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Alternaty - Nha Trang hotels and resorts market view - December 2012
 

Alternaty - Nha Trang hotels and resorts market view - December 2012

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In this issue we have analyzed the Nha Trang Hotel Market and provided a review of Branded Residences. You will also find a summary of HICAP as well as the announcement of the Vietnam winners of the ...

In this issue we have analyzed the Nha Trang Hotel Market and provided a review of Branded Residences. You will also find a summary of HICAP as well as the announcement of the Vietnam winners of the South East Asia Property Awards recently held in Singapore.

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    Alternaty - Nha Trang hotels and resorts market view - December 2012 Alternaty - Nha Trang hotels and resorts market view - December 2012 Document Transcript

    • VietnamHotels + ResortsNewsletterDecember 2012Table of ContentsNha Trang Hotel Market Overview 1Vietnam Economics Update 6Regional News Update 7Feature Article: Branded Residences 8HICAP 2012 Roundup 9South East Asia Property Awards 2012 Roundup 9Investment Opportunities 10About Us 10 Nha Trang Hotel Market OverviewNha Trang City was chosen as this edition’s 251 km2 with a 17 km coastline. Nha Trangfeature location because the City’s hotel Bay has 19 islands including the largestmarket is poised to enter into a new era asboth the supply of and demand for accom- island, Hon Tre, with 3,250 ha and home to Vinpearl Resort (Nha Trang’s largest resort W e attended HICAP in Hong Kong on 10th - 12th October, 2012 and were selected to partic-modation is about to make a significant leap with 485 rooms) and Vinpearl Luxury which ipate as a panellist for the HICAPforward. In terms of demand, November opened in Q2 of 2011. The island is connect- Update 2013 in Singapore in March,marked the start of the high season for Rus- ed with the mainland by a cable car system 2013. See roundup on page 9.sian tourists and with a major tour operator that can conveniently ferry tourists betweenhaving tentatively entered the market last the island and the mainland. We were a speaker at the 2nd An-year, it is about to ramp up tourist arrivals nual Hospitality Management Con- ference 2012 held at the Legendthis coming season via charter flights in a Saigon on 15th November 2012.big way. On the other hand a wave of new Access See our website to download oursupply is about to hit the market, so it will presentation on fractional sale.be interesting to see which side, demand Most arrivals to Nha Trang are by a shortor supply will tip the scales over the coming flight from HCMC or Hanoi. Cam Ranh We assisted in the property inspec-year. International Airport was upgraded with a tions and judging process for the South East Asia Property Awards new terminal in 2007 and remains one of 2012 and presented the awards the newest and best airports in Vietnam for Vietnam at the gala dinner inLocation with ample capacity to meet current and Singapore on 21st November, 2012. expected future demand. The airport is 28 See page 9 for the winners.Nha Trang City is located within the South km south of Nha Trang City which translatesCentral Region of Vietnam, a strip of prov- into a 40 minute taxi ride from the airport at — Alternaty Updatesinces that runs along the coast of Vietnam a cost of approximately US$20 for the oneand includes other resort locations such as way journey. Unfortunately, as is all too com-Da Nang and Mui Ne. The capital city of mon at most airports in Vietnam, there is anKhanh Hoa Province, Nha Trang is 448 km army of unscrupulous taxi operators eagerlynorth of HCMC and 1,280 km south of Ha- awaiting to scam vulnerable tourists.noi. The latest official population estimate ofNha Trang is 361,454 (2009) and its area is
    • 2 Nha Trang Hotel Market OverviewIn total, there are approximately 78 sched-uled flights per week to Nha Trang whichtranslates to a maximum capacity of 12,600 A lthough Nha Trang is served by a modern airport with plenty of capacity and ability to handle inter-passengers per week or 655,200 per annum. national flights and mid-sized jets,This does not include charter flights, which its distance from the city adds aover the last year has rapidly grown to significant cost to the journey, more Nha Trang so in terms of time and transfers Khanh Hoa Provincebecome a significant source of international than money. In this regard it is lessarrivals, especially from Russia with the arriv- competitive compared to its resortal of the tour operator Pegas Touristik. destination peers Da Nang and Phu Quoc where the airports are