Alternaty - Vietnam hotel market overview 2013
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Alternaty - Vietnam hotel market overview 2013

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Alternaty was invited to speak at the HOFTEL Asia Conference, held at the Hyatt Regency Danang, on 27th – 28th June 2013. Mauro Gasparotti, presented a Vietnam hotel market overview and Rudolf ...

Alternaty was invited to speak at the HOFTEL Asia Conference, held at the Hyatt Regency Danang, on 27th – 28th June 2013. Mauro Gasparotti, presented a Vietnam hotel market overview and Rudolf Hever, moderated a debate titled “Will Vietnam hotel property ever turn the corner?”.
Alternaty is pleased to share with you the Vietnam hotel market overview presented. Please find below the table of contents and previews.

Table of content
• Vietnam Real Estate Market
2000 – 2006: Real estate/Hospitality
2007 – 2013: Vietnam bumpy ride
• Hotel Supply and Demand
Demand
Hotel market demand by origin
Hotel inventory
Suppy
Vietnam indicative hotel land price
HCMC hotel supply
Hanoi hotel supply
• Vietnamese Hoteliers
• Hotel Investment – Noteworthy hotel transactions
Hilton Hanoi Opera
InterContinential Hanoi West Lake
Victoria Hotel Group 5 resorts
Sheration Hanoi
Legend Hotel
Sheraton Nhatrang
Life Resort Hoian and Quynhon
Vincom A Center

• Market Opportunities
HCMC tourist arrivals, investment opportunites and challenge
Hanoi tourist arrivals, investment opportunites and challenge
Danang tourist arrivals, investment opportunites and challenge
Dalat tourist arrivals, investment opportunites and challenge
Nhatrang tourist arrivals, investment opportunites and challenge
Phuquoc tourist arrivals, investment opportunites and challenge
Haiphong tourist arrivals, investment opportunites and challenge

• About Alternaty Real Estate

--
About HOFTEL
HOFTEL is the world's leading association of hotel property investors - the only one which is both international and multi-branded. It is specifically designed to represent the disparate owners of hotels and provide them with a voice as a distinct industry sector.
HOFTEL provides a voice for our members as a lobbying group, but also gives them a private forum in which to voice their opinions and compare notes with other owners.

Stay tuned for Alternaty's exclusive release at http://blog.alternaty.com/

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Alternaty - Vietnam hotel market overview 2013 Alternaty - Vietnam hotel market overview 2013 Presentation Transcript

