GHN Vietnam_rh LITTLE GREEN 1400 Vietnam Rh

User Manual: LITTLE GREEN 1400

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GHN Market Report: Vietnam 2013

A typical vacationer, today, travels far and wide! The lesser heard

travel destinations are fast becoming the new hotspots. The low

cost carriers have changed the dynamics of travel across the world,

especially in South East Asia. Every city seems accessible! Then

there is little surprise when Vietnam emerges as a promising tourist

destination.

Vietnam has had a long and hard struggle to establish itself as an

independent nation. After

the consolidation of North

& South Vietnam, the

economic growth of the

country has been

consistent with economic

reforms beginning from

1986, Doi Moi Reforms,

and consequently, the

country became a member

of the WTO in 2007. According to IMF, in 2012, the nominal

GDP reached USD 138 Bn with a nominal GDP per capita income

of USD 1,527. Various market intelligence reports suggest that

Vietnam is on its way to becoming one of the fastest growing

emerging economies of the world.

The turbulent history of the country held back the tourism potential

the country promises. Consequently, it has relatively a young

hospitality market with a total of 250,000 units (2011). The

primary interest of the government has been to strengthen the

economy and improve agricultural & industrial production.

Agriculture is the mainstay of the Vietnamese economy. Today,

Source – Wikipedia

Green – Vietnam

Dark Grey - ASEAN

Top Five Hotel Markets

While we compare these cities based on the

number of hotels present in these cities, we

understand that the share of the branded

inventory is limited, 3%-5%, & a major part of

the inventory is unbranded & budget or

midscale in orientation.

1. Hanoi, the capital city, houses

approximately 475 hotels. The city is

located on the banks of Red River &

approximately 1,760 Kms north of HCMC.

The city is expected to be the fastest

growing city in the world in terms of the

GDP Growth (from 2008-2025), as per a

study by PWC. Moreover, it offers French

architecture, museums, lakes & traditional

food to its tourists.

Various prominent brands are present in

the city & the pipeline of the upcoming

inventory is strong as well. Most business

hotel brands like to firm their feet either in

Hanoi or HCMC. The range of brands, in

this light, is evident.

On an average, the city achieves an AOR of

62% with an ADR of USD 125.

Juhie Tak

Manager - Hospitality

Services, India

Cushman & Wakefield

Air: There are about 9 international airports with

limited connectivity to international destinations. The

international airports at Hanoi & HCMC are the

prominent international airports.

Sea: There are 7 main sea ports – Hai Phong, Quang

Ninh, Da Nang, Saigon, Cant Ho, Vung Tau & Phu

My. China Beihai-Ha Long Bay is a significant

transnational sea route.

Surface: Vietnam is connected to Cambodia (5

crossings), China (2 crossings) & Laos (6 crossings)

via international overland border crossings.

Vietnam is the world’s largest producer of cashew nuts & black

pepper. It is also the second largest exporter of rice (after

Thailand). Other primary exports include coffee, tea, rubber and

fishery products.

Tourism & Hospitality:

Vietnam, as a tourist destination, is supported by strong market

fundamentals – rich cultural offering, diversity of destinations,

relatively safe & secure, increasing international and domestic

tourism demand, strong investment potential and geographical

location. In 2012, the budget for tourism promotions was over

VND 30 Bn. The country has performed various promotional

activities in countries like Germany, Russia, Ukraine, Japan, the

Republic of Korea, Britain, China and other Southeast Asian

Nations as a part of outside-the-nation promotion. The government

offers visa exemption to the nationals of few select countries

(ASEAN countries for less than 30 days & South Korea, Japan,

Russia, Norway, Sweden, Denmark & Finland for less than 15

days). For the rest, the government offers visa-on-arrival which is

issued on arrival at Vietnam International Airports.

The geographical location of Vietnam is of strategic significance

given the sensitive nature of historical, political and economic

affairs in the region. The country spreads over 331,210 Sq.km,

with a 3,444 km long coastline with a terrain which is mostly hilly

and under tropical forest cover, topographically making it well

suited for a leisure destination.

Top Five Hotel Markets

2. HCMC, the largest city in Vietnam,

houses approximately 324 hotels. Erstwhile

Saigon, the city, is located in the south

eastern region of Vietnam.

By the end of 2012, the city's GDP was

estimated around USD 28,595 Bn. The

public sector forms 33% of the economy

while the private sector forms 5% of

economy. The rest is in foreign

investments. In the economic center of the

country, there are various export

processing zones, industrial & software

parks. The city also attracts tourists for its

historical & cultural significance.

The orientation of the hotels is business.

The city boasts of more brands than Hanoi.

On an average, the city achieves an AOR of

68% with an ADR of USD 115.

2012!

Air !

Sea!

Surface!

The hospitality market in Vietnam depicts every nuance of a

nascent market- limited branded inventory, higher ADRs, lower

AORs & increasing curiosity among the investors & hoteliers. The

total tourist arrivals in 2012 were approximately 6.8 Mn, growing

by 12% over 2011, and are expected to exceed 10 Mn by 2020.

The growth in number of visitor arrivals, however, had declined

after the GFC. There is an overall sense of recovery due to the rise

in domestic tourism. The key feeder markets are China (24%),

South Korea (9%), Japan (8%) and USA (7%). Of all the visitor

arrivals, about 60% is leisure in nature.

