VietNamNet Bridge – Though the real estate market remains cool and the hotel
business performance is getting worse, this is still an attractive business in
the long term.
According to Cao Thanh Hoang, General Director of KHM Capital, a South Korean
investment fund, a lot of Japanese investors have shown their interest in hotel
Hoang went on to say that it’s now the right time for buyers to contact
investment funds which need to sell hotels’ stakes when the fund closing time
Big money was poured into 5-star hotels in 2007-2008, when the hotel room rates
and the occupancy rate was very high. However, both the rates have been
decreasing continuously over the last two years.
According to Grant Thornton Vientam, the hotel room rate in 2011 dropped to $123
per night from $131 in 2010. The rate decreased further in 2012 which was blamed
on the increase of Asian travelers who tent to use 3-star hotels.
Rich Conti, President of The Plasencia Group, the consultancy firm which gives
advices in the merger and acquisition (MA) deals in the high end hotel sector,
thinks that investors would not get the desired profits, because the current IRR
now just hovers around 16-18 percent, while it was over 20 percent in 2007-2008.
In Vietnam, most of the high end hotels are located on the main routes in
central areas of big cities, on the “golden land areas.” Therefore, investors
have warned that they would have to spend big money to buy the high grade hotels
Hoang has noted that the land use right value is very high, which makes the
hotel prices high. Therefore, the hotel buyers at this moment are mostly the
professional hotel managers and investors, the only people who can ensure the
good business performance of the hotels.
A senior executive of Thien Minh Company has revealed that besides the 3-4 star
hotels, Thien Minh is considering some 5-star hotel projects, hoping to wrap up
some transactions in the time to come.
Vice President of Hilton Worldwide South East Asia–William Costley also thinks
that it’s now the right time to think of long term investment projects, saying
that he can see great opportunities in the high end hotel sector.
The senior executive, in the interview given to the local newspaper VnExpress,
also said he was asked why to open a hotel now in Vietnam, when the local
economy is in big difficulties.
However, what he can see is the market is still very good, the national economy
is not too bad, while the occupancy rate at 4-5 star hotels is still high.
Meanwhile, in tourism or hotel development, investors need to keep long term
vision, not for one or two years, but 12 years, when making investment decisions
Who have most 5-star hotels in HCM City?
Saigontourist, a well-known travel firm, is the owner of many 5-star hotels in
HCM City most of which have become operational. It holds 100 percent of stakes
at Rex and Majestic
New World Hotel, $87.5 million, in district 1: developed by Saigon Inn – New
World Hotel joint venture of some partners, including Saigontourist and New
World Hotel Ltd.
Sheraton Hotel, $97 million, in district 1: developed by Dai Duong Joint Venture
of the Saigon Real Estate Corporation, Saigontourist and Lam Ho Investment Pte.
Kumho Asiana Plaza, $223 million, in district 1, developed by HDSC,
Saigontourist, Kumho EC Inc.