Experts reveal ways to increase value of resort real estate in Vietnam

By Minh Anh - May 08, 2018 | 03:19 PM GMT+7

TheLEADERJust building large rooms or lobbies no longer delivers a sustainable competitive advantage and guest satisfaction for condotel projects, according to the leading real estate consultancy firm Savills Vietnam.

Experts reveal ways to increase value of resort real estate in Vietnam
Eurowindow’s Mövenpick Cam Ranh Resort managed by Mövenpick Hotels & Resorts corporation

Focusing on modern guest experience

Condotel is a current popular trend in Vietnam. Savills Vietnam has forecasted that 18,000 condotel units would be added to the market of key tourism destinations in the next two years.

Besides, Vietnam’s unprecedented growth in the hospitality sector thanks to the strong development of tourism has led to the situation that most of hotels and resorts have been very busy and there are lots of construction activities going on.

However, director of Savills Hotels Asia Pacific Mauro Gasparotti said that the developers seem to focus on short-term market opportunities through capturing the strong growth in room demand. Overall, there is a lack of product diversification and developers tend to replicate what already exists, instead of making an effort to embrace new concepts.

Whereas, the hospitality industry is changing fast and many opportunities are opening for developers not only to plan for today’s room demand but also for future new categories of guests.

Therefore, building a large room or lobby no longer delivers a sustainable competitive advantage and guest satisfaction.

“The Vietnam market is enormously promising for the development of more sophisticated hospitality projects, following all the global megatrends that are happening around us. We see changes every day. Technology will completely transform the way we travel, with the coming of big data, artificial intelligence, automated systems and building sensors”, Mauro Gasparotti highlighted.

He advised that developers need to start to take all those elements into serious consideration at the planning stage of their next projects. The design, human resources, and functions of the hotels will completely change in the coming years.

“In addition, if you also consider all the demographic shifts, such as aging populations or the rise of the Asian middle class, the opportunities are incredible. Developers should focus on creating the guest experience rather than simply providing rooms”, said Mauro Gasparotti.

Choosing well-known management agents

Most of the condotels are managed by the developers but Savills observes that many projects have begun to integrate a brand within their projects. This would contribute significantly to promoting sales, operation and increasing value of the projects.

According to Andrew Pang from Yoo Asia Limited, the branded residence is yet to be popular in Vietnam but is considered to be a good investment product in the region.

Branded residences are proper apartments/homes being associated, designed or managed by a well-known international brand, often these residences are part of a mixed-use development that includes a hotel managed by the same brand.

Agree with Yoo, Karan Kaul from Onyx Hospitality added that proper third-party management under an established brand can give residences a premium in sales prices and offer buyers the added value of international standard services. Pure condotel projects need to be analyzed carefully by both investors and buyers.

“As often the focus is on generating unit sales, rather than the long-term viability and operating forecasts of the property once built and opened.

At the upscale and higher segments of the market a hotel with additional and separated branded residences often makes more sense to develop than a condotel”, said Karan Kaul.

Targeting the Millennials

Discussing the hospitality trend in the future, representative of Savills Hotels said that a new category of travelers is emerging in the market – the Millenials, accounting for 24 per cent of the global population.

Vietnam has a young population as this population segment accounts for 38 per cent of the total population in 2016. Therefore, Millennial travelers will become a very important tourism and hospitality revenue source.

Chavatik Wanakasemsan (Winn) from Lub d stated that social travelers tend to avoid the traditional hotels and look for a gateway to authentic local experiences and an experience with new friends both foreigners and local. Most of them require super-fast Wi-Fi speed for streaming their videos or watching Youtube or Netflix.

Sharing accommodation platforms like Airbnb, Couch Surfing, Hostels and Poshtels would serve their need or lifestyle. The guest room is just part of their travel experience. They love to take photos at every moment and seek for local food and local culture for sharing their travel stories via social media.

Chavatik said that a nomad is a traveler who travels from one place to another place and works while they are traveling. Co-working space will be part of their office when the need to work or conference call with their clients arises while staying in the hotel.

He also highly evaluated the poshtel model. Vietnamese millennials are among the top three nationalities to stay at Lub d. By 2020, the millennial traveler market will see at least the double digit growth from 2018, which will be a challenge for hotels to adapt to their existing products to capture this segment.

Providing more recreational services

Another important part of hospitality is entertainment. Vietnam historically has lacked quality F&B and entertainment options, compared to neighboring destinations such as Phuket, Bali, Bangkok, and Singapore.

According to Mauro, entertainment and F&B can be an incredible additional source of revenue for resorts and hotels.

Kevin Wallace from Nikki Beach illustrated the potential of beach clubs or urban clubs in Vietnam which can be beneficial not only for the single establishments but also for the whole area and neighboring hotels or resorts. He believes that the Vietnam market is highly potential for new entertainment options.

“WithVietnam’s youthful population of young millennials and rising middle-class incomes, demand for food experiences, entertainment, film, art, music and fashion, at beachside locations in Long Hai/Ho Tram, Danang, Hoi An, Nha Trang, Cam Ranh and Phu Quoc will fit best over the next decade, with Hanoi and Ho Chi Minh City being the best urban locations,” said Kevin.