locat-Nha Trang also welcomes tourist arriv- ed closer to the main beach areas.ing from cruise ships. In 2011, Nha Trangwelcomed 35 cruise ships with more than — Alternaty Opinion35,000 tourist arrivals, including the QueenMary II – one of the world’s largest cruiseships. © 2012 BingSupplyOf the 250 accommodation establishments ability to satisfy a diverse mix of travellers, Figure 1in Nha Trang supplying approximately 5,000 catering for a wide range of budgets and Largest Hotels in Nha Trangrooms in total, 25 properties are rated 3 - 5 accommodation needs. These include local 600stars by the Vietnam National Administration guesthouses, modern city hotels, beachfront 500of Tourism (VNAT) comprising of five prop- resorts, island destinations as well as remoteerties that are rated 5-star, four properties hideaway properties. For this reason, Nha 400that are rated 4-star and the remaining Trang is chosen by the local Vietnamese and 300properties are rated 3-stars. As is usually expat market (e.g. Mia Resort, Novotel, Sher- 200the case in Vietnam, a number of properties aton, Best Western Hon Tam Island, Sunriseexist which are officially unrated, yet they Beach Hotel, Vinpearl Luxury), as well as 100would certainly be of an international 4 or Western backpackers (e.g. local guesthouses 05 star standard. These tend to be the new and family run hotels), Russians (e.g. Vinpearl Vinpearl Yasaka Saigon Novotel Lodge Sunrise Beach Asia Paradise Luxury Nha Trang Michelia Hotel Vinpearl Luxury Nha Trang Hai Yen Vien Dong Hotel Nhat Thanh Evason Ana Mandara Sheraton White Sand Doclet Best Western Bhuvana Hon Tam Resort Orient Best Western Hon Tam Sea & Sun An Lam Ninh Van Bay Resort Happy Light Mia Resort Diamond Bay The Summer Six Senses Ninh Van Bayproperties which are yet to reach full scale Island Resort, Diamond Bay Resort), as welloperational status or due to their boutique as Europeans, Koreans and Japanese seekingnature do not conform to the rigid star peaceful hideaways (e.g. An Lam Ninh Vanrating criteria. What sets Nha Trang apart Bay, Six Senses Ninh Van Bay, Ana Mandara).is the availability of a broad range of hotelmanagement formats and brands with the Source: AlternatyTable 1Selected Future Supply in Nha Trang and Cam Ranh Source: AlternatyProject Name Developer Scale (rooms) Operator BrandThe Costa Nha Trang TD Group 308 IHG Crowne PlazaNha Trang Centre Hoan Cau/Thanh Yen 140 Apartments Formerly in talks with an international upscale brandHyatt Regency Cam Ranh Kien A Corporation Hyatt Hyatt RegencyBest Western Premier Hai Van Nam JSC >1,000 (condotel) Best Western Best Western PremierMarriott Nha Trang Sao Sang Nha Trang 250 Marriott MarriottRussian Cam Ranh Resort Russian Cam Ranh Dev. Corp. 200 Langham Langham PlaceAlternaty® Vietnam Hotels + Resorts Newsletter alternaty.com
    • December 2012 Nha Trang Hotel Market Overview 3Since the Novotel opened in the fourthquarter of 2008, the number and diversity ofrooms supplied has increased dramatically I t is clear that the Russian market has become the engine of arrivals growth in Nha Trang and just a cursory look at the way the Russian market has trans- formed the Thai tourism industry is all that is required to realise that Nha Trangwith the opening of the Sheraton (Q4/2010, is now at the very cusp of an imminent boom in arrivals. Total Russian tourist284 hotel keys), Michelia (Q1/2011, 201 hotel arrivals to Thailand in 2011 was just over 1 million, while in 2010, Nha Trang citykeys), Vinpearl Luxury (Q2/2011, 84 resort received a mere 28,000 Russian arrivals. This doubled to 60,000 in 2011.keys), An Lam (Q2/2011, 35 resort keys) andmost recently Mia (Q3/2011, 50 resort keys). — Alternaty OpinionThis pace of increase in supply is set to con-tinue with several large scale properties dueto come on line in the near future.DemandTotal tourist arrivals to Khanh Hoa Province Europe and has recently boosted capacity Figure 2in 2011 was a record 2.18 million, up by a sig- to 3 charter flights per day as they expect Tourist Arrivals to Khanh Hoanificant 18.5% compared to the 1.84 million to double arrivals this coming season. No Provincevisitors received in 2010. Domestic arrivals doubt the unrest in the Middle East played 2000 1800accounted for 80% (1.74 million arrivals) of a key role in channelling a new wave of 1600the total and increased by 20% compared to Russian tourists towards Asia. 14002010 while international arrivals accounted 1200 1000for 20% (440,000 arrivals) and increased by The average length of stay in Nha Trang is 800only 13.7% compared to the previous year. only several days because the usual package 600 tour to Vietnam tends to include a visit to 400In the