  • A boutique real estate firm, we partner with hotel and resort developers to deliver alternative real estate products. Vietnam Hotel Market 28 June 2013 Presented by Mauro Gasparotti - Executive Director Contact: mauro.gasparotti@alternaty.com - # +84 908 556 492 Prepared for :
  • 28 June 2013 2 Presentation Outline Vietnam Hotel Market • Vietnam Real Estate Market • Hotel Supply and Demand • Hotel Players • Hotel Investment • Market Opportunities
  • 28 June 2013 3 2000 - 2006: Real Estate/ Hospitality Vietnam Hotel Market • Relatively undeveloped country, limited infrastructure , roads or international airports. • Very limited real estate products, 50 dollar five star rooms, few serviced apartments, grade A offices and condominiums. • Low interest from the international investment community. • Vietnam perceived still as a backpacker destination, add-on to Thailand, only for experienced travelers, perceived as low safety and no infrastructure. • Only HCMC and Hanoi offering international flights. • Six Senses, Furama, Nam Hai still the only “high end” resorts product available. • Operators only Accor, Marriott, Starwood and Hilton and only for upscale products, in the main cities. • Domination of government owned service providers, Saigon Tourist and Hanoi Tourist. View slide
  • 28 June 2013 4 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market • 2006/2007 Vietnam opened to WTO, financing easily available worldwide, country became the darling of speculators. • Due to the new foreign investment laws and low restrictions on land development, Vietnam become an attraction for international investors looking for a short term bite into the upcoming bubble. • Foreign Direct Investment skyrocketed 0 20 40 60 80 2007 2008 2009 2010 2011 2012 5M 2013 Foreign Direct Investment (US$ Billion) Committed Capital Implemented Capital 0 2 4 6 8 10 0 1000000 2000000 3000000 4000000 2007 2008 2009 2010 2011 2012 Q1 2013 RealGDPannualgrowthrate(%) NominalGDP(VND) Vietnam's Nominal GDP and real GDP annual growth rate Norminal GDP Real GDP annual growth rate (%) Source: Foreign Investment Agency Source: General Statistics Office of Vietnam View slide
  • 28 June 2013 5 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market • The stock market was the first to react to the general optimism with stunning increases. • Front page of the Economist: “The Next Asian Tiger”. • Demographics of Vietnam, young population, stable and high GDP growth, illusion that the economic bubble was supported by strong fundaments and thus sustainable. VN Index – 10 years Source: Ho Chi Minh Stock Exchange
  • 28 June 2013 6 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market • Capital gains from stock market and bank financing went into real estate. • Land prices increase 100% - 200% y-o-y (certain cases 500% increase). • Office price doubles y-o-y from average of $15 - 20 per m2 to $40 - 45 per m2 • Prime retail space fully occupied. • Industrial parks at full capacity with land rental 50% increase y-o-y. • Very limited condominiums and villas. Majority of projects sold out in pre launch stage, with the legendary night of the pre launch of the Vista in HCMC (CapitaLand) where buyers were queuing outside the show room the night before the sales begun. • Clear undersupply of hotel rooms, with mid to high scale running at 80% - 85% occupancy and 35% - 40% yearly increase in ADR.
  • 28 June 2013 7 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market • Hangover day? Starting in Q2 2008, inflation shooting up at 25% year end. • In order to control inflation, Government set a stop lending policy, which, acting together with the Global Financial Crisis, caused liquidity to dry up and market to collapse. 0 5 10 15 20 25 30 2007 2008 2009 2010 2011 2012 2013 Y-o-YPriceIndex(%) Consumer Price Index CPI (Y-o-Y) Housing and Construction Materials Source: General Statistics Office of Vietnam
  • • Second Half of 2008 and the whole 2009, a write off period for Vietnam. • But still high confidence on the fundamentals of the country and belief on short term crisis: inflation only to be blamed! 28 June 2013 8 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market
  • 28 June 2013 9 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market • 2010, inflation under control, real estate confidence back but no longer FDI, local developers to be the dominant players. • Bitexco to build the HCMC flagship building, Vincom to expand into commercial, retail, residential, HAGL, SSG, Thu Duc House, Vinaconex to penetrate the local condo market. • State Owned Enterprises, Private Family and Banks, all ready to play the property game. • Countless new smaller developers and SOEs, with limited resources, could not afford to develop commercial or residential in HCMC and Hanoi. Second home and coastal projects became the preferred investment with accessible land price and no limitation on pre-sale policy. • Branded residences, Mixed-use with rental pool and timesharing products. • International operators signing MOUs. • Timesharing companies looking for deals. • Condotels start to shape up.
