Alternaty - Vietnam hotel market overview 2013

A boutique real estate firm, we partner

with hotel and resort developers to

deliver alternative real estate products.

Vietnam Hotel Market

28 June 2013

Presented by Mauro Gasparotti - Executive Director

Contact: [email protected] - # +84 908 556 492

Prepared for :

mailto:[email protected]

28 June 2013 2

Presentation Outline Vietnam Hotel Market

• Vietnam Real Estate Market

• Hotel Supply and Demand

• Hotel Players

• Hotel Investment

• Market Opportunities

28 June 2013 3

2000 - 2006: Real Estate/ Hospitality Vietnam Hotel Market

• Relatively undeveloped country, limited infrastructure , roads or international airports.

• Very limited real estate products, 50 dollar five star rooms, few serviced apartments,

grade A offices and condominiums.

• Low interest from the international investment community.

• Vietnam perceived still as a backpacker destination, add-on to Thailand, only for

experienced travelers, perceived as low safety and no infrastructure.

• Only HCMC and Hanoi offering international flights.

• Six Senses, Furama, Nam Hai still the only “high end” resorts product available.

• Operators only Accor, Marriott, Starwood and Hilton and only for upscale products, in

the main cities.

• Domination of government owned service providers, Saigon Tourist and Hanoi Tourist.

28 June 2013 4

2007 - 2013: Vietnam Bumpy Ride Vietnam Hotel Market

• 2006/2007 Vietnam opened to WTO, financing easily available worldwide, country

became the darling of speculators.

• Due to the new foreign investment laws and low restrictions on land development,

Vietnam become an attraction for international investors looking for a short term bite

into the upcoming bubble.

• Foreign Direct Investment skyrocketed

0

20

40

60

80

2007 2008 2009 2010 2011 2012 5M 2013

Foreign Direct Investment

(US$ Billion)

Committed Capital Implemented Capital

0

2

4

6

8

10

0

1000000

2000000

3000000

4000000

2007 2008 2009 2010 2011 2012 Q12013 R

eal

GD

P a

nn

ual

gro

wth

rat

e (

%)

No

min

al G

DP

(V

ND

)

Vietnam's Nominal GDP and

real GDP annual growth rate

Norminal GDP Real GDP annual growth rate (%)

Source: Foreign Investment Agency Source: General Statistics Office of Vietnam

28 June 2013 5


• The stock market was the first to react to the general optimism with stunning increases.

• Front page of the Economist: “The Next Asian Tiger”.

• Demographics of Vietnam, young population, stable and high GDP growth, illusion that

the economic bubble was supported by strong fundaments and thus sustainable.

VN Index – 10 years

Source: Ho Chi Minh Stock Exchange

28 June 2013 6


• Capital gains from stock market and bank financing went into real estate.

• Land prices increase 100% - 200% y-o-y (certain cases 500% increase).

• Office price doubles y-o-y from average of $15 - 20 per m2 to $40 - 45 per m2

• Prime retail space fully occupied.

• Industrial parks at full capacity with land rental 50% increase y-o-y.

• Very limited condominiums and villas. Majority of projects sold out in pre launch stage,

with the legendary night of the pre launch of the Vista in HCMC (CapitaLand) where

buyers were queuing outside the show room the night before the sales begun.

• Clear undersupply of hotel rooms, with mid to high scale running at 80% - 85%

occupancy and 35% - 40% yearly increase in ADR.

28 June 2013 7


• Hangover day? Starting in Q2 2008, inflation shooting up at 25% year end.

• In order to control inflation, Government set a stop lending policy, which, acting

together with the Global Financial Crisis, caused liquidity to dry up and market to

collapse.

0

5

10

15

20

25

30

2007 2008 2009 2010 2011 2012 2013

Y-o

-Y P

rice

In

de

x (

%)

Consumer Price Index

CPI (Y-o-Y) Housing and Construction Materials

Source: General Statistics Office of Vietnam

• Second Half of 2008 and the whole 2009, a write off period for Vietnam.

• But still high confidence on the fundamentals of the country and belief on short term

crisis: inflation only to be blamed!