first 9 months of 2012, total arrivals Hanoi and Ho Chi Minh City packaged with 200 0were 1.75 million, 5.7% higher compared to a short beach stay in between either in Nhathe same period in 2011 however the 27.4% Trang or Da Nang.growth of international arrivals comfortably Source: Khanh Hoa Department of Culture, Sports and Tourismoutpaced the 0.9% growth in domestic arriv- The average length of stay in the city hotelsals. In terms of absolute numbers, in the first tends to be 3 days and 2 nights for Viet- Domestic Arrival9 months of 2012, domestic arrivals to Khanh namese guests, who tend to come for the International ArrivalHoa Province increased by 11,500 to 1.36 weekend, while international guests, such asmillion and international arrivals increased by Russians tend to come in groups and stay up82,500 to 383,500 arrivals compared to the to a week in these properties. days and include a resort stay plus shortsame period in 2011. tours of other locations in Vietnam. Japanese The resorts have a longer average length of visitors are a significant source of guestsNhat Minh International Travel Company in stay, in the range of 4 to 6 nights, however for Ana Mandara Nha Trang and Six Senses2010 partnered with Russia’s Vladivostok In- this varies significantly depending on the Ninh Van Bay as both of these resorts haveternational Airport, operating two flights per nationality of the guest. Vietnamese guests a native Japanese guest relations officermonth from the Russian city of Khabarovsk who stay in the resorts tend to book for 2 – and their average length of stay tends to beto the Cam Ranh International Airport in late 4 nights including the weekend. Europeans relatively short at just 2 - 3 nights.2010. The truly game changing event was in tend to stay 1 – 2 weeks with some up to 4late 2011 when the mammoth Pegas Touristik weeks, especially from Germany. The aver-partnered with Anh Duong Company to age length of stay of visitors from Australiaoffer 1 charter flight per day. The partnership and the US is 4 – 5 days. Meanwhile, resorthas already sent well over 50,000 Russian guests from Russia stay 4 – 7 nights on aver-tourists to Nha Trang from 9 cities in Eastern age as the tours from Russia tend to be 12alternaty.com Alternaty® Vietnam Hotels + Resorts Newsletter
    • 4 Nha Trang Hotel Market Overview December 2012SeasonalityNha Trang’s major strength as a resortdestination is its ideal climate with 10 monthsof the year being conducive for tourists H aving interviewed several of the top tier hotels and resorts in Nha Trang, one of the interesting insights that emerged was the stark contrast in guest segmentation between properties within the samewhile only 2 months of the year are charac- competitor set. Each property has a unique segmentation in terms of lo -terised by heavy rain, storms and flooding. cal vs foreign guest, couple vs family and mix of nationalities that variesThese two months, October and November, throughout the year. This makes it a very challenging task for the opera- tors to satisf y a wide range of needs which are often conflicting yet needalone account for almost 80% of the annual to be satisfied concurrently.rainfall. — Alternaty OpinionNha Trang has a tropical climate with twoseasons and an average annual temperatureof 27 degrees celcius. The dry season lasts Trang, there are arrivals at all times of the Figure 3from January to August with only 27mm year whatever the season whether that be Rainfall & Average Temperatureof rainfall per month. The average annual Europeans, Americans, Russian, Asians or 300 Temperature (°C ) 30 250 Rainfall (mm)temperature during the local summer and local Vietnamese. In Vietnam, the summer 200 28 26high season months of May to August is 29 lasts from May to August, which coincides 150 24 100degrees. Meanwhile the monsoon season, with the school holidays, hence it is the peak 50 22 0 20which coincides with the local winter, is from season for Vietnamese tourists. Europeans Jan Mar May Jun Jul Oct Feb Apr Aug Sep Nov DecSeptember to December, with the wettest tend to come during their winter months Source: Khanh Hoa Department of Culture, Sports and Tourismmonths being October and November with from November to February, as do the Rus-250mm of rainfall per month on average. sians and Americans. Rainfall Average TemperatureThe diversity of tourist arrivals to Nha Trangmeans that despite the weather in NhaHotel PerformanceThe abundance of small sized family runmini hotels at the budget end of the spec- both local and international guests. However it is no easy task to cover the cost of services T he recently opened boutique resorts have impressed the mar- ket not only in