According to Savills Vietnam’s report, the shortage of rooms and the shortage of future supply have contributed to the attraction of the hotel segment in Hanoi and Ho Chi Minh City to investors (investors).
Raymond Clement, CEO of Savills Hotels Asia Pacific, said that hotel transactions recorded in Vietnam in the past few years were very limited compared to other countries in the region due to the Large transactions are often not published publicly.
Among the outstanding hotel deals recorded in Vietnam in 2019 are Warburg Pincus Investment, which acquired a majority stake in The Grand Ho Tram Strip Resort or a deal with corporations. Malaysia’s Berjaya divested 75% of its capital at InterContinental Hanoi Westlake for more than 53 million USD.
Projects in Hanoi and Ho Chi Minh City have always been a top priority in the eyes of domestic and foreign investors as both cities have recorded stability in room occupancy (81% and respectively. 69% in 2019) and room rates (USD119 and USD118 in 2019, respectively).
Mr. Gasparotti further explained that the shortage of rooms and the shortage of future supply (only 26 projects have been announced that will enter Hanoi & Ho Chi Minh City market in the next 3 years) have contributed to creating. attraction of these two cities to investors.
Contrary to the coastal resort locations where investors often seek investment opportunities in luxury segment projects, big cities attract investors in the mid-range segment, just these projects have good design and construction quality.
“Normally, hotels must have at least 150 rooms, in which utilities, lobby and logistics areas are planned and allocated appropriately to become“ attractive ”in the eyes of investors. Among investment products, projects without operating units often attract more investors because they can easily change their brand in the future, thereby creating significant value for the product. ” Mr. Clement shared more.
While hotel operators have successfully signed many management contracts, foreign investors have not been very smooth in making investment deals. The main cause of this situation is the shortage of hotels in the market, the legal complexity along with fierce competition from domestic enterprises are also actively seeking for opportunities. Investment opportunities in this segment.
Also according to Savills, the recent outbreak of Corona (nCoV) has caused significant impacts on many industries, in which resort real estate is one of the most affected sectors. While long-term investors are usually not affected by short-term fluctuations, sellers may face more difficulties due to the negative impact of operating cash flow this year.
Savills’ representative said the lack of this cash flow could cause some owners, especially for highly leveraged projects, to be under financial pressure, leading to selling off. real estate or seek investment partners. As a result, it is expected that many projects will be offered for sale this year in Vietnam and neighboring countries, especially in coastal destinations as these areas will face a decline in the number of tourists.