Danang hospitality lures FDI

Due to Danang’s central location and service standards, the hospitality industry is experiencing high growth

Felix Lai, investment director at Hong Kong’s Gaw Capital Partners, told a real estate forum organised by the Australian Chamber of Commerce in Vietnam (AusCham) last week that Danang has been on the radar for foreign investors due to its long, white-sand beaches and increasing international connectivity.

“Foreign companies looking at investment opportunities in Danang can be from Asian, North American, and even Middle Eastern countries. As a result, Gaw Capital has faced intense competition in its search for resorts and site developments along the city’s coastline,” Lai said.

The forum aims to get an insight into the latest real estate investment movements in Vietnam, with the topic of Danang’s hospitality market proving to be the most popular amongst property developers, investors, and experts.

Adam Bury, vice president of investment sales at Asia JLL Hotel & Hospitality Group, said hotel performance has shown strong improvement over the last 12 months, but there remains room for increased international operator presence in tourism hotspots like Danang.

“Vietnam is one of the hottest investment destinations in the region,” he said.

The occupancy rate in Vietnam is around 60-70 per cent which is not yet as competitive as Bangkok or Singapore. From an investment point-of-view, it is not too late for investors to cash in on the market to get higher returns, according to Bury.

According to a recent report by Savills Vietnam, Danang has pioneered luxury coastal homes and is second behind Nha Trang in total stock, with 1,199 villas and 3,367 apartments. Surveys have shown that more than 80 per cent of purchasers are from Hanoi, who are attracted by a wide variety of products, sophisticated infrastructure, bright tourism prospects and sales policies, and the image of a young, dynamic, and green city.

Successful developments include Ba Na Hills, Ocean Villas, Hyatt Regency, Furama, Intercontinental, and Azura. Large-scale upcoming projects include Soleil Danang, Coco Bay, Da Phuoc, Han Riverside, Ariyana, Central Coast, Vinpearl Han River, and Ocean Suites & Estates.

On a related note, Tony Chisholm, general area manager of Accor Hotels and Resorts Group, said that more international flights to and from Danang have been launched to promote tourism and investment in the central city.

“Driven by the benefits on offer, some Accor hotels in Danang have reached a high level of occupancy and have thereby helped the firm maximise returns for businesses and owners,” he said.

Gonzalo Maceda, vice president for Asia Pacific at Melia Hotels, is upbeat about the city’s prospects.

“Our first hotel launched last year in Danang already has an impressive record. We did not expect this kind of result three years ago when investment and tourism activities in Danang were still subdued,” he said.

In 2015, there were 73 three, four, and five-star hotels with 8,485 rooms, of which seven of the 11 five-star hotels and four of the 14 four-star hotels were managed by international operators. Accor Hotels and Resorts Group is the largest international operator in Danang, managing approximately 950 rooms.

Major upcoming hospitality projects include Crowne Plaza Phase 2, Hilton Danang Hotel, and Four Points by Sheraton. The $4 billion Hoi An South casino resort, expected to be put into partial operation by 2019, will inspire a huge push for the formation of hospitality sites running from Danang to Hoi An, as indicated in the report.