Source: Vietnam Tourism

Leisure is the primary demand segment with around 61%

contribution towards the total demand share, while business

follows with around 17% demand share. Being well-connected and

providing for ample of pre & post event opportunities, the country

holds immense potential of being promoted as a MICE destination.

The north & south regions dominate the hotel market. The central

area has very few quality hotels & the new supply is limited.

Currently, 18% of the inventory is in the 3 – 5-Star categories.

Occupancy levels have declined since the GFC but ADRs have

demonstrated strong growth as more brands have started

operations.

500,000!

1,000,000!

1,500,000!

2,000,000!

2,500,000!

3,000,000!

3,500,000!

4,000,000!

4,500,000!

Tourism !Business!Visiting

Relatives!

Others!

2011!

2012!

Top Five Hotel Markets

3. Hue is located in central Vietnam, on the

banks of Perfume River. It is situated about

700 kms south of Hanoi & 1,100 kms north

of HCMC. The city houses approximately

105 hotels.

It is a UNESCO World Heritage Site. This

quaint town was the capital of Vietnam for

150 years during 1802 to 1945.

The location is favorable for a spa-oriented

upscale or luxury hospitality offering. This is

evident in the existing products.

On an average, the city achieves an AOR of

60% with an ADR of USD 225.

4. Nha Trang, a coastal city, lies on the

south central coast of Vietnam. It houses

approximately 99 hotels.

A popular tourist destination for

backpackers, it is known for its beaches &

scuba diving. It will host the Asian Beach

Games in 2016.

With beautiful beaches & mild temperatures

all year round, Nha Trang features some of

the best resorts in Vietnam.

On an average, the city achieves an AOR of

63% with an ADR of USD 180.

Da Nang

Nha Trang

Hue

Ho Chi Minh City

Ha Noi

Opportunities:

Vietnam has 118 industrial parks in the southern part and 40 in

the northern part. Besides tourism, the country is also emerging

as a stable economic center leading to an increased interest by a

variety of hospitality stakeholders.

International brands/operators provide comfort to bankers and

investors. This is apparent in the list of upcoming inventory. The

most significant growth in supply is expected in Da Nang along

with HCMC with 4,000 plus units to become operational by 2017

in each destination. Primary tourist centers of Nha Trang, Da Lat

& Phan Thiet in the south-central region have a comparatively

high proportion of low quality & unbranded supply.

Many hotel operators are looking at branded residences as well.

Such projects are well perceived because of pre-sale structure and

provide comfort to the investors as well. It has been observed that

at such leisure destinations, branded residences work well as a

Hanoi

Proposed Hotel Inventory Notes/Remark

Intercontinental

Landmark

359 2013

JW Marriott 450 2013

Hilton Garden Inn 86 2013

Novotel Ciputra 250 2013

Mercure Hado 380 2013

Holiday Inn Dong Da 300 2013

HCMC

Proposed Hotel Inventory Notes/Remark

Le Meridien 350 2013

Pullman Saigon Center 300 2013

Da Nang

Proposed Hotel Inventory Notes/Remark

JW Marriott 271

Owned by VinaCapital Da Nang

Resort Pvt Ltd/1,400 Sq mtr Meeting

Space /To open in 2013

Hilton Da Nang 226

Developer - Bach Dang Hotel

Complex Trading Service Company

Da Lat

Proposed Hotel Inventory Notes/Remark

Swiss Belhotel Da Lat 2013

Top Five Hotel Markets

5. Da Nang is located 759 Km south of

Hanoi & 960 Km north of HCMC. It is the

4th biggest economic center (after HCMC,

Hanoi & Hai Phong). A major port city, it

houses approximately 93 hotels.

Located in proximity of various UNESCO

World Heritage Sites & the capital of the

erstwhile kingdom of Champa – My Son, it

is popular for its Marble Mountains, Ba Na

Mountain & other similar scenic locations.

On an average, the city achieves an AOR of

64% with an ADR of USD 220.

The other cities of tourist interest are

Hoi An, Da Lat, Phan Thiet & the new island

development - Con Dao Island. Da Lat is a

resort destination visited more by domestic

travelers. These locations have some iconic

hospitality products at the moment.

Currently not so popular, these markets

are slated for the next surge in branded

developments.

second-home concept. Americans & Europeans are always looking for such options given the

warm weather and sylvan locales.

Impediments:

Vietnam, as a country, continues to deal with the woes of poverty, unemployment and

infrastructural concerns. The tourist facilities in most cities are basic.

The cost of construction is relatively higher in Vietnam than in other countries in South &

Southeast Asia. For a 32 sq.mt, with 50% efficiency, the construction cost adds to USD 11 Mn

approximately and for a 28 Sq.mt, with 60% efficiency, it adds to USD 7 Mn approximately.

Outlook: Although Vietnam will continue to struggle with currency issues and entry barriers, it

also promises to be a destination that is easily accessible and provides an ideal landscape for

holiday-ers.

Juhie Tak, Manager - Hospitality Services, India, Cushman

& Wakefield, is a regular contributor of market insights for

GlobalHotelNetwork.com.

Cushman & Wakefield is a longstanding member of GlobalHotelNetwork.com.

GHN Vietnam_rh LITTLE GREEN 1400 Vietnam Rh

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