Club Phu Quoc TBC Upscale TBC
Mini House Waterfront TBC Upscale TBC
Ritz-Carlton Reserve TBC Luxury TBC
Source: JLL1918
Vietnam Hotel & Tourism Market Outlook
Vietnam has enjoyed rapid growth in foreign tourist arrivals and has already exceeded the target of ten million international arrivals by 2020 originally set by VNAT.
VNAT is forecasting a further 15% increase in international tourist arrivals to 11.5 million in 2017 and for the tourism sector to generate USD 20 billion in revenue. To facilitate the increase, the government has introduced an online visa system for short-term and business travellers from top source markets and is also extending the waiver of visa requirements to more countries.
As a result of the rapid growth in international tourist arrivals and revenue, the 2020 target has been revised upwards to 20 million generating USD 30 billion in tourism revenue and creating 3.5 million jobs in the tourism sector, up from the initial target of three million jobs.
This growth will be driven by a number of key strategies and increased investment into tourism product development to leverage the existing strengths in the country’s existing tourism industry, as well as developing new areas.
As infrastructure investment continues apace and is matched by equally entrepreneurial private groups investing into the transport and hospitality sectors, Vietnam is likely to see a further opening up of destinations. Those already mentioned which set to benefit from this spending include Nha Trang
& Cam Ranh, Mui Ne and Phu Quoc which are breaking the strangle hold on arrivals and tourism spending that is currently held by Ho Chi Minh City, Hanoi and Danang/Hoi An.
As these destinations continue to rise so do those behind them. Halong Bay in the north of Vietnam has long been a mainstay of tourist itineraries, other destinations which may begin to flourish behind those listed include Sapa in the mountainous north, the idyllic beaches of Quy Nhon located midway between Danang and Nha Trang, as well as the beaches surrounding Ho Chi Minh City, including Ho Tram.
International casino developers have been circling Vietnam given the recent lifting of a ban on local gambling. Many hotels across the country have chosen to add electronic gaming to boost revenues. In the south, whilst initially criticised by some during its opening phase, the Ho Tram Grand project continues to mature, the second phase of 559 rooms is currently under construction and slated to open in 2018, whilst a third phase has also been announced. Phu Quoc is another destination likely to benefit from casino operations in the coming years.
Whilst casino projects across Asia have often being much maligned by industry and mainstream press, particularly highlighting the social ills, Melco Crown Philippines was recently recognised as being the best performing casino stock
20
globally in 2017 and demonstrates that financial success can be achieved with the right planning and thus investors will continue to pursue such opportunities.
It has long been perceived that Vietnam struggles to attract repeat visitors, particularly in the leisure sector. Historically, tourism demand has been from European arrivals content on a two-week trip from north to south (or vice-versa) to tick off the key attractions. Those repeat visitors were likely those who come back to Vietnam for work, or are overseas-based Vietnamese visiting relatives.
Our observations show this trend of one-time only visits is changing – in part a reflection of the shift in arrival demographics to Asian nations. Investment into tourism-related industries by government and private enterprises has also enticed repeat visitation.
Vietnamese culture, and food in particular, has been well promoted. The country is quickly becoming a 'foodie' destination with a vastly improving food and beverage scene, from local driven beer gardens to hip coffee shops to the almost weekly opening of a new gourmet restaurant. The food and beverage scene is now such that the orange helmets of the famous Saigon Vespa Food Tour are now a regular site even outside five-star properties in the city.
Golf is another area where Vietnam has sought growth – demand for the four Championship courses in Danang and Hoi An has driven a mini-surge in Korean arrivals keen to test themselves against the courses. This is on the back of the inaugural Ho Tram Open, won by current Masters Champion Sergio Garcia, which was Vietnam’s richest ever sporting event with a total purse of US$1,500,000.
Historically, the lack of funding applied to marketing Vietnam was a regular critiscism, with it being suggested that stronger support would further drive tourism growth. There is a significant return to be made for the wider economy by increasing marketing investment, a key component to promoting repeat visitation. Given the growth and success that has already been achieved, increased spending on tourism marketing is only likely to further turbo-charge a rapidly developing industry.
Given the recent rapid growth in international visitor arrivals, continued marketing efforts, improvements to infrastructure and further development of human resources and services in Vietnam, the outlook for tourism and the accommodation sector is bright.
21
JLL’s Hotels & Hospitality Group has completed more transactions than any other hotels and hospitality real estate advisor over the last five years, totalling more than $68 billion worldwide. Between negotiating the world’s most extraordinary, enticing, and profitable property deals, the group’s 350-strong global team also closed more than 4,400 advisory, valuation and asset management assignments. Investors worldwide turn to JLL to shape their strategies, tailor their portfolios and maximise the value of their assets. We are recognised as the global leader in real estate services across hospitality properties of all shapes and sizes. Our expert advice is backed by industry-leading research. We apply our broad spectrum of hotel valuation, brokerage, asset management and consultancyservices through every phase of the hotel lifecycle. We have helped more hotel investors, owners and operators achieve high returns on their assets than anyother real estate advisor in the world. Whether you are looking for a hotel or you’re ready to sell, we’ll use our capital markets expertise, hospitality industryknowledge and global relationships to put the right parties together and execute a bespoke deal that exceeds your objectives. For more news, videos and research from JLL’s Hotels & Hospitality Group, please visit: www.jll.com/hospitality, download the Hotels & Hospitality Group app for iOS and Android, or view our e-magazine The Hotel Investor, available for iPad. Jones Lang LaSalle’s Hotels & Hospitality Group Singapore CEA Licence: L3007326E
www.jll.com/hospitality
Key Contacts
Research
Investment Sales
Strategic Advisory
Frank SorgiovanniHead of Research Asia Pacific
Adam BurySenior Vice President Asia
Andrew LangstonExecutive Vice President Asia
Trang VoVice President Asia
Giuliano EspositoVice President Asia