“Wave” of hotel sales amid tourism growth

"Wave" of hotel sales

According to Thanh Nien , the list of 396 land use rights in Hanoi, Hung Yen, Quang Nam, Khanh Hoa, Da Nang, Ho Chi Minh City, Dong Nai, Ca Mau, Can Tho... are the secured assets that have just been put up for sale by the Vietnam Joint Stock Commercial Bank for Industry and Trade ( VietinBank ) causing a shock with nearly 90% being villas, homestays, and 3-5 star hotels.

The largest asset on the list of assets to be liquidated by this bank is a 5-star hotel in Da Nang , built on an area of over 1,200 square meters, with 236 rooms. This asset is offered for sale by VietinBank for 600 billion VND.

Another 4-star hotel in Hoi An with a land area of 9,057m2 and a capacity of 98 rooms is also for sale at 420 billion VND; a land plot of 1,786m2, a hotel with a capacity of 137 rooms, is for sale at 365 billion VND…

Real Estate - — Many hotels are selling