terms of the qualitytrum means that Nha Trang has a fiercely and amenities provided and to push rates of the products delivered but alsocompetitive hotel market, making it a diffi- much above/ towards $100 per night. At the in terms of the quality of servicescult task for hoteliers to bring profits. These top end of the range for city hotels which is offered. This has been reflected in their operating performance, reach-hotels and guesthouses with zero to 3 stars currently dominated by Sheraton, the task ing profitability within 12 months ofoffer value for money by providing a decent of justifying room rates to cover the costs operation, as well as in terms of cus-product at a very low price point and they of providing full services and multiple F&B tomer reviews, having raced to themake it extremely difficult for the upscale outlets is even more difficult. It will certainly top of hotel user review rankingssegment to justify their room rate premium. be interesting to see how room rates and at the online hotel booking sites.With room rates in the range of $20 - $40 performances are affected with the opening What they have proven is that the Nha Trang market has the capacityper night, these hotels have been in business of Crowne Plaza and Best Western Premier. to easily absorb new supply, provid-for a long time, so they know their customer ed that the product is thoughtfullyneeds and they know how to meet these In terms of average room rates the interna- conceived and precisely designedneeds at minimum cost. tionally managed and high end boutique with the target market in mind. resorts are achieving ARR’s in the range ofThe Novotel, having entered the market $250 - $300 while the ARR of the interna- — Alternaty Opinionback in 2008 and being the only interna- tionally managed upscale city hotels are intional 4 star product at this time, has so far the range of $90 - $110.succeeded in justifying its price premiumover the local products and is favoured byAlternaty® Vietnam Hotels + Resorts Newsletter alternaty.com
    • December 2012 Nha Trang Hotel Market Overview 5Operating CostsNha Trang hoteliers enjoy a relatively long is always fierce competition for trained and challenging task of controlling costs, as theytrading history compared to other resort skilled labour which puts an upward pressure have a significant added cost in terms of fueldestinations in Vietnam as Nha Trang was on labour costs. Labour costs also tend to for the power generators and shuttle boats.among the first to develop its tourism sector. have a strong correlation with the number of This has encouraged the use of alternativeThis is a considerable advantage in terms of expatriates among the hotel staff. energy solutions such as using solar powerbudgeting for and controlling hotel oper- for the water heating. Another extra cost forating costs. Also, staff availably and level of That being said, the hideaway style resorts these resorts is the on-site staff accommo-skill as well as experience is above average in remote locations, especially those that can dation in some cases.compared to other locations however the only be accessed by boat, such as Six Sens-steady increase in rooms supply means there es, An Lam and Hon Tam have a much moreLand PriceWhen it comes to development sites, Nha adjacent to the city centre and hotel devel- Would we at AlternatyTrang again offers a wide range of options opment sites within the CBD are limited. invest our money infrom large scale absolute beachfront sites Nha Trang?suitable for mixed-use resorts with residen- However, there is an ample supply of beach-tial components to smaller sized city hotel front sites just north of and south of Nha In a city hotel, not really. In a bou-development sites. The current master plan Trang City. Cam Ranh Bay to the south has tique resort, absolutely! The comingdoes not allow for further resort develop- approximately 30 sites, all of them already new supply will impact the Nhaments on the main strip of beachfront controlled by investors and developers, but Trang hotel market no doubt, espe- very few having received their construction cially the existing city hotels, which license and most of them in need of inves- will have a hard time competing with tors and joint venture partners. There are the new arrivals that are likely to still more sites available in remote hideaway offer heavily discounted rates to gain locations, as well as on nearby islands. market share. The asking price of land can be as high as However we believe the impact on US$800 – US$1,500 psm for the smaller the performance of resorts will be development sites along the area surround- limited, provided that the growth