  • 28 June 2013 10 2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market • First half 2011, two main factors affect the market: inflation rises up again and oversupply starts to hit prices and occupancies. • Interest rates for banking loans skyrocket at 20% annual rate as a result of Government policy to control inflation. • Buyers lost completely interest in second home and coastal projects. Price of villas collapse. • Higher vacancy in commercial buildings and strong decrease in rental rates. • Price for residential market started to curve down and developers reducing prices. • Collections of buyer installments slow and difficult. • As a result: Raising Non Performing Loans, collapse of credit and banking system, liquidity problems and low consumer and investors confidence. • 2014 ….. ?
  • 28 June 2013 Hotel market - Demand Vietnam Hotel Market • International tourist arrivals in Vietnam 2012 have reached 6.84 million, with an increased of 60.98% from 2008. • In May, 2013 the international tourist arrivals is 0.56 million indicating a decrease of 9% compared to that of April, 2013. From Jan to May, 2013, the international tourist arrivals is 2.97 million, with a decrease of 1.4% compared to the same period of 2012. • The local travelers count still for the vast majority of the market, with a total of 32.5 million in 2012, equal to 82.6% of the total travelers inside the country. 0 1 2 3 4 5 6 7 2005 2006 2007 2008 2009 2010 2011 2012 Tourist Arrivals to Vietnam (million) 17.4% 82.6% International arrivals 2012 Domestic travelers 2012 Source: Vietnam National Administration of Tourism Source: Vietnam National Administration of Tourism 11
  • 28 June 2013 Hotel market demand by origin Vietnam Hotel Market 6120 12 7 Segmentation of International travel in Vietnam - 2012 Tourism Business Visiting relatives Others 65 13 15 7 Geographic origin of travelers to Vietnam - 2012 Asia America Europe Others 170 93 60 51 9.87 0 20 40 60 80 100 120 140 160 180 China South Korea Japan Taiwan USA Growth by geographic origin 2009 – 2012 (% growth) Source: Hotel Investment Conference Asia Pacific (HICAP) 2012 - QUO Source: Hotel Investment Conference Asia Pacific (HICAP) 2012 - QUO Source: Hotel Investment Conference Asia Pacific (HICAP) 2012 - QUO • In the first 5 months of 2013, Russian tourist arrivals is 136,801 indicating a sharp increase of 57.8% compared to the same period of 2012. • Repeat clients less than 15% 12
  • Hotel supply in Vietnam - 2012 28 June 2013 Hotel Inventory Vietnam Hotel Market No. of hotels 632 hotels 39.48% 590 hotels 36.85% 43 hotels 2.69% 116 hotels 7.25% 219 hotels 13.68% Source: Alternaty 13
  • . .. . . . . . . . . . . . . . 28 June 2013 14 Hanoi Nhatrang Dalat Phuquoc Vietnam Hotel Supply Vietnam Hotel Market Haiphong Danang Muine HCMC 0 10 20 30 40 50 60 0 1000 2000 3000 4000 5000 6000 3 star 4 star 5 star No. of rooms No. of hotels 0 10 20 30 40 0 500 1000 1500 2000 2500 3 star 4 star 5 star 0 20 40 60 0 1000 2000 3000 4000 3 star 4 star 5 star 0 5 10 15 0 500 1000 1500 3 star 4 star 5 star 0 5 10 15 20 0 200 400 600 800 3 star 4 star 5 star 0 5 10 15 0 500 1000 1500 3 star 4 star 5 star 0 10 20 30 40 0 500 1000 1500 2000 2500 3 star 4 star 5 star 0 10 20 30 40 0 1000 2000 3000 4000 3 star 4 star 5 star Source: Alternaty
  • . .. . . . . . . . . . 28 June 2013 15 Hanoi Nhatrang Dalat Phuquoc Vietnam Indicative Hotel Land Price Vietnam Hotel Market • Haiphong • Danang • Muine • HCMC (USD/sqm) Central Non-central Hanoi 11,000 – 22,000 2,000 – 5,000 HCMC 7,000-16,000 2,000-4,000 Dalat 800 – 2,500 60 - 400 Beach-front In-land Haiphong NA 100-300 Danang 50 – 130(hoi an) Depend on city location Nhatrang 30 – 60 (Cam Ranh Bay) 400 – 800 (Nha Trang city) Muine 500 – 900 (small size) 30 - 80 Phuquoc 150 – 200 20 – 50 Source: Alternaty Note : the land price indicated is only as reference. The price could vary considerably based on size, location , legal ownership and development permitted on the land.
  • 28 June 2013 HCMC supply Vietnam Hotel Market New Entry in 2012-13 (3 – 5 star) : Nikko Saigon 334 rooms Novotel Saigon 247 rooms Tan Son Nhat Saigon 208 rooms Ibis Saigon 140 rooms Expected new entry 2013-14 (5 star only): Pullman Saigon 306 rooms Timesquare 315 rooms Le Meridien 350 rooms Vincom (new name) 300 rooms 0 2000 4000 6000 8000 10000 12000 2000 2010 2013 2014F Number of hotel rooms 3 – 5 star Five star 0% 20% 40% 60% 80% 100% 5 star 4 star 3 star Hotel ownership by grade, Q2, 2013 State Owned Entps Joint Venture Family Source: Alternaty Source: Alternaty 16
