Growth in hospitality real estate to continue

Growth in hospitality real estate to continue

Range of factors in the segment's favor, according to Savills.
19:00, 27/01/2019
(Photo: Savills Vietnam)

(Photo: Savills Vietnam)

Vietnam’s hospitality real estate market has proven to be an attractive segment for investors in the last few years due to its consistent growth, which is expected to continue next year in part because of a boost from global megatrends, according to Mr. Mauro Gasparotti, Director of Savills Hotels Asia Pacific.

One of the most prominent trends is information technology (IT), which has had a tremendous impact on the tourism industry in both the leisure and business sectors. Mr. Gasparotti pointed out that the development of IT makes travel much easier, with higher-quality products and many different accommodation options thanks to travel support tools and apps. “Smartphones, AI, electronic payments, and social media have all affected the future of travel in incalculable ways,” he said.

2019 will see the opening of many condotel projects, with enormous inventories coming into the market. “Condotels are good products only when they are well-studied, planned, and executed,” Mr. Gasparotti said. “However, they could damage the market if they are poorly planned and controlled, because this would lead to a significant depression in terms of room rates and occupancy in the medium term, especially in beach destinations.”

According to a report from Savills Hotels Asia Pacific, the market in 2019 will welcome a new wave of supply from branded properties coming online such as Movenpick Cam Ranh and Melia Ho Tram, which could put these locations on the international tourism map. Meanwhile, main destinations like Ho Chi Minh City, due to limited future supply, are expected to maintain good levels of stability in performance. “We also hope to see more green projects and sustainable development in the future, which will become a very important factor and criteria for end users,” he added.

Vietnam is in a good position to capture growth and opportunities. Mr. Gasparotti said that Savills encourages developers to study new trends and products that don’t have a broad presence in Vietnam, such as branded residences, select service hotels, or experience-oriented resorts, in order to diversify accommodation options and capture the needs of a new generation of traveler.

“However, these products also require investors have a certain understanding of concepts and ideas as well as ways of cooperating with related parties to ensure project feasibility and implementation,” he said.

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