ing the main street Tran Phu (Red Zone) in visitor arrivals remains intact. The and as low as US$300 – US$500 psm for less increase in international arrivals from central locations on the city fringe. Sites in Russia may help to absorb some of Cam Ranh Bay (Green Zone) are suitable for the oversupply. mixed-use resorts with residential compo- nents and their asking price ranges from The recently opened boutiques US$30 psm and up to US$60 psm depend- which were well conceived and suc-© 2012 Bing ing on the location, approvals and tenure. cessfully delivered are a case in point however, there still exists a significant gap between the depth and qualityFinal Thoughts of resorts offered by Indonesia and Thailand as compared to Vietnam.It is no wonder why Nha Trang remains one This diversity is what gives the Nha Trang And therein lies the opportunity.of the main tourist destinations in Vietnam. hotel market its depth and at the same timeAbove all, it is its diversity that sets it above will ensure that it will continue to alwaysits peers. It is the diversity of its landscapes, remain at the forefront of the tourism marketexperiences and types of accommodation in Vietnam.offered as well as the diversity of budgets,nationalities and tastes that it can cater for.alternaty.com Alternaty® Vietnam Hotels + Resorts Newsletter
    • 6 Vietnam Economics Update December 2012 Vietnam Economics Update Inflation Economic Growth Figure 4 Figure 5 Consumer Price Index Gross Domestic Product Real GDP annual growth rate (% ) 40 Norminal GDP (US$ billion ) 140 120Y-o-Y Price Index (%) 100 20 80 60 40 0 20 0 Source: General Statistics Office of Vietnam Source: General Statistics Office of Vietnam Consumer Price Index (Y-o-Y) Housing and Construction Materials Nominal GDP Trade Balance November CPI came in at 7.08% y-o-y foodstuff component, which accounts for while the m-o-m figure was up 0.47% which 40% in the goods basket, decreased 0.08% GDP in the first 9 months stood at 4.73% was much lower than the 2.2% m-o-m compared to October. The government CPI compared to the figure of 5.77% in the same increase in September and 0.85% increase target of 8% for 2012 seems within sight period of 2011. GDP growth in Q3 was up in October. The CPI increase in November if December’s CPI continues to be under 5.35% and the highest quarterly result so far was mainly attributed to the 5.16% increase control. this year however it still seems that the 5.2% in medicine and healthcare. The food and government GDP target for 2012 will be out of reach. Interest Rates Foreign Direct Investment Figure 6 Figure 7 State Bank of Vietnam Interest Rates Foreign Direct Investment 20 80 FDI (U S$ billion) 60 15Interest Rates (% ) 40 10 20 5 0 0 Source: Foreign Investment Agency Source: State Bank of Vietnam Committed Capital Base Discount Rate Refinancing Rate Implemented Capital According to Ministry of Planning and In- local currency denominated Government In the first 11 months of 2012, implemented vestment and despite the government’s best bond ratings to B2 from B1 citing higher risks FDI was US$10 billion, only 0.5% short of the efforts to spur lending, in the first 9 months to the government’s balance sheet due to figure achieved during the same period in of 2012 credit growth was only 2.35%. On the continuing weaknesses in the bank- 2011. On the other hand, newly registered 28th September, 2012 S&P raised its ratings ing system and the expectation of lower capital was US$7.26 billion, equivalent to of Vietnam’s banking system to B+ from B medium-term economic growth prospects. only 60.38% of the amount registered in in recognition of the government’s efforts to Interest rates currently stand at 9% for the 2011. Real estate ranks second in terms of at- stabilize the economy. base rate (unchanged since November 2010) tracting FDI with 9 newly registered projects, and 8% for the discount rate (unchanged with total registered and additional capital of On the other hand, Moody’s on the same since July 2012). US$1.85 billion or 15.1% of total FDI. day downgraded Vietnam’s foreign and Alternaty® Vietnam Hotels + Resorts Newsletter alternaty.com
