Vinpearl Resort & Spa on Phu Quoc island (Photo: VNA) In the latest Savills’ report, Mauro Gasparotti, Director, Savills Hotels APAC,said: “major cities and coastal destinations have promising prospects forultra-luxury products, with decent branded residence offerings.”
“Vietnam suffers from a shortage of high-quality offerings and productdiversity. Many developers tend to replicate existing designs or conceptswithout adequately considering market trends or product identity. Despite theintensifying competition, development prospects remain available for those whocan effectively respond to market dynamics,” he said.
Sharing her point of view about the situation, Uyen Nguyen, Head ofConsultancy, Savills Hotels APAC, said: “There is a growing trend forwellness-related offerings that should be explored because this trend canmanifest in various forms, from yoga and meditation retreats to senior livingresidences, medical tourism complexes, or nature-immersed resorts located inareas close to major cities.”
“The market anticipates a shift towards quality, with a heightened emphasis ondetails that can contribute to the success and character of resort operations,”Uyen added.
Vietnam has experienced remarkable growth in the past 10 years withinternational travellers increasing by 16.9% per annum between 2009 and 2019.High demand boosted confidence in the sector, with a strong developmentpipeline.
According to Savills, on average, about 10,000 rooms entered each year between2017 and 2019. This strong growth was interrupted by the pandemic, and it willtake time to recreate the necessary momentum to reach pre-pandemic levels.
Given the strong pipeline, even pre-pandemic, Vietnam needed a 20% to 30% growthin annual demand to keep pace with new openings.
In the first two months of 2023, the country welcomed 1.8 million internationaltravellers, which is 40% lower than the pre-pandemic level. There were 560,000 travellersfrom the Republic of Korea and 148,000 from the US. The domestic marketcontinued to dominate with 20 million travellers.
“Domestic and Korean markets supported the recovery of certain areas like DaNang, with some beachfront properties able to exceed 50% occupancy. However,other destinations, like Nha Trang, have been heavily affected by the drop inChinese tourists and the significant number of openings in the past few years,”said Gasparotti.
According to Savills Hotels statistics, Nha Trang provides 24,000 mid to luxuryrooms, 50% of which entered between 2017 and 2019. This destination may requiregreater joint efforts from business owners and local authorities to repositionits tourist image and catch international attention and demand.
Certain cities have experienced significant recovery, particularly Ho Chi Minh City,where occupancy is fast reaching 2019 levels.
“Though occupancy is improving, average daily rates are between 15% and 20% lowerthan pre-pandemic levels. But it is worth noting that in certain cases, luxuryand boutique hotels that were well-positioned have reached or even surpassed2019 rates,” said Uyen.
Reflecting on development in 2023, Gasparotti said: "Financing has becomemore challenging, but there is a strong interest from foreign investors in theright product.”
“Beach villas and condominiums can be a valuable source of funding, but theentire process must be managed effectively to deliver value to both developersand residents and guests. Projects must be capable of generating capital gains,which is only possible if there is a greater emphasis on quality and operationsrather than development scale. This year, there are considerably more hotelsand resorts for sale than last year. However, the price expectations may notaccurately reflect the market conditions and risks associated with expectedfuture volatility," he said.
Globally, the hotel industry started 2023 off strong, with more than 60% ofproperties reaching 2019 revenue per available room levels./.
VNA
