Hotel sector proves irresistible to investors

By Dat Nguyen   November 16, 2019 | 08:00 pm GMT+7
Hotel sector proves irresistible to investors
A resort by the beach in Da Nang. Photo by Shutterstock/SenSeHi.

A number of major hotel acquisitions have taken place in Vietnam this year as the tourism market continues to boom.

The Ho Tram Grand Strip resort in the southern Ba Ria-Vung Tau Province was sold in April to a unit of U.S. private equity firm Warburg Pincus.

The U.S. firm bought a 62.8 percent stake in Canada’s Asian Coast Development, which owned the $4.2 billion development comprising hundreds of rooms and a casino.

In Hanoi, Malaysian conglomerate Berjaya Group sold a 75 percent stake in the Intercontinental hotel near the West Lake in March to local firm Hanoi Hotel Tourism Development Co., Ltd for $53.4 million.

Foreign investors are showing interest in Vietnam, making it one of the most talked-about markets in the Asia Pacific, as prices of hotels in the country are higher than their expectations, said Vo Quoc Phuong Trang, vice president real estate consultancy Jones Lang LaSalle (JLL) Hotels & Hospitality Asia Pacific.

Vietnamese investors on the other hand prefer building new hotels and resorts, she added. "Domestic investors’ interest in hotel investments has been growing in recent years, and they are willing to pursue deals of large value, sparking fierce competition with foreign investors."

Hanoi and Ho Chi Minh City are expected to remain the top two cities for hospitality investment, followed by coastal tourist hotspots Da Nang and Nha Trang.

Visa exemptions, direct air routes and improved marketing efforts have boosted the country’s appeal to tourists. In the first nine months of this year, as international arrival numbers to HCMC grew by 14.3 percent year-on-year, the market saw 1,100 new rooms added, lifting overall supply to 20,200 rooms, according to JLL data.

The figure is set to rise to 22,000 rooms in 2021, 55.4 percent in the upmarket segment.

In Hanoi over 1,000 rooms will be added in the last quarter this year, increasing total supply to 18,700.

By the end of 2021 the capital will have more than 20,400 rooms, 59.8 percent in the upscale segment.

Hanoi hotels have been reporting strong numbers thanks to the rising number of tourists. In January-August the average room rate has risen by 2.9 percentage to $116, and revenue per available room has grown 8.4 percent to $94.

In the first 10 months Vietnam received 14.5 million international visitors, up 13 percent year-on-year, according to the General Statistics Office.

 
 
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