    • December 2012 Regional News Update 7 Regional News UpdateVietnam News Regional NewsCBRE Vietnam acquired by CBRE Capri by Fraser to debut in HCMC Wyndham debuts new brand inInc by the end of this year IndonesiaCB Richard Ellis (Vietnam) Co., Ltd has been The Capri by Fraser, a serviced residence Wyndham Hotel Group announced theacquired by CBRE Group Inc after 10 years project which is under construction in Dis- launch of its Howard Johnson brand in Indo-operating as an affiliate. Mr Marc Townsend trict 7, HCMC, will be managed by Frasers nesia with three properties (in Bali, Surabayaand Mr Richard Leech will continue to lead Hospitality Pte Ltd and is scheduled to open and Makassar) as well as the opening of thethe entity in Vietnam. late this year. The development consists of fourth Ramada in the country. 175 units and will be the third Capri by FraserVietnam on target to achieve 6.5 in SE Asia (others in Singapore and Kuala Myanmar to establish two hotelmillion international tourist arrivals Lumpur). zonesAccording to VNAT, international tourist ar- The Myanmar government is planning torivals to Vietnam reached 6.036 million in the ZETA Group (South Korea) an- establish two hotel zones next year to helpfirst 11 months of 2012, up 11.4% compared nounces MOU with Quang Binh combat the severe hotel room shortageto the same period of 2011. In November, Government brought about by the recent spike in touristthis number reached 656,000. With this ZETA Group Holding, a real estate invest- arrivals. One hotel zone will be located with-growth rate, the target of 6.5 million interna- ment firm from the Republic of Korea has in the major tourist destination in the Inlaytional arrivals for 2012 will be achieved. signed an MoU with the government of region in Shan State Northern Myanmar Quang Binh, a province in the North Central while the another zone will be located nearEuromonitor forecasts Vietnam to Region of Vietnam to invest in a US$4 Mount Popa, 50km Southeast of Bagan.lead hotel sector growth in Asia billion development including hotels, urbanAccording to a report released by Euromon- facilities, casino and outdoor entertainment Qatar Airways to provide dailyitor International, the hotel sector in Asia is activities. flights to Phnom Penhexpected to grow by a compounded annual Qatar Airways is asserting it aggressive ex-growth rate (CAGR) of 7% during 2012 – C.T. Group nearing completion of pansion to South East Asia with the launch of2016 while Vietnam is expected to top the new golf course in Cu Chi District, daily flights to Phnom Penh early next year,growth rate in the region with an expected HCMC becoming the only Middle Eastern carrier toCAGR of up to 15% during the same period, The first 18 holes as well as a 10,000 sm operate in Cambodia. The Doha - Phnomfollowed by the Philippines, China, Malaysia, club house of the CT Sphinx Golf Club Penh route will operate with a capacity ofUzbekistan, India and South Korea. and Residences is expected to be put into 284 seats per day. operation in Q3, 2013. The project comprisesDa Phuoc International Township of a 36-hole golf course, a club house and Aston launches new select servicescraps golf course 200 luxury villas over 200 hectares and was brand in IndonesiaDaewon Cantavil, developer of the Da Phuoc acquired from Korean firm GS Engineering Aston International has launched a newproject has received permission from the & Construction last year by CT Group for select service brand called Hotel Neo byDanang People’s Committee to convert the US$24 million. Aston, which is designed to appeal to the66ha golf course forming part of the project budget traveller with well-designed layoutsinto landed houses and high rise buildings. Kinh Do shelves Lavenue Crown and four star facilities. The first property isThe project comprises of 8,500 apartments, Kinh Do Corporation has decided to put scheduled to open in Bali with a further 205-star hotels and a 60 storey office build- Lavenue Crown, a five star hotel, commercial Hotel Neo’s in the pipeline.ing with total investment capital of US$300 centre and serviced apartment project inmillion. HCMC’s CBD on hold and also suspended other real estate projects to focus on its core business in the food sector.alternaty.com Alternaty® Vietnam Hotels + Resorts Newsletter
    • 8 Feature Article: Branded Residences December 2012 Feature Article: Branded ResidencesHotel and resort developers are constantly through presales of the residential products.seeking innovative ways to shorten their These mixed-use projects are developed inpayback period and increase the overall the belief that second home buyers wouldreturn on their investment. The last few appreciate the opportunity to not only ownyears have seen an increase in the num- property but also to enjoy the use of aber of hotel and resort projects that have lifestyle product with the added benefit ofincorporated residential components in a bid some potential rental returns. Owners ofto increase profits. By combining residential branded residences have full access to allproducts with professionally managed hotel the amenities and services that form part ofand resort components developers are able the hotel or resort complex