VIETNAM’S TOURISM AND HOSPITALITY MARKET Duong Thuy Dung, Associate Director October 14, 2014
2 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
CONTENT
1. Regional Hotel Peformance
2. Vietnam Hotel Peformance
3. A glimpse on Phu Quoc
4. Hospitality Investment
3 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
REGIONAL HOTEL PERFORMANCE
Tourist Arrivals by Year
Source: Association of Southeast Asian Nations.
Vietnam has one of the smallest number of international visitor per
year in the region
0
5,000
10,000
15,000
20,000
25,000
30,000
Vie
t N
am
Thaila
nd
Ph
ilip
pin
es
Sin
gap
ore
Ma
laysia
Ind
on
esia
Tourist arr
ivals
('0
00)
2010 2011 2012 2013
4 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
REGIONAL HOTEL PERFORMANCE
Occupancy Rate (%) – 4-5 star
Source: STR Data.
60%
62%
64%
66%
68%
70%
72%
74%
76%
78%
Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
Hanoi HCMC Kuala Lumpur Bangkok Jakarta
Jun-14
Occupancy level also lowest compared to other cities
5 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
REGIONAL HOTEL PERFORMANCE
Average Daily Rate – 4-5 star
Source: STR Data.
80
90
100
110
120
130
140
Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
US
$/r
oo
m/n
igh
t
Hanoi HCMC Kuala Lumpur Bangkok Jakarta
Jun-14
…but ADRs have demonstrated a fair growth
6 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
REGIONAL HOTEL PERFORMANCE
Revenue per Available Room – 4-5 star
Source: STR Data.
Jun-14 55
60
65
70
75
80
85
90
95
Dec-11 Jun-12 Dec-12 Jun-13 Dec-13
US
$/r
oo
m/n
igh
t
Hanoi HCMC Kuala Lumpur Bangkok Jakarta
…ensuring RevPAR levels remain above that of many regional
competitors
8 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
INTERNATIONAL ARRIVALS
International Tourist Arrivals
Source: Vietnamese Government Statistical Office, Q3 2014.
-30%
-10%
10%
30%
50%
-
2
4
6
8
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
9M
20
14
Gro
wth
Ra
te (
%)
Arr
iva
ls (
Mill
ion
pe
rso
ns)
International arrivals Growth rate
International visitor arrivals to Vietnam have grown rapidly over the past
few years, but will have problems reaching the VNAT target (8 mil in2014)
9 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
China accounts for the largest proportion
INTERNATIONAL ARRIVALS STRUCTURE
Source: Vietnam National Administration of Tourism, Q3 2014.
International Tourist by Top 5 Countries, 9M 2014
0%
4%
8%
12%
16%
20%
-
400
800
1,200
1,600
2,000C
hin
a
Ko
rea
Ja
pa
n
US
A
Ta
iwa
n
% g
row
th y
-o-y
No
. o
f to
urists
('0
00
)
No. of tourists % growth y-o-y
10 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Vacation tourists dominate the market
INTERNATIONAL ARRIVALS STRUCTURE
Source: Vietnam National Administration of Tourism, Q3 2014.
International Tourist by Purpose, 9M 2014
-
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
2007 2008 2009 2010 2011 2012 2013 9M 2014
Inte
rna
tio
na
l To
urist A
rriv
als
('0
00
)
Leisure Business/MICE Others
11 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
VIETNAM HOTEL PERFORMANCE
Total Supply by Hotel rooms (3-5 star)
Source: CBRE Vietnam, Q3 2014.
-
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
HCMC Hanoi Da Nang Nha Trang Phu Quoc
12 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Recovery on the way
VIETNAM HOTEL PERFORMANCE
Occupancy Rate (5 star)
Source: CBRE Vietnam, Q2 2014.
30%
40%
50%
60%
70%
80%
90%
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014
Occu
pa
ncy r
ate
HCMC Hanoi Da Nang Nha Trang Phu Quoc
13 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Da Nang and Phu Quoc are leading the ADR growth
VIETNAM HOTEL PERFORMANCE
Average Daily Rate (5 star)
Source: CBRE Vietnam, Q2 2014.
