Resort property market: mini hotels on the wane, homestays on the rise

Investors are developing new types of resort properties

Huynh Quang Thai Anh, a real estate broker in the resort city of Nha Trang, said five years ago, he could earn big money thanks to investments in guesthouses and mini hotels.

“At that moment, many guest houses and mini hotels developed by small investors arose on major streets of the city such as Tran Phu, Cu Chi, Tue Tinh, Dinh Tien Hoang and Nguyen Thien Thuat. However, investors recently have poured money into condotel projects,” he said.

“Condotels don’t require high investment capital, just VND1.5-5 billion ($68,100-227,200), while committed profit is high at 8-12 per cent. Therefore, it is very attractive in investors’ eyes,” he explained.

The same situation can be seen in Danang. Pham Van Phong, a hotel developer in Da Nang, said the number of travelers to Danang has been increasing in recent years, but only 3-5-star hotels have high occupancy rates. Meanwhile, guesthouses and low-end hotels are idle even in peak tourism season.

The increasingly high demand for quality of hotel rooms and services explains why under-3-star hotels can no longer attract travelers.

“In the last three years, investors stopped hunted for land plots to build guesthouses and mini hotels. Instead, they rushed to develop condotels,” he said.

The other resort markets including Quang Ninh and Thanh Hoa have also witnessed a condotel boom in the last two years.

However, Nguyen Chuong, a condotel broker, thinks the investment wave won’t last for a long time. “I saw signs of slowdown in the second half of 2017,” he said.

“The condotel supply in tourism cities is so high that investors fear the committed profit won’t be as high as expected. Other investors are worried about the legitimacy of condotel.”

New investment

As homestays are now in fashion, investors are spending money to build bungalows and container houses to attract travelers. Not competing with high-end hotels and resorts in service quality, homestays offer originality, interesting landscapes and low costs.

The models have appeared in the last two years in Nha Trang, Danang, Quang Ninh and Thanh Hoa. Ccasa, built of old containers, Tabalo Hostel designed as cruise ships’ cabins in Nha Trang city, and Memory with vintage style are the best known.

Hoang Tuyen, a homestay service provider in Danang, said the clients at homestays are mostly young people who like trekking and new experiences.