Property consultancy Knight Frank wants construction of beachfront hotels stopped

By Anh Ky   May 20, 2024 | 04:46 am PT
Property consultancy Knight Frank wants construction of beachfront hotels stopped
A resort on Phu Quoc island in 2021. Photo by VnExpress/Ngoc Thanh
Developers should stop building new beachfront hotels as there is a risk of oversupply and 20 million four- and five-star rooms are vacant annually, property consultancy Knight Frank said.

Before the Covid-19 pandemic, Vietnam received 18 million international tourists annually, according to Ben Gray, director of capital markets at Knight Frank Vietnam.

This dropped to 12.6 million last year, he said.

Assuming 30% of them traveled in pairs and booked double rooms for seven nights at four- to five-star beachfront hotels and resorts, they would only fill a third of the currently available rooms, he said.

The risk of oversupply is emerging, with low occupancy rates and large numbers of new hotels being built in popular tourist places like Phu Quoc island and Ha Long Bay, he warned.

"These locations have seen rampant hotel project development that exceeds demand."

Nearly 6.2 million foreigners visited Vietnam in the first four months of 2024, up 68.3% year-on-year, according to the tourism authority.

Vietnam faces intense competition from neighboring markets such as Thailand, Indonesia, the Philippines, and Malaysia, Gray said.

Domestic tourism, another large source of guests for beachfront hotels, has been struggling due to expensive airfares.

In contrast to the beachfront hotel segment, the luxury hotel market in major urban centers is performing well and attracting attention from foreign investors, according to Knight Frank.

Some well-known hotel brands have launched new projects in these areas this month, including the Sheraton Hanoi West and the Hilton Saigon.

American luxury hotel chain Nobu Hospitality is also set to soon enter this market.

According to Gray, the well located, boutique properties market is particularly attractive to international investors because they can maintain high prices throughout the year thanks to a steady flow of guests and lower operation costs compared to large-scale projects.

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