80
100
120
140
160
180
200
220
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014
AD
R (
US
$/r
oo
m/n
igh
t)
HCMC Hanoi Da Nang Nha Trang Phu Quoc
14 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Phu Quoc in a different class
VIETNAM HOTEL PERFORMANCE
Revenue per Available Room (5 star)
Source: CBRE Vietnam, Q2 2014.
20
40
60
80
100
120
140
160
180
Q4 2010 Q4 2011 Q4 2012 Q4 2013 Q2 2014
Re
vP
ar
(US
$/r
oo
m/n
igh
t)
HCMC Hanoi Da Nang Nha Trang Phu Quoc
16 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Opportunities
PHU QUOC HOSPITALITY MARKET
Potential for eco-tourism and eco-resort development
Investors: A few number of top-tier hotels/resorts and no existing second home
villa creates a good opportunity for the hospitality investors
Hotel operators: lack of big brand names also creates a good opportunity for
international operators
eco
sss
Source: CBRE Vietnam, Q3 2014.
150 km Phu Quoc has
huge potential to
develop into a
favoured beach
escape
coastal length
99 scenic mountains
62% forest area
With
17 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Concerns
PHU QUOC HOSPITALITY MARKET
Infrastructure: Poor infrastructure, low progress
on road upgrading
Facilities and amenities : Lack of international
hospitals, supermarkets or retail chains, nightlife,
bars and clubs
Master plan: Too many projects under planning
while local government keeps changing the
island’s master plan
Labour force: Lack of skilled workforce
Development cost: High cost of construction
and operation s
Source: CBRE Vietnam, Q3 2014.
18 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
New airport raises seat capacity by 60%
PHU QUOC HOSPITALITY MARKET
Source: Centre for Aviation (CAPA), Q2 2014.
New airport
115 Flights per week (current capacity)
187 max pax per flight (current capacity)
760,000 max pax per year (current capacity)
2,700,000 max pax per year (expected capacity in 2020)
Old airport
100 Flights per week
90 max pax per flight
450,000 max pax per year
“ − Only domestic airlines area operating in
Phu Quoc International Airport (Vietnam
Airline, Vietjet Air and Jetstar Pacific)
− New flights open soon:
• Phu Quoc - Singapore: 2 flights/week starting
on November 2, 2014 (Airbus 321)
• Phu Quoc – Siem Reap: 3 flights/week starting
December 18, 2014 (ATR-72)
”
19 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
100 establishments offering
approximately 2,900 rooms
Only 15 (with 952 rooms in
total) are classified as 3-5
hotels
All top-tier hotels in Phu
Quoc are on the west side
of the island
Existing supply – Limited & Small Scale Accommodation
PHU QUOC HOSPITALITY MARKET
Location of Top-tier Hotels in Phu Quoc
20 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Operating Cost
PHU QUOC HOSPITALITY MARKET
ENERGY COST F&B COST
4-STAR
HOTELS IN
MAINLAND
4-STAR
HOTELS IN
PHU QUOC
4-STAR
HOTELS IN
MAINLAND
4-STAR
HOTELS IN
PHU QUOC
6-8%
TOTAL
REVENUE
12-15% TOTAL REVENUE
20-25%
TOTAL REVENUE
30-35%
TOTAL REVENUE
Source: CBRE Vietnam, Q3 2014.
50-60% ENERGY COST DROPS WITH
POWER CONNECTED TO
NATIONAL GRIDLINE
Expected lower ADR => Phu Quoc become more attractive
destination
Increasing operating
revenue as energy cost is expected
to reduce significantly
21 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Top-tier hotels in Phu Quoc are among the best performers
• Small-scale hotels (from 17 to 43 keys) can achieve occupancy rates from 80% upward
• Luxury four-star and three-star categories obtained average occupancy rates of above 80%, standard
four-star hotels obtained average occupancy rates of around 60%.
• Bungalow-style resorts achieve higher occupancy rates than block hotels as most of traveller are holiday-
makers and like to stay in a nature-oriented accommodation
Market Leader in Vietnam
PHU QUOC HOSPITALITY MARKET
RevPAR of Top Hotels in Selected Coastal Provinces
70
80
90
100
110
120
130
Phu Quoc HCMC Nha Trang Phan Thiet Da Nang Hanoi Vung Tau
RevP
AR
(U
S$
/ro
om
/nig
ht)
Source: CBRE Vietnam, Q3 2014.
