RESORT REAL ESTATE HAS BEEN GROWING

RESORT REAL ESTATE HAS BEEN GROWING

The latest statement of Savills Hotels and Next Story Group includes emerging industry trends and the future of the local hospitality industry, discussing market conditions, potential ideas and new development approaches.

Following the presentation ‘Hospitality Megatrends and Sector Evolution Analyses’, Mr. Mauro Gasparotti, Director of Savills Hotels Asia Pacific, and Senior Consultancy Manager Ms. Trang Vo point out how the sector has experienced strong global growth in 2017, with a remarkable 6.6% increase in the first 8 months of the year. Sector growth is expected to continue as cheaper flights, improving travel technologies, relaxed visa policies, falling language barriers and ever increasing traveler appetites for discovering new countries and destinations.

Vietnam inbound rates continue to surge with remarkable 28.1% year on year growth. Expectations are continuing with global travel rates increasing and proximity to growing source markets such as China and Korea. Asia emerging market where traveler annual growth rates from 2016-2021 are forecast at 7.6% will further boost the local market. New direct international routes and easier access from other countries will be necessary to take best advantage and ensure Vietnam stays competitive with other South East Asia destination countries.

Hotel and resort performance this year has been strong, especially in Hanoi and HCMC, where occupancy growth has been outstanding with levels averaging 81% and 73% respectively. Da Nang and Nha Trang saw large increases in arrivals which improved YoY occupancies and despite more new openings this year, a slight increase in average room rates. 

Mr Mauro Gasparotti highlighted “2017 was a particular good year for hotels in the two main cities. The combination of growing demand from leisure and business guests and a supply shortage, has lead hotels to run at high occupancy levels, well above budgets set at the start of the year. As there will be relatively limited new supply entering in the next few years in HCMC and Hanoi, this should lead developers to consider hotel development with potential for higher yields and to diversify real estate portfolios”. 

However, sounding a note of caution, Mauro added “the majority of new supply is concentrated in beach destinations and unfortunately condotel volumes are now higher than resort units. With that comes a higher risk of a category price war, especially in the case of a demand slow down. Often developers fail to carefully consider hotel or resort developments positioning and appeals; how to add value to the area itself, rather than simply planning high rise buildings with limited value for the destination besides adding inventory. A more complete development approach will be the only way Vietnam hospitality will properly evolve with sustainable growth that benefits provinces and communities.

Great impacts from sharing economy and digital media

Due to the Savills Hotels experiences, it was also noted Vietnam lacks product variety compared to more mature tourist destinations like Thailand and Bali. Wellness resorts, spa destination resorts, senior living communities, hotels and co-working hubs, design and art boutique resorts, high-tech hotels, selected services hotels are examples of products not in the local market but with a strongly growing global demand. 

Mr Morris Sim, Chief Marketing Officer from Next Story Group, spoke of the impact that the sharing economy and digital media have had on hospitality. 

Mr Morris Sim explained how the collaborative economy has made sharing resources common place, and monetization of sharing is now acceptable to consumers. Additionally, Generations Y and Z have new demands for working, living, playing and learning. Sim presented market research the Next Story Group conducted across APAC that shows how hotels must evolve to remain competitive. In response to these trends, Next Story Group has launched, Kafnu, which will open in Ho Chi Minh City in 2018. Kafnu, which blends living, working, learning, playing and relaxing, creates a physical social network within a real estate asset to connect it to the collaborative economy. By connecting real estate with local and transient consumers, and pricing via a membership model rather than by use, Kafnu reinvents urban spaces for the new generation. 

Ms Trang Vo noted that “developers are now needing a longer term, broader vision when planning a new product. They should understand how global trends and changes in consumer behavior will affect hospitality products over the medium and long terms rather than maximizing only short term returns” 

In an increasingly competitive environment developers are seeking new ideas to better differentiate in their planning stages. Mr Mauro Gasparotti and his team have been closely involved in several projects in Viet Nam and the region, supporting developers optimize their hospitality approach – be it hotel, resort or condotel, providing a full service platform including Hotel & Resort Market Research, Feasibility Studies, Operator Selection & Hotel Management Contract Negotiation, Asset Management, Investment Brokerage & Advisory Service

If you want to see more about FDI opportunities in Vietnam, contact us: info@fdi-vietnam.com

 “Source: The Hanoitimes”