International hotel companies expand their presence in Vietnam

As domestic and international have increased dramatically during the last five years, Vietnam has seen an increasing number of international hospitality brands entering the market.

According to Savills Vietnam, the number of international hotel operators has increased from 30 hotel brands in 2010 to 80 brands active today. Domestic hotel companies have seen the number of Vietnamese traveling domestically increase and international hotel companies have also seen the number and types of international tourists increase and change.

• Best Western will open a “Premier Hotel” in the central province of Quang Binh

• Doubletree by Hilton is building a hotel and condotel property in Ha Long Bay

• Mandarin Oriental will establish a hotel in Ho Chi Minh City

• Melia Hotels has signed three new properties in Ho Chi Minh City – The Melia Saigon Central, The INNSIDE Saigon Central, and The INNSIDE Saigon Mariamman

• Radisson Hotels recently opened its first property in Vietnam on Phu Quoc Island

• Travelodge Asia will open its first property in 2020 in Nha Trang

DoubleTree by Hilton – Ha Long Hotel & Condotel

Mauro Gasparotti, Director of Savills Hotels Asia Pacific, said that there has been increased awareness and interest in Vietnam as domestic and international travelers have increased. According to Gasparotti, “Vietnamese developers are still new to hospitality products, but with the large amount of supply coming, they will learn quickly, and more high-quality assets are expected to be under way. We have forecast that a total of more than 30,000 new rooms will be opened by the end of 2019.”

The planned Mandarin Hotel Saigon

Gasparotti also said, “We are very positive about the growth of the sector and the attraction of international operators to Vietnam. It is very interesting to see that operators themselves are launching new brands to target new types of clients such as millennials or health-conscious travellers. Vietnam would be a high-potential market for them to introduce focused brands, as the categories of travellers here are largely diversified.”

The Radisson Blu Phu Quoc

A recent report by CBRE Vietnam on the hotel investments revealed Asian-based groups have led most of the international investments into Vietnam’s hotel sector.
Asian investors have been attracted to the higher yields they can earn from investments in mid-market hotels in Hanoi and Ho Chi Minh City. Asian investors see that there is a lack of supply between high-end hoteliers and local operators so they have been quick to invest in this segment of hotels.

Interestingly, investors from different countries also have preferences in the their investments:

• Japanese investors – are interested in small hotels with 100 ~ 150 rooms in Hanoi and Ho Chi Minh City. They focus on marketing their hotels to Japanese travelers to Vietnam who are looking for inexpensive hotels in the center of each city.

• Singaporean investors – are interested in multi-purpose complexes that feature hotels, residences and retail shops and that have something “special” that reflects the character of the development.

• South Korean investors – are interested in large-scale, high-end hotels in the 150 ~ 250 room range. They prefer to invest in projects that are in Da Nang, Hanoi and Ho Chi Minh City, where many South Koreans live.

Real estate industry experts expect that the interest in city hotels, condotels, hotels and resorts will remain high since domestic and international tourism in the country continue to expand.

The World Tourism Organization (WTO) reports that Vietnam was the third fastest-growing tourist location in 2017 and that International arrivals to Vietnam in the first eight months of 2018 increased 22.8% compared to the same period of last year. The WTO expects Vietnam’s tourism to continue to grow through 2020, so it seems that investment into hotels and resorts will continue unabated in parallel with demand.