22 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Salinda Premium Resort and Spa
open for booking now
Future supply – Big Names Lining Up
PHU QUOC HOSPITALITY MARKET
VINPEARL PHU QUOC
NOVOTEL PHU QUOC RESORT BY
CEO GROUP
INTERCONTINENTAL BY
BIM GROUP
SUNSET SANATO
Source: CBRE Vietnam, Q3 2014.
24 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Ho Chi Minh
City
Hanoi
HOSPITALITY INVESTMENT Big investments are seeping into hospitality sector
• Acquired project from Ha Do Group
Source: Compiled from various sources, Q3 2014.
POSITION INVESTORS /
DEVELOPERS COMPONENTS VALUE
Sapa Sun Group
• Fansipan cable car
• Hotel
• Entertainment complex
$206 mil.
Hanoi Thanh Hoa
Construction Corp. * • 4-star Hotel -
Quang
Ninh
Nakheel
Sovico Holding • Urban- tourism complex $550 mil.
VinGroup • Resort complex $45 mil.
ISC Corporation
Tuan Chau
• Casino
• Recreation complex $7,000 mil.
Hai Phong VLC • 200-room hotel/Accor
• 24 serviced apartments -
Thanh Hoa FLC Group • 18-hole golf course,
• Resort complex $257.5 mil.
Phu Yen Vung Ro Petroleum • Resort complex $2,500 mil
Phu Quoc
VinGroup • 27-hole golf course
• Resort complex $796 mil.
CEO Group • Resort complex
• 406-room Hotel (Novotel) $210.7 mil.
BIM Group • Resort complex
• 400-room Hotel (Crowne Plaza) $70.2 mil
25 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
36%
29%
6%
7%
21%
1%
Hotel
Office
Development site
Apartment
Retail
Industrial
Hotel accounts for 35%
transactions and 36% value
Office accounts for 20%
transactions and 29% value
Development sites account
for 26% transactions but
only 6% value
Retail accounts for 21%
value although only 6% of
transactions
HOSPITALITY INVESTMENT
Proportion is calculated based on transactions made during 2011 – 1H2014
Source: RCA, Sep 2014
35%
20%
26%
11%
6%
2% Hotel
Office
Development site
Apartment
Retail
Industrial
54
TR
AN
SA
CT
ION
S
TO
TA
L V
AL
UE
US
$1
,498 M
IL
Hotel is the most sought-after property (2011-2014)
26 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
The number of hotel sales in Vietnam has dropped in 2009 as a
consequence of lack of liquidity and concern about future performance.
In 2009, lower prices, additional liquidity and more stable economic
conditions have helped increase the sales volume.
Increasing number of hotel transactions since 2009
HOSPITALITY INVESTMENT
3
7
3
1
3
7
3
5
2
0
1
2
3
4
5
6
7
8
-
50
100
150
200
250
300
350
2006 2007 2008 2009 2010 2011 2012 2013 YTD2014
US
$ M
illio
ns
Total Value Number of transactions
Source: RCA, Sep 2014
27 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
The market experienced the highest transacted price per room in 2013
Highest transacted price per key recorded in 2013
HOSPITALITY INVESTMENT
Source: RCA, Sep 2014
-
100,000
200,000
300,000
400,000
500,000
600,000
2006 2007 2008 2009 2010 2011 2012 2013 YTD2014
Tra
nsa
ctio
n p
rice
pe
r ke
y
(US
$)
Transaction price per key (min-max range)
28 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Key indicators
HOSPITALITY INVESTMENT
Hotel Office Retail Apartment Dev Site
No. of
transactions 19 11 3 6 14
Size No. of rooms sqm sqm No. of apartments Sqm/ ha
Range 54-411 2,240 - 31,562 6,880 - 55,000 260 - 550 2,994 sqm - 7.8ha
Average 171 18,261 33,778 407 18,521 sqm (*)
Value
Range US$5.2-$155.2 mil US$5.1-$67.4 mil US$5.3-$314 mil US$10.7-$43.2 mil US$7.3-26.7 mil
Average US$31.81 mil US$43.87 mil US$159.65 mil US$20.62 mil USS$12.56 mil
Value per unit per room per sqm per sqm per apartment per sqm
Range US$38,267-$531,652 US$1,428 - $3,749 US$776-$7,958 US$24,280 - $78,596 US$185-$2,036
Average US$153,352 US$2,514 US$4,367 US$47,422 US$936
Key markets HCMC, Hanoi, Hoi An HCMC, Hanoi HCMC HCMC, Hanoi HCMC, Hanoi
Cap Rate N/A 8.5%-13.6% N/A N/A N/A
(*) Exclude Alaska Garden of 7.8ha
Source: RCA, Sep 2014
29 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
HOSPITALITY TRANSACTIONS 2012 - YTD2014
Source: RCA, retrieved September 2014.