thereby enjoyingto rely on an additional source of financing the full brand experience. Questions + Answers Q Would a residential componentSome things that you should be aware of before consider- be a good option for my resorting to develop branded residences project? A It is certainly worth considering, International hotel management Be aware that your hotel or resort will however each developer has companies prefer to stay well away decrease in value once you sign with a different financing and ROI from them due to their management management company or if you have a targets and it is important to implications. residential component be aware that in some cases Ensure that the marketing agent or Consider to create a fractional structure the inclusion of a residential sales team does not over promise to as part of the residential sales but seek component may increase costs buyers. They only deal with the buyers expert advice before doing so. but not necessary increase the until the sale is made, while you will Allow the owners to join an internation- overall return. have to deal with them for the life of al and local exchange system. your development. Do not allow the owners to publically Q Can I sign a management Do not underestimate the importance rent their units in the open market at agreement for my mixed-use of a finely balanced maintenance fee a self determined price. This can be residential project? and think again before proposing to extremely damaging to the marketing A This is possible in some cases, have it fixed - it can end up being a image and financial performance of the but the majority of the inter- very painful decision once the resort whole complex. national operators would not ages. In the case of branded residences, do allow developers to sell residen- The maintenance fee is one of the most not promise to owners a specific brand tial products that are branded common reasons for litigation with and a specific brand should not be with their name. the owners. Ensure that the calculation named in the sales contract. Always methodology is completely transparent. reserve the right to terminate the man- Q What other management op- Set up an independent body corporate agement company and have the ability tions do I have? structure for the individual owners and to change to an equivalent substitute. A There are several smaller in- ensure that the accounting systems of Finally, seeks expert advice before ternational operators that may the resort and residential components embarking upon mixed-use branded consider such a project or you are completed separated. residences. can create your own manage- ment and brand but make sure it is done properly from the very beginning.Alternaty® Vietnam Hotels + Resorts Newsletter alternaty.com
    • December 2012 HICAP 2012 Roundup 9 HICAP 2012 RoundupThe Hotel Investment Conference Asia Pacific Attention is clearly moving towards newly destinations, especially for products with(HICAP), held annually since 1989, is the accessible destinations such as Myanmar and residential components.most established conferences for the hotel Sri Lanka, both of which seem to be amonginvestment and development community the top emerging hotel and resort markets in Myanmar was the hottest topic in everyin Asia Pacific. Unsurprisingly, at this years Asia. The two countries were often men- investment discussion and many investorsevent held in Hong Kong on 10 - 12 October, tioned by panellists throughout the confer- are currently considering to explore oppor-Alternaty was one of only a few attending ence and especially during the “Investment tunities for development or acquisition ofcompanies representing Vietnam. There was Outlook” session where they were identified existing buildings to convert into hotels.a much lower attendance of Vietnamese as highly targeted investment destinations. The next conference in the series will becompanies compared to previous years and Indonesia is still experiencing very strong the HICAP Update which will be held ininstead there was a much higher partici- growth and destinations such as Bali and Singapore on 12 - 13 March 2013. For thispation from countries that were previously Jakarta have the close attention of Singapor- conference Alternaty has been selected tounderrepresented namely the Philippines, ean, Hong Kong and Australian investors. participate in the panel discussion focusingMyanmar and Indonesia. However, the rapid growth seems to be on hotel development and investment op- headed towards oversupply in the resort portunities and challenges in Vietnam. South East Asia Property Awards 2012 RoundupThe South East Asia Property Awards 2012 The Executive