  • 0 1000 2000 3000 4000 5000 6000 7000 8000 9000 10000 2000 2010 2013 2014F Number of hotel rooms in Hanoi 3 – 5 star 28 June 2013 Hanoi supply Vietnam Hotel Market New Entry in 2012-13 (3 – 5 star): Pullman Hanoi 242 rooms Hanoi Club Hotel & Lake Palais 128 rooms Expected new entry 2013-14 (5 star only) : JW Marriot 394 rooms 56 Intercontinental Landmark 72 359 rooms Five star Source: Alternaty 17
  • 28 June 2013 Vietnamese hoteliers Vietnam Hotel Market The future of the Vietnamese hospitality? 18
  • 28 June 2013 Confidential Sale Hotel + Additional commercial land Buyer – Lotte Group Legend Hotel InterContinental Hanoi West Lake $ 370,000/rooms Seller - Vietnamese Buyer - Berjaya Land Sold under construction Hotel Investment - noteworthy hotel transactions Vietnam Hotel Market 19 $ 325,000/room Seller – Vietnamese Buyer - Berjaya Land Indicative yield: approx. 8.5% Sheraton Hanoi $ 45,000,000 for 5 resorts total of 417 keys Seller – Victoria Group Buyer – Thien Minh Jsc Victoria Hotel Group 5 resorts Note : While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission
  • 28 June 2013 $ 260,000/room Seller – Vinacapital Buyer – N/A Indicative yield: approx. 11.5% Hilton Hanoi Opera $ 16,000,000 96 + 63 keys Seller - Life Resort Buyer - Minor International Yield analysis: NA Life Resort Hoi An and Quy Nhon Hotel Investment - noteworthy hotel transactions Vietnam Hotel Market 20 $ 470,000,000 Hotel + Retail Seller - Vingroup Buyer - Infrastructure and Property Development Group (VIPD) $ 145,000/room Seller – Vinacapital Buyer – Minority Shareholder Sheraton Nhatrang Vincom A Note : While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission
  • International tourist arrival 2011 3.5 mil, y-o-y increase of 11.7% 2012 3.8 mil, y-o-y increase of 10.5% 5M, 2013 1.6 mil Investment opportunities • Mid Scale , Budget and Limited Service category. Ideally international management. • Serviced Apartments (Mid and high level) • Mixed use complex Retail/Hotel • City Resort (gate away) Challenges • Land price • Five star room supply in 2014 HCMC hotel market Vietnam Hotel Market Source: The Ho Chi Minh City Department of Culture, Sports and Tourism 28 June 2013 21
  • Hanoi hotel market Vietnam Hotel Market Total tourist arrival 2011 13.5 mil(11.6 mil domestic & 1.9 mil foreign), y-o-y increase of 9.8% 2012 14.4 mil (12.3 mil domestic & 2.1 mil foreign), y-o-y increase of 6.67% Q1, 2013 5.1 mil (4.5 mil domestic & 0.6 mil foreign) Investment opportunities • Mid Scale , Budget and Limited Service category. Ideally international management. • Serviced Apartments (Mid and high level) • Mixed use complex Retail/Hotel Challenges • Land price • City future development direction Source: The Hanoi Department of Culture, Sports and Tourism 28 June 2013 22
  • Total tourist arrival 2011 2.35 mil (1.85 mil domestic & 0.5 mil foreign), y-o-y increase of 33% 2012 2.65 mil (2.02 mil domestic & 0.63 mil foreign), y-o-y increase of 12% 4M, 2013 0.9 mil (0.62 mil domestic & 0.28 foreign) Investment opportunities • International four/three star resorts • Destination resort (Spa) • Mid Scale Family (Club Med) • Beach Club, entertainments • Fractional Sale/timesharing Challenges • High risk of oversupply • Seasonality Danang hotel market Vietnam Hotel Market Source: The Da Nang Department of Culture, Sports and Tourism 28 June 2013 23
  • Lam Dong tourist arrival 2011 2.23 mil (2.14 mil domestic & 0.09 mil foreign) y-o-y increase of 8.7% 9M, 2012 2.73 mil (2.5 mil domestic & 0.23 mil foreign), increased 17% compared to same period of 2011 Q1, 2013 1.09 mil (1.03 mil domestic & 0.06 mil foreign), increased 4.86% compared to same period of 2012 Investment opportunities • Spa Destination • Retirement villages. Challenges • Oversupply • Limited infrastructure • Limited tourist attraction Dalat hotel market Vietnam Hotel Market Source: The Lam Dong Department of Culture, Sports and Tourism 28 June 2013 24
  • Khanh Hoa Tourist arrival 2011 2.30 mil (1.86 mil domestic, 0.44 mil foreign), y-o-y increase of 25.02% 2012 2.31 mil (1.78 mil domestic, 0.53 mil foreign), y-o-y increase of 0.42% 5M, 2013 1.17 mil (0.9 mil domestic & 0.27 mil foreign) Investment opportunities • Resorts • Mixed use Residential/Resorts • Branded residences • Beach Clubs • Retails • Boutique high end resorts Challenges • Risk of oversupply • Limited international flights • Midscale destination Nha Trang hotel market Vietnam Hotel Market Source: The Khanh Hoa Department of Culture, Sports and Tourism 28 June 2013 25
  • Total tourist arrival 2011 0.36 mil (0.24 mil domestic & 0.12 mil foreign), y-o-y increase of 52.2% 2012 0.41 mil (0.28 mil domestic & 0.13 mil foreign), y-o-y increase of 14.1% 5M, 2013 0.26 mil (0.19 mil domestic & 0.07 mil foreign), increased 29.6% compared to first 5M of 2012 Investment opportunities • Resorts • Mixed use Residential/Resorts • Branded residences • Beach Clubs • Boutique high end resorts Challenges • Construction costs • Operation Costs • Limited international flights • Development Approvals Phuquoc hotel market Vietnam Hotel Market Source: The Kien Giang Department of Culture, Sports and Tourism 28 June 2013 26
