Hospitality and real estate navigate uncertainty

November 04, 2023 | 10:57
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Hotel occupancy rates in Southeast Asia have trended upward since the reopening of all major markets. However, a competitive labour market, rising energy costs, geopolitical tensions, and expensive travel continue to impact hospitality demand.
Hospitality and real estate navigate uncertainty

The Meet The Experts (MTE) conference took place on November 1, attracting more than 30 speakers and over 700 professionals from the Real Estate and Hospitality industry. The conference, featuring WeHub, Savills Hotels, Dulux Professional, Vasta Stone, and more than 30 partners, provided a valuable platform for investors, hotel owners, management companies, design firms, and consulting companies to enhance their professional knowledge.

Vietnam is challenged by a surplus of available rooms and the slow return of key markets such as China and Russia. Between 2013 and 2023, Nha Trang, Phu Quoc, Danang, Halong, and Hoi An had a 54 per cent share of the new room supply. Beach destinations have grown by 16 per cent per annum over the past decade, significantly higher than 6 per cent annual growth in Ho Chi Minh City and Hanoi, according to Savills Vietnam.

Several destinations welcomed significant properties in a single category. In Mui Ne, Nha Trang, and Halong, more than 80 per cent of properties fall into the midscale – upper midscale segment, which often engages aggressive pricing. These properties face competition from second home products, which offer flexible room pricing strategies to capture market share, according to Savills Vietnam.

Hospitality and real estate navigate uncertainty
Mauro Gasparotti, director of Savills Hotels and host of MTE conference

“Excessive development is not the sole issue; rather, the issue lies in the creation of inappropriate products. Rapid tourism growth before the pandemic drove a surge in hospitality properties," said Mauro Gasparotti, director of Savills Hotels and host of the conference.

"However, some developers hastily entered without proper planning, leading to properties that lack identity and contribute to oversupply issues in certain areas. Although there are some well-built properties with the right positioning, there are many that prioritise quantity over quality. Modern guests prioritise experiences more than ever before, and travellers, including locals, now have numerous options to explore,” he added.

At the conference, senior representatives from Accor Hotels Group,, VinHMS, Sovico Hospitality Group, Hoiana Resort & Golf and Wyndham Hotels discussed challenges and their solutions, Vietnam’s potential, and how the country’s hospitality segment can thrive in the long run.

Demand has not fully recovered. Asian source markets are 33 per cent below 2019 levels; South Korea led the market with 2.6 million arrivals – 18 per cent lower than 9M/2019. China only reached 28 per cent of its 9M/2019 arrivals.

In contrast, the American and Oceania markets are recovering with 1.1 million arrivals, just 7 per cent below 2019 figures.

Hotel performance recovery is fragmented. In Ho Chi Minh City, occupancy has fast approached 2019 levels. However, properties in leisure markets like Nha Trang-Cam Ranh, Danang, and Phu Quoc are struggling to improve occupancies.

Experts at MTE acknowledge the continued headwinds, but are optimistic about the momentum and the forecasts for upward performance towards the latter part of 2023. The recent visa updates will also support performance into 2024. Hospitality experts believe the sector will navigate stability, despite potential difficulties ahead.

Speakers from Dulux Professional, The Ascott Limited, Yotel, and Tilleke & Gibbins discussed colour trends, the potential of senior living models in Vietnam, value creation from repurposing spaces and how the 2023 draft land law will impact real estate.

Hospitality and real estate navigate uncertainty

Industry experts and senior professionals from Savills Vietnam, Lodgis Hospitality, Nobu Hospitality, Shangri-La Group, Radisson Hotel Group, TCC Land International (Thailand), and Indochina Capital explored branded residences and ultra-luxury dynamics and the strategies for embracing culinary and experiential elements in future mixed-use developments.

Nguyen My Lan, general director of AkzoNobel Vietnam said the hospitality and real estate market is entering a crucial recovery phase. This time is when businesses and investors need to exert significant efforts to introduce new experiences and products that align with the actual needs of customers.

"Introducing Colors of the Year was a way to add vitality to urban areas and enhance living spaces. Furthermore, with the mission of contributing to creating sustainable value and inspiring green living, Dulux Professional will continue to accompany businesses in the hospitality and real estate industries to rejuvenate the energy for the market," Lan said.

The next MTE event, on embracing regenerative real estate, will take place in Ho Chi Minh City in March 2024.

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By Nguyen Huong

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