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28 June 2013 9


• 2010, inflation under control, real estate confidence back but no longer FDI, local

developers to be the dominant players.

• Bitexco to build the HCMC flagship building, Vincom to expand into commercial, retail,

residential, HAGL, SSG, Thu Duc House, Vinaconex to penetrate the local condo market.

• State Owned Enterprises, Private Family and Banks, all ready to play the property game.

• Countless new smaller developers and SOEs, with limited resources, could not afford to

develop commercial or residential in HCMC and Hanoi. Second home and coastal

projects became the preferred investment with accessible land price and no limitation

on pre-sale policy.

• Branded residences, Mixed-use with rental pool and timesharing products.

• International operators signing MOUs.

• Timesharing companies looking for deals.

• Condotels start to shape up.

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• First half 2011, two main factors affect the market: inflation

rises up again and oversupply starts to hit prices and

occupancies.

• Interest rates for banking loans skyrocket at 20% annual rate

as a result of Government policy to control inflation.

• Buyers lost completely interest in second home and coastal

projects. Price of villas collapse.

• Higher vacancy in commercial buildings and strong decrease in rental rates.

• Price for residential market started to curve down and developers reducing prices.

• Collections of buyer installments slow and difficult.

• As a result: Raising Non Performing Loans, collapse of credit and banking system,

liquidity problems and low consumer and investors confidence.

• 2014 ….. ?

28 June 2013

Hotel market - Demand Vietnam Hotel Market

• International tourist arrivals in Vietnam 2012

have reached 6.84 million, with an

increased of 60.98% from 2008.

• In May, 2013 the international tourist arrivals

is 0.56 million indicating a decrease of 9%

compared to that of April, 2013.

From Jan to May, 2013, the international

tourist arrivals is 2.97 million, with a

decrease of 1.4% compared to the same

period of 2012.

• The local travelers count still for the vast

majority of the market, with a total of 32.5

million in 2012, equal to 82.6% of the total

travelers inside the country.

0

1

2

3

4

5

6

7

2005 2006 2007 2008 2009 2010 2011 2012

Tourist Arrivals to Vietnam (million)

17.4%

82.6%

International

arrivals 2012

Domestic

travelers 2012

Source: Vietnam National Administration of Tourism

Source: Vietnam National Administration of Tourism

11

28 June 2013

Hotel market demand by origin

Vietnam Hotel Market

61 20

12

7

Segmentation of International

travel in Vietnam - 2012

Tourism

Business

Visiting relatives

Others

65 13

15 7

Geographic origin of travelers

to Vietnam - 2012

Asia

America

Europe

Others

170

93

60 51

9.87

0

20

40

60

80

100

120

140

160

180

China South

Korea

Japan Taiwan USA

Growth by geographic origin 2009 – 2012 (% growth)

Source: Hotel Investment Conference Asia Pacific (HICAP) 2012 - QUO



• In the first 5 months of 2013, Russian tourist arrivals is 136,801

indicating a sharp increase of 57.8% compared to the same

period of 2012.

• Repeat clients less than 15%

12

Hotel supply in Vietnam - 2012

28 June 2013

Hotel Inventory Vietnam Hotel Market

No. of hotels

632 hotels

39.48%

590 hotels

36.85%

43 hotels 2.69%

116 hotels 7.25%

219 hotels 13.68%

Source: Alternaty

13

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.

28 June 2013 14

Hanoi

Nhatrang

Dalat

Phuquoc

Vietnam Hotel Supply Vietnam Hotel Market

Haiphong

Danang

Muine

HCMC

0102030405060

0100020003000400050006000

3 star 4 star 5 star

No. of rooms

No. of hotels

0

10

20

30

40

0

500

1000

1500

2000

2500


0

20

40

60

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1000

2000

3000

4000


0

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10

15

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500

1000

1500


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800


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15

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1000

1500


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20

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40

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1000

1500

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2500


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2000

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4000


Source: Alternaty

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.

.

.

.

.