  • A boutique real estate firm, we partner with hotel and resort developers to deliver alternative real estate products. About Alternaty 28 June 2013
  • 28 June 2013 Alternaty is a boutique real estate firm providing a suite of consulting services throughout the development lifecycle. Headquarter in HCMC Vietnam, with associates in Thailand, Myanmar Indonesia and the Maldives. Our team has 17 years of combined experience in the real estate industry with an extensive track record in hotel and resort advisory in Indochina Region More than 40 hotel and resort valuations in Vietnam, Lao and Cambodia. More than 35 feasibility and market studies. 12 Operator selection advisory assignments. Vast experience in mixed used residential resorts, rental pool structure and fractional ownership. Alternaty Alternative Real Estate 28
  • 28 June 2013 29 How Can We Help You? About Alternaty • We are a real estate consulting firm providing specialist advice for real estate developers and investors. • Our approach is to forge partnerships with developers to provide a suite of consulting services including market research, development advisory, feasibly study and highest and best use analysis. • We specialise in the early stages of planning and development when accurate and detailed advisory adds significant value for the whole development and maximises the returns for developers, investors or any players involved throughout the development process. Alternative Real Estate Boutique Consulting Investment Services Villa Management Hotel Operator Selection & Hotel Operations Review
  • 28 June 2013 30 Our Scope of Services About Alternaty • A boutique real estate firm providing a suite of consulting services throughout the development lifecycle. Alternative Real Estate Vacation ownership Fractional ownership Private Residence & Destination Club Condo Hotel Hotel Investment Boutique Consulting Market research Feasibility study Financial projections Cash flow modelling Highest and best use analysis Development recommendations Due diligence Valuation Investment Services Joint venture partners Private equity and family offices Opportunistic, special situations funds Absolute beachfront land for sale Distressed assets Exit strategy execution Villa Management Resort style management of second home projects Website bookings and reservation engine Villa Brand Standards Standard Operating Procedures Butler Services Hotel Operator Selection & Hotel Operations Review Hotel Operator Selection: Management agreement negotiations Sale & leaseback, long term lease, guaranteed returns, franchise Hotel Operations Review: Inspection & operational analysis Departmental recommendations
  • Annex
  • 28 June 2013 Alternaty in the Press Annex Rudolf Hever, interviewed on HTV9, speaking at the Vietnam Hospitality Management Conference on “Fractional Models: Opportunities and Risks”, November 2012. “Vietnam’s island paradise: but where are the residential products?”, Rudolf Hever, The Property Report, Dec 12 – Jan 13 “Vietnam’s island paradise: but where are the residential products?”, Rudolf Hever, The Property Report, Dec 12 – Jan 13 Mauro Gasparotti, interviewed on HTV9 (Nhip Cau Doanh Nhan - Businessman Bridge) on Fractional Sale and Timesharing Models, December 2012. 32
  • 28 June 2013 Conferences & Events Annex Left-Right: Mauro Gasparotti (L) and Rudolf Hever (R) presenting the award for Best Condo Vietnam (Hyatt Regency Danang to Mr Rick Mayo-Smith, Managing Director, Indochina Capital (C) at the South East Asia Property Awards 2012 in Singapore. Mauro Gasparotti (second from left) speaking at a panel discussion on “Vietnam – Finding the way forward” at the HICAP Update held in Singapore in March 2013. Left-Right: Mauro Gasparotti (third from left) speaking at a panel discussion on “Navigating into the future: Vietnam” at the the Asia Pacific Hotel Investment Conference hled in Bangkok in May 2013. Rudolf Hever (R) chairing a panel discussion on “Condo Hotel, Villas and Branded Residences – How Best to Accelerate Return of Capital?” at the Asia Pacific Hotel Investment Conference hled in Bangkok in May 2013. 33
  • 28 June 2013 Connect with Us! Alternaty Social Media Channels Annex Twitter Facebook LinkedIn og Blog SlideShare YouTube 34
  • Online Direct Booking Website Alternaty Villas 28 June 2013 35
  • Thank You Disclaimer: This document has been prepared in good faith and for general informational purposes only. Nothing herein contains investment, legal, tax and/or other advice and investors should seek independent professional advice before making any investment decision. While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission.