|Hospitality real estate gets the green light |
With the opening of borders in March and the general shift in attitudes towards the pandemic in Vietnam, the hospitality sector is a prime candidate to rebound in the second half of 2022.
“After more than two years under the pandemic, vaccinated international tourists were allowed back into Vietnam without any obstacles," said Nguyen Ha, senior vice president at Indochina Capital. "Although a full recovery should not be expected until 2023, early trends over the past month have been promising for the Vietnamese tourism industry.”
Airports and tourist destinations were packed over the long weekend holiday earlier in April, so much that airlines were forced to add additional flights to keep up with the demand.
“The true test will be how travel trends continue throughout summer and into fall. Companies are starting to increase their travel budgets, as local business travel should start to revert to pre-pandemic levels, in an encouraging sign for all city hotels,” Ha added.
While international travel was slow to pick up in March, due to uncertainties with procedures and a surge in COVID-19 cases, recent data has shown that tourists from Japan and South Korea have made their way over regardless in big numbers.
Developers and operators, according to Ha, ought to focus their marketing efforts on targeting tourists from Asian countries, as the majority of travellers will look to travel shorter distances on their first few trips abroad.
“This year has been a long time coming for developers who focus on hospitality. Indochina Kajima tentatively plans to open its first Wink Hotel in Danang at the end of 2022 with another following just a few months after," Ha explained. "Those hoping for a quick recovery may be disappointed, but the light at the end of the tunnel is most certainly in sight, and that is an exciting prospect for all of those involved in the travel sector.”
Welcoming new guests
Meanwhile, Regent Hotels and Resorts, a brand name from IHG, officially opened on April 19 on Phu Quoc Island. At the opening ceremony of Regent Phu Quoc last month, Rajit Sukumaran, IHG’s managing director for Southeast Asia and South Korea, commented that it is a very exciting time for the group in Vietnam, where it is targeting growth in a substantial and sustainable way.
“We’re going to double our estate in Vietnam in the next 3-5 years as we show our commitment to the increasing number of guests who want to stay with us, and the owners who want to partner with us,” said Sukumaran.
IHG is going to focus on bringing the right brands to the right locations and creating hotels and resorts that are sought after by travellers and bringing economic growth to cities, regions, and communities, according to Sukumaran.
“We’re confident that Vietnam’s tourism sector will return, and return strongly,” he said. “According to STR, a provider of market data on the hotel industry worldwide, occupancy in the country for the month of February increased by 47 per cent from the year before, which is a very sizeable turnaround.”
International business travel is also coming back strongly in locations including Ho Chi Minh City and Hanoi, led by the pent-up need to travel.
According to Sukumaran, his guests were also booking longer stays than before the pandemic, and also bigger rooms such as suites and residences, as they seek to make the most of their stays.
Vo Hong Thang, deputy director of DKRA Vietnam, said that, in the first quarter of 2022, the resort real estate category witnessed exciting developments in several segments such as resort villas, resort townhouses, and shophouses, with increased supply and consumption.
It is forecasted that in 2022, traditional markets with tourism brands such as Danang, Nha Trang, and Phu Quoc will recover and have strong resurgence steps.
Thang added that completing amendments and supplements to the laws on investment and land related to the legality of tourism real estate in 2022 and beyond will create an optimistic premise for the resort and hospitality sector.
It is expected that this year, the Ministry of Construction will complete the legal framework for condotels, officetels, and shophouse types to protect the legal interests of customers. “This is one of the solid foundations to accelerate the development of those new tourist property types in Vietnam,“ said Thang.
Along with the optimistic signals about tourism, many signs such as the continuous progress of completing legal procedures and the $15.2 billion support package to stimulate demand and economic recovery are opening up new opportunities for the hospitality segment, and the real estate market in general, this year.
Dinh Minh Tuan, director of the southern region at Batdongsan.com.vn, said that resort real estate would become an essential segment.
“Along with centralised traditional markets, the upcoming resort and hospitality real estate investment trend is moving to new markets which have large land funds, improved infrastructure systems, and more incentives such as Quy Nhon, Ba Ria-Vung Tau, and Phan Thiet,” Tuan said.