By Mauro Gasparotti, Director of Savills Hotels Asia Pacific
Vietnam has witnessed a large amount of growth of international hotel brands and foreign management companies in the past few years. From 30 hotels operating under international brands in 2010 there is now a total of 79 by the end of 2017. A particularly large increase was observed in 2018 with recent announcement of Mandarin Oriental in HCMC, Movenpick in HCMC, Best Western Premier in Quang Binh and Long Hai. There are also new brands introduced in the market in the last 3 years include Ozo and X2 Vibe (New Hoi An City), Double Tree by Hilton (Ha Long, Vung Tau and Hanoi), Four Seasons (Quang Nam and Hanoi), Oakwood (HCMC), Glow (Danang), Mai House (HCMC) and more.
Compared to a few years ago, the number of projects that can appealing to international operators is much greater due to better quality, more international design concern, improved trust on foreign management companies and increased need for creating competitive advantages. We observed a large increase of interest from operators in the country in the past three years, following the expansion of the hospitality market. Vietnamese developers are still new to hospitality products, but with the large amount of supply coming, there will be a fast learning for some of them and more quality asset are expected to be under way. We have forecast that a total of more than 30,000 keys will be opened by the end of 2019.
With experience of working as a representative of Vietnamese developers for the selection and negotiation of Management Agreements for several years, we have found that if the developers aim to develop a well built and designed projects, the planning stage is extremely important as part of the whole process which should be done properly. In several cases, the developers rush too much into design and construction without properly running a business study or involving management experts in the design process. This will lead to projects that are not designed with operational efficiency or a business concept that does not suit the market conditions. Therefore, we strongly advise developers to involve management companies from the early stage of design. Some developers forget that architects are not hotel operators. Instead, developers should support them in having professional management guidance during the design process.
Vietnam has also experienced a strong growth of condotels in the last 2 years. It is anticipated that by 2020, approximately 65% of the new supply will be condotel or second home products, which means one of every four in total supply will be categorised into condotel. Condotel is actually much more complicated than a pure hotel. It possesses features of both Residence and Hotel. It requires therefore a higher support in terms of management. However, several projects in Vietnam have not considered the implications on management for the condotel. This will lead to poorly planned products that will look like an attractive residence or condominium but they will be problematic to be managed as a hotel or a resort with several shortfalls in terms of back of house, facilities and front of house. Most condotels are managed by the developers and some of them do not have experience on hotel management. However, there are few projects have begun to integrate a brand and engage management company. Most of these condotels are part of a complex project, which includes hotel or resort component.
For more information, click 12062018 – The rise of Hotel Operators interest in Vietnam hospitality market – EN
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