Vietnam's Hospitality & Real Estate - The Way Forward

Vietnam’s real estate and hospitality markets are transforming and are facing several significant short-term challenges.

Mauro Gasparotti, Director of Savills Hotels, hosted Meet The Experts and delivered a presentation on the challenges and opportunities: “Vietnam’s hospitality market had great momentum before the pandemic, moving from a destination only for experienced travellers, to a place for holiday and leisure travellers. It rivalled international travel hubs like Thailand, thanks to the joint efforts from many industry players.”

“However, development outpaced demand, and now we are dealing with the consequences of overdevelopment like incomplete or underperforming projects. The market needs time to readjust. On a positive note, several high-quality hotels and resorts in the country are doing exceptionally well, and they will keep doing so for the foreseeable future. Projects that have been properly implemented and are correctly managed will recover faster,” Mauro continued.

Tourism faces difficulties such as inflation, global political tensions, raised airfares and labour shortages. In Vietnam, recovery is fragmented. HCMC has experienced significant recovery with occupancy fast reaching 2019 levels. However, properties in Nha Trang and Da Nang are still struggling to improve performance. Operating margins in these areas are -40% to -60% lower than in Bali and Phuket.

Fenady Uriarte, Business Development Manager, Southeast Asia of STR added “While Southeast Asia’s RevPAR for February YTD 2023 moves closer to 2019 levels at -3.6%, Vietnam’s overall RevPAR is still -33.4% behind. However, ADR is moving in the right direction. As we look ahead, key source markets reopening, such as China and Japan, could present an upside for Vietnam.”

Many hotel developments are delayed or on hold because of tightened credit controls. However, the conversion of existing developments shows that many hotel owners are looking to collaborate with chain brands. Owners of independent hotels and chains are increasingly attracted to the opportunity to benefit from the scale, expertise, and network of global hotel operators.

At the MTE conference, senior representatives from RMIT University Vietnam, Radisson Hotel Group, Archipelago Indochina, La Vie Hotels & Resorts, VinHMS, TUI Blue Hotels, Qatar Airways, TIA Wellness Resort and Nova Hospitality discussed the trajectory of Vietnamese hospitality, the development of coastal destinations, and how to implement sustainable expansion and recovery.

At present, classic hotel brands dominate in Vietnam. By 2026, more lifestyle brands are expected, including Voco, Hyde, Hotel Indigo, Caption by Hyatt, L7 and Garrya. New types of travellers are emerging who focus on their overall experience and have higher expectations, which has fuelled the rise of lifestyle hotels.

Millennials make up 30% of Vietnam’s population and are shaping the travel landscape. Norbert Vas - COO of Archipelago Indochina shared “I am both concerned and optimistic about this sector in Vietnam. Concerned about where big operators are taking the concept, but optimistic because there is vast local talent and creativity and a burgeoning young domestic class of sophisticated travellers who would gladly embrace the lifestyle concept if executed correctly.”

Speakers from QUO Global, Dulux Professional, IHG Hotels & Resorts, SOHO Hospitality and Delivering Asia Communications discussed the latest industry movements such as colour trends, hotel conversion, luxury dining, and the power of branding and media communications.

Industry experts and senior professionals from Savills Vietnam, Lodgis Hospitality Holdings, Swiss-Belhotel International, TCC Land International (Thailand), Tanzanite International, Baker McKenzie, Brand & Co and EuroStyle explored branded residences and ultra-luxury dynamics.

In the next three years, forecasts expect significant growth in the luxury hotel segment. While luxury rooms currently have 2% of the total supply, they have 5% of the pipeline.

Luxury branded residences are increasingly popular in Vietnam. International property branding expert Anthony Moulton, Managing Director at Brand & Co said, “Time and space is the new luxury.”

Ultra-high-net-worth (UHNW) and high-net-worth (HNW) buyers want branded residences that buy them time and a home that gives them space, think Super Prime real estate where size matters.

True luxury is about creating a space for the mind (in a philosophical sense, creating time). It has to do with the quality of space, services, amenities, light and air, rather than just expensive materials.

When branding and marketing these types of projects, Moulton said “Prestige and status are still the two largest factors that make people buy luxury branded residences and luxury goods”.

Hotels are reshaping the look, feel and appeal of their properties, using exterior and interior designs as one of their differentiating methods to create unique experiences.

The representative of Vietceramics added “Higher guest expectations have motivated Vietceramics to provide the most innovative solutions for interior building materials, sourced from our globally renowned partners. Thanks to groundbreaking manufacturing techniques, our tile and sanitary ware collections could satisfy exceptional aesthetics requirements. They also incorporate technologies such as anti-slip, anti-bacterial, and private wellness total health care. We proudly accompany investors in creating a perfect hotel ambience, that caters to the safety, wellbeing, and satisfaction of their customers.” 

“Eco-friendly architecture is an inevitable global trend. To support legitimate demand, AkzoNobel is constantly researching colour trends that are in keeping with consumer preferences. We also strive to develop and deliver sustainable, eco-friendly, and healthconscious products. This year, AkzoNobel has partnered with Savills Hotels to share and contribute to the development of sustainable solutions for the industry. With 20 years of trend research and colour analysis, we forecast world trends in every aspect of life, from social and environmental trends to economics. By translating real feelings and interests into colour, we aim to inspire our clients to transform the space around them,” Nguyen My Lan, General Director of AkzoNobel Vietnam further added.

WeHub Vietnam and Savills Hotels would like to thank our event partners, guests and speakers. WeHub Vietnam looks forward to future MTE events, where industry professionals can stay connected, learn and gain insights.

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