Directors of Alternaty, Maurowas held in Singapore on 21 November, Gasparotti and Rudolf Hever were delighted2012. The awards recognise the best luxury to present the Vietnam awards in Singaporeresidential developments in the region in- during the gala dinner.cluding Indonesia, Malaysia, the Philippines,Singapore, Thailand and Vietnam. A wide The award for the Best Villa Vietnam wentrange of categories are awarded including to Vincom Village Hanoi with the awarddeveloper, development, real estate services, presented to Ms. Le Thi Thu Thuy, Vicearchitecture and interior design. Chairwoman and CEO, VinGroup JSC (photo top right). VinGroup JSC also won the awardFor this years awards, Alternaty together for Best Developer Vietnam.with law firm Limcharoen Hughes & Glanvillewere requested by the organisers to assist The award for Best Condo Vietnam wentin the judging process by inspecting the to Hyatt Regency Danang with the awardnominee properties for Vietnam located in presented to Mr Rick Mayo-Smith, ManagingHanoi, Danang and HCMC and submitting Director, Indochina Capital (photo bottomscores according to published criteria. A right).central panel of judges, supervised by BDOAdvisory then selected the winners.alternaty.com Alternaty® Vietnam Hotels + Resorts Newsletter
    • 10 Investment Opportunities December 2012 Investment Opportunities About UsHot Properties – See our website for more Hot Properties & EnquiriesVietnam Opportunities Regional OpportunitiesLocation Hoi An, Vietnam Location Phuket, ThailandStatus Construction 93% completed and Status Operating resortexpected to be operational within 12 weeks. Scale 42 keys on 1.5 hectaresScale 98 keys comprising of apartments, Description Contemporary Thai style villapenthouses and villas on 2.6 hectares. resort on a cliff with private beach. Some Alternaty is a boutique real estateDescription A beachfront resort with a units have a private swimming pool. firm providing specialist advice formix of unit types including beachfront villas Investment Options 100% equity stake hotel, resort and second home proj-designed in a Mediterranean style. ects in Vietnam and the IndochinaInvestment Options 100% equity stake, Location Bali, Indonesia region.59% equity stake or 31.5% equity stake with Status Operating resortoption to purchase on shore or off shore. Scale 81 keys Our services DescriptionHigh end villa resort located in Investment ConsultingLocation HCMC, Vietnam Uluwatu with strata title. Investor RepresentationStatus Construction 85% completed and Investment Options Up to 90% equity Hotel Operator Selectionexpected to be handed over by Q2, 2013. stake Market ResearchScale 70 units of serviced apartments Feasibility StudyDescription A mixed-use development Location Chiang Mai, Thailand Development Consultingcomprising of serviced apartment, hotel, Status Operating resortretail, office and residential apartment com- Scale 29 keys We specialise inponents in close proximity to the airport. Description A boutique resort with a prime Alternative OwnershipInvestment Options Serviced apartment location with value-add opportunity to Rental Pool Structuringlease or management contract. refurbish adjacent buildings to add another Fractional Ownership 29 keys. Membership ClubsLocation HCMC, Vietnam Investment Options 100% equity stake, Branded ResidencesStatus Operating Hotel freeholdScale 280 roomsDescription 5 star hotel located on theperiphery of the CBD.Investment Options 100% equity stakePlease don’t hesitate to contact us to discuss any of the contents in this newsletter or for moreinformation on any of the opportunities above. We welcome your comments and suggestionsfor the next edition. In the meantime, don’t forget to follow us on Twitter, LinkedIn or Face-book to receive the latest updates and opportunities as they become available. Unit 23, 26 Ly Tu Trong Street,Rudolf Hever Mauro Gasparotti My NguyenExecutive Director Executive Director Research Executive District 1, Ho Chi Minh City, VietnamT +84 933 902 530 T +84 908 556 492 T +84 836 028 591E rudolf.hever@alternaty.com E mauro.gasparotti@alternaty.com E my.nguyen@alternaty.com T +84 836 028 591 W alternaty.comDisclaimer Find UsAlternaty Vietnam Hotels + Resorts Newsletter, published by Alternative Real Estate Service Co., Ltd. (hereafter “Alternaty”), is anewsletter containing information about the hotel and resort market in Vietnam and Indochina region. It is provided for gener-al information purposes only. Whilst making all reasonable effort to provide correct information, no legal responsibility can beaccepted by Alternaty for any loss or damage arising out of the use of or reliance on the contents of this newsletter.