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Hanoi

Nhatrang

Dalat

Phuquoc

Vietnam Indicative Hotel Land Price Vietnam Hotel Market

• Haiphong

• Danang

• Muine

• HCMC

(USD/sqm)

Central Non-central

Hanoi 11,000 – 22,000 2,000 – 5,000

HCMC 7,000-16,000 2,000-4,000

Dalat 800 – 2,500 60 - 400

Beach-front In-land

Haiphong NA 100-300

Danang 50 – 130(hoi an) Depend on city location

Nhatrang 30 – 60 (Cam Ranh Bay)

400 – 800 (Nha Trang city)

Muine 500 – 900 (small size)

30 - 80

Phuquoc 150 – 200 20 – 50

Source: Alternaty

Note : the land price indicated is only as reference. The price could vary considerably based on size, location , legal ownership and development permitted on the land.

28 June 2013

HCMC supply Vietnam Hotel Market

New Entry in 2012-13 (3 – 5 star) :

Nikko Saigon 334 rooms

Novotel Saigon 247 rooms

Tan Son Nhat Saigon 208 rooms

Ibis Saigon 140 rooms

Expected new entry 2013-14 (5 star only):

Pullman Saigon 306 rooms

Timesquare 315 rooms

Le Meridien 350 rooms

Vincom (new name) 300 rooms

0

2000

4000

6000

8000

10000

12000

2000 2010 2013 2014F

Number of hotel rooms

3 – 5 star Five star

0%

20%

40%

60%

80%

100%


Hotel ownership by grade, Q2,

2013

State Owned Entps Joint Venture Family

Source: Alternaty

Source: Alternaty 16

0

1000

2000

3000

4000

5000

6000

7000

8000

9000

10000

2000 2010 2013 2014F

Number of hotel rooms in Hanoi 3 – 5 star

28 June 2013

Hanoi supply Vietnam Hotel Market

New Entry in 2012-13 (3 – 5 star):

Pullman Hanoi 242 rooms

Hanoi Club Hotel & Lake Palais 128 rooms

Expected new entry 2013-14 (5 star only) :

JW Marriot 394 rooms 56

Intercontinental Landmark 72 359 rooms

Five star

Source: Alternaty

17

28 June 2013

Vietnamese hoteliers Vietnam Hotel Market

The future of the Vietnamese hospitality?

18

28 June 2013

Confidential Sale

Hotel + Additional commercial land

Buyer – Lotte Group

Legend Hotel InterContinental Hanoi West Lake

$ 370,000/rooms

Seller - Vietnamese

Buyer - Berjaya Land

Sold under construction

Hotel Investment - noteworthy hotel transactions Vietnam Hotel Market

19

$ 325,000/room

Seller – Vietnamese

Buyer - Berjaya Land

Indicative yield: approx. 8.5%

Sheraton Hanoi

$ 45,000,000 for

5 resorts total of 417 keys

Seller – Victoria Group

Buyer – Thien Minh Jsc

Victoria Hotel Group 5 resorts

Note : While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy

or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission

28 June 2013

$ 260,000/room

Seller – Vinacapital

Buyer – N/A

Indicative yield: approx. 11.5%

Hilton Hanoi Opera

$ 16,000,000

96 + 63 keys

Seller - Life Resort

Buyer - Minor International

Yield analysis: NA

Life Resort Hoi An and Quy Nhon

Hotel Investment - noteworthy hotel transactions Vietnam Hotel Market

20

$ 470,000,000

Hotel + Retail

Seller - Vingroup

Buyer - Infrastructure and Property Development Group (VIPD)

$ 145,000/room

Seller – Vinacapital

Buyer – Minority Shareholder

Sheraton Nhatrang

Vincom A

Note : While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy

or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission

International tourist arrival

2011 3.5 mil, y-o-y increase of 11.7%

2012 3.8 mil, y-o-y increase of 10.5%

5M, 2013 1.6 mil

Investment opportunities

• Mid Scale , Budget and Limited Service category.

Ideally international management.

