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Ho Chi Minh City

Vietnam remains key focus for hotel investors and operators

Hoteliers attracted by a rapidly growing tourism sector, robust economic development and infrastructure investments, according to real estate consultancy JLL


​Vietnam, 29 June 2017With a record 10 million international visitor arrivals in 2016 and 20 million arrivals being targeted by 2020, Vietnam is set to generate US$ 30 billion of tourism revenue by the end of the decade. Chinese arrivals saw massive growth in 2016, up over 50% and as in Phuket Russian arrivals are also rebounding with 2017 April YTD arrivals increasing over 60% year-on-year.

The dramatic rise in arrivals has gone hand in hand with significant infrastructure investment as Vietnam spends a greater amount of its' GDP on infrastructure than any other Southeast Asian nation. The investment will lead to 2,000km of new highways, metro systems in Hanoi and HCMC, and a slew of airport expansions and new builds. This is complimented by investments from both state and private airlines to expand and improve their fleets.

It is therefore unsurprising that investors and hotel operators alike are keen to commit to this high growth market. Adam Bury, Senior Vice President, Investment Sales, Asia Pacific, Hotels & Hospitality Group at JLL commented, "With the huge commitments made by both state and private stakeholders into infrastructure and transport linkages, hotel investors are keen to capitalise on the Vietnamese market. 2016 saw record levels of hotel transactions, with the dollar value of deals completed during the year representing 83 per cent of those deals completed in Thailand, a market which is often perceived to be significantly larger and more liquid."

Going on to discuss in more depth, Bury added, "Vietnam is shedding its image as a destination which tourists only visit once, with the food scene, golf and casinos being just some of the reasons for repeat visitation. The investments made in infrastructure and transport has opened up the array of coastal destinations beyond the long-standing hot spots of Danang-Hoi An and Nha Trang-Cam Ranh for investors to target".

With the recent rebranding of Hoi An's The Nam Hai, now under Four Seasons management, and a second Four Seasons in the early stages of development in Hanoi, it is clear that many large operators are also keen to take a slice of the ever expanding market.

Frank Sorgiovanni, Head of Research, Asia Pacific at JLL Hotels and Hospitality Group, says: "We have seen an increasing amount of internationally branded hotels open in Vietnam over the past 24 months, and expect further diversification of hotel management companies and brands in the market.

"As observed elsewhere in Southeast Asian, we expect growth beyond international hotel brands. Homegrown hotel brands are likely to come to the forefront, particularly catering to domestic travelers. We're seeing domestic hotel brands being established in Ho Chi Minh City and Hanoi in the budget and mid-scale segments, and expect these chains to grow nationwide at a rapid pace".

Vietnam should not be seen as just a tourism destination, as the country's rapid economic development, led by industrial manufacturing and production has driven corporate demand to the market. Further, increased connectivity combined with new hotel product offering has made the destination ever more important as a MICE destination.

Adam Bury concluded: "Vietnam's hospitality industry has progressed rapidly over recent years. We have observed considerate corporate and business demand within hotels across Ho Chi Minh City and Hanoi as multi-national manufacturers have entered Vietnam and relocated staff from other Asian markets on a temporary or semi-permanent basis."

"Hotel performance, particularly in Hanoi, has improved off the back of the massive industrial investment that has surrounded the city. We're seeing similar trends in Ho Chi Minh City, which is also benefiting from its position as the financial hub of the country. The medium-term fundamentals continue to look good for investors." 

For more information, download the report “Vietnam: Spotlight on the Accommodation & Tourism Industry” here