MOVEMPICK SAIGON
LIFE WELLNESS RESORT LOTTE LEGEND HOTEL HANOI DAEWOO HOTEL
• Location: HCMC
• Seller: VinaCapital
• Buyer: Tung Shing
• Amount: $30.4 mil
• Location: Hanoi
• Seller: Daewoo
• Buyer: Hanel
• Amount: $114.0 million
• Location: HCMC
• Seller: Vinaland + Kotobuki
• Buyer: Lotte
• Amount: 65.1
• Location: Quy Nhon
• Seller: IBUS
• Buyer: Minor International
• Amount: $6.4 million
VINPEARL LUXURY SHERATON NHA TRANG
• Location: HCMC
• Seller: Vingroup
• Buyer: VIPD Group
• Amount: $155.2 million
• Location: Nha Trang
• Seller: Vinaland
• Buyer: n/a
• Amount: $42 million
LIFE HERITAGE RESORT
• Location: Hoi An
• Seller: IBUS
• Buyer: Minor International
• Amount: $9.6 million
CENTURY RIVERSIDE HOTEL
• Location: Hue
• Seller: Crowndale International
• Buyer: Hue People Committeel
• Amount: $5.2 million
30 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
Domestic Players Dominate both Buyers and Sellers
VIETNAM INVESTMENT
Domestic 63%
Japan 6%
Korea 13%
Offshore 4%
Singapore 8%
Taiwan 2%
Thailand 4%
Domestic 54%
Hong Kong 15%
Japan 2%
Korea 13%
Malaysia 3%
Netherlands 5%
Offshore 8%
Domestic
Hong Kong
Japan
Korea
Malaysia
Netherlands
Offshore
(blank)
Data recorded during the period of 2011- YTD 2014
Source: RCA, Sep 2014
BUYERS SELLERS
Singapore
Taiwan
Thailand
Koreans are active in both selling (Kumho Asiana, Daewoo) and buying (Lotte, CJ, Asiana Airlines).
Singaporeans have become active buyers (Keppel, Mapletree, Capitaland, Ascott).
Proportion is calculated based on transactions made during 2011 – 1H2014
Source: RCA, Sep 2014
31 CBRE | VIETNAM’S TOURISM AND HOSPITALITY LANDSCAPE
VIETNAM INVESTMENT Continued pockets of interest from overseas investors
VALUATION TRANSPARENCY STRUCTURING TRACK RECORD
Significant and varied interest in Vietnam but investors (and agents) frustrated
by limited deal opportunities;
Demand for deals continues to significantly outstrip supply – particularly for
operating assets in city centre (HN and HCMC);
For the majority of ‘deals’ the big four questions still remain - Without a
realistic and honest approach to these, foreign investors will look elsewhere.
Every week – NEWSPAPER UPDATES
Every month – DASHBOARD
Every quarter – QUARTERLY REPORT
At CBRE, we live and breathe
the business of real estate
© 2014 CBRE (Vietnam) Co., Ltd. This report has been prepared in good faith and with due care by CBRE (Vietnam) Co., Ltd. We obtained some of the information above from sources we believe to be reliable. However, we have not verified the accuracy of the information which we obtained from other sources and make no guarantee, warranty or representation about it. We include projections, opinions, assumptions or estimates which are made with careful consideration of factors known to us for example only, and they may not represent current or future performance of the market. This information is designed exclusively for use by CBRE clients, and cannot be reproduced without prior written permission of CBRE.
For more information regarding this presentation please contact: CBRE Vietnam Co., Ltd. Research & Consulting T +84 8 3824 6125
F +84 8 3823 8418