• Serviced Apartments (Mid and high level)

• Mixed use complex Retail/Hotel

• City Resort (gate away)

Challenges

• Land price

• Five star room supply in 2014

HCMC hotel market Vietnam Hotel Market

Source: The Ho Chi Minh City Department of Culture, Sports and Tourism

28 June 2013 21

Hanoi hotel market Vietnam Hotel Market

Total tourist arrival

2011 13.5 mil(11.6 mil domestic & 1.9 mil foreign), y-o-y increase of 9.8%

2012 14.4 mil (12.3 mil domestic & 2.1 mil foreign), y-o-y increase of 6.67%

Q1, 2013 5.1 mil (4.5 mil domestic & 0.6 mil foreign)


• Mid Scale , Budget and Limited Service category.

Ideally international management.

• Serviced Apartments (Mid and high level)

• Mixed use complex Retail/Hotel

Challenges

• Land price

• City future development direction

Source: The Hanoi Department of Culture, Sports and Tourism

28 June 2013 22


2011 2.35 mil (1.85 mil domestic & 0.5 mil foreign), y-o-y increase of 33%

2012 2.65 mil (2.02 mil domestic & 0.63 mil foreign), y-o-y increase of 12%

4M, 2013 0.9 mil (0.62 mil domestic & 0.28 foreign)


• International four/three star resorts

• Destination resort (Spa)

• Mid Scale Family (Club Med)

• Beach Club, entertainments

• Fractional Sale/timesharing

Challenges

• High risk of oversupply

• Seasonality

Danang hotel market Vietnam Hotel Market

Source: The Da Nang Department of Culture, Sports and Tourism

28 June 2013 23

Lam Dong tourist arrival

2011 2.23 mil (2.14 mil domestic & 0.09 mil foreign)

y-o-y increase of 8.7%

9M, 2012 2.73 mil (2.5 mil domestic & 0.23 mil foreign), increased 17%

compared to same period of 2011

Q1, 2013 1.09 mil (1.03 mil domestic & 0.06 mil foreign), increased 4.86%

compared to same period of 2012


• Spa Destination

• Retirement villages.

Challenges

• Oversupply

• Limited infrastructure

• Limited tourist attraction

Dalat hotel market Vietnam Hotel Market

Source: The Lam Dong Department of Culture, Sports and Tourism

28 June 2013 24

Khanh Hoa Tourist arrival

2011 2.30 mil (1.86 mil domestic, 0.44 mil foreign), y-o-y increase of 25.02%

2012 2.31 mil (1.78 mil domestic, 0.53 mil foreign), y-o-y increase of 0.42%

5M, 2013 1.17 mil (0.9 mil domestic & 0.27 mil foreign)


• Resorts

• Mixed use Residential/Resorts

• Branded residences

• Beach Clubs

• Retails

• Boutique high end resorts

Challenges

• Risk of oversupply

• Limited international flights

• Midscale destination

Nha Trang hotel market Vietnam Hotel Market

Source: The Khanh Hoa Department of Culture, Sports and Tourism

28 June 2013 25




5M, 2013 0.26 mil (0.19 mil domestic & 0.07 mil foreign), increased 29.6%

compared to first 5M of 2012


• Resorts

• Mixed use Residential/Resorts

• Branded residences

• Beach Clubs

• Boutique high end resorts

Challenges

• Construction costs

• Operation Costs

• Limited international flights

• Development Approvals

Phuquoc hotel market Vietnam Hotel Market

Source: The Kien Giang Department of Culture, Sports and Tourism

28 June 2013 26

A boutique real estate firm, we partner

with hotel and resort developers to

deliver alternative real estate products.

About Alternaty

28 June 2013

28 June 2013

Alternaty is a boutique real estate firm providing

a suite of consulting services throughout the

development lifecycle. Headquarter in HCMC

Vietnam, with associates in Thailand, Myanmar

Indonesia and the Maldives.

Our team has 17 years of combined experience in

the real estate industry with an extensive track

record in hotel and resort advisory in Indochina

Region

More than 40 hotel and resort valuations in

Vietnam, Lao and Cambodia.

More than 35 feasibility and market studies.

12 Operator selection advisory assignments.

Vast experience in mixed used residential

resorts, rental pool structure and fractional

ownership.

Alternaty Alternative Real Estate

28

28 June 2013 29

How Can We Help You? About Alternaty

• We are a real estate consulting firm providing specialist advice for real estate developers and investors.

• Our approach is to forge partnerships with developers to provide a suite of consulting services including market

research, development advisory, feasibly study and highest and best use analysis.

• We specialise in the early stages of planning and development when accurate and detailed advisory adds significant

value for the whole development and maximises the returns for developers, investors or any players involved

throughout the development process.

Alternative

Real Estate

Boutique

Consulting

Investment

Services

Villa

Management

Hotel Operator

Selection & Hotel

Operations Review

28 June 2013 30

Our Scope of Services About Alternaty

• A boutique real estate firm providing a suite of consulting services throughout the development lifecycle.

Alternative

Real Estate

Vacation ownership

Fractional ownership

Private Residence &

Destination Club

Condo Hotel

Hotel Investment

Boutique

Consulting

Market research

Feasibility study

Financial projections

Cash flow modelling

Highest and best

use analysis

Development

recommendations

Due diligence

Valuation

Investment

Services

Joint venture

partners

Private equity and

family offices

Opportunistic,

special situations

funds

Absolute beachfront

land for sale

Distressed assets

Exit strategy

execution

Villa

Management

Resort style

management of

second home

projects

Website bookings

and reservation

engine

Villa Brand

Standards

Standard Operating

Procedures

Butler Services

Hotel Operator

Selection & Hotel

Operations Review

Hotel Operator

Selection:

Management

agreement

negotiations

Sale & leaseback,

long term lease,

guaranteed returns,

franchise

Hotel Operations

Review:

Inspection &

operational analysis

Departmental

recommendations

28 June 2013

Alternaty in the Press Annex

Rudolf Hever, interviewed on HTV9, speaking

at the Vietnam Hospitality Management

Conference on “Fractional Models:

Opportunities and Risks”, November 2012.

“Vietnam’s island paradise: but where

are the residential products?”, Rudolf

Hever, The Property Report, Dec 12 –

Jan 13

“Vietnam’s island paradise: but where

are the residential products?”, Rudolf

Hever, The Property Report, Dec 12 –

Jan 13 Mauro Gasparotti, interviewed on HTV9

(Nhip Cau Doanh Nhan - Businessman

Bridge) on Fractional Sale and

Timesharing Models, December 2012.

32

28 June 2013

Conferences & Events Annex

Left-Right:

Mauro Gasparotti (L) and Rudolf Hever (R)

presenting the award for Best Condo

Vietnam (Hyatt Regency Danang to Mr Rick

Mayo-Smith, Managing Director, Indochina

Capital (C) at the South East Asia Property

Awards 2012 in Singapore.

Mauro Gasparotti (second from left)

speaking at a panel discussion on “Vietnam –

Finding the way forward” at the HICAP

Update held in Singapore in March 2013.

Left-Right:

Mauro Gasparotti (third from left) speaking

at a panel discussion on “Navigating into the

future: Vietnam” at the the Asia Pacific Hotel

Investment Conference hled in Bangkok in

May 2013.

Rudolf Hever (R) chairing a panel discussion

on “Condo Hotel, Villas and Branded

Residences – How Best to Accelerate Return

of Capital?” at the Asia Pacific Hotel

Investment Conference hled in Bangkok in

May 2013.

33

28 June 2013

Connect with Us! Alternaty Social Media Channels

Annex

Twitter Facebook LinkedIn

og

Blog SlideShare YouTube

34

https://twitter.com/AlternatyRE

http://www.facebook.com/Alternaty

http://www.linkedin.com/company/alternaty

http://blog.alternaty.com/

http://www.slideshare.net/Alternay

http://www.youtube.com/AlternatyRE

Online Direct Booking Website Alternaty Villas

28 June 2013 35

Thank You

Disclaimer: This document has been prepared in good faith and for general informational purposes only. Nothing herein contains investment, legal,

tax and/or other advice and investors should seek independent professional advice before making any investment decision. While reasonable care

has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such

information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission.

Alternaty - Vietnam hotel market overview 2013

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Transcript of Alternaty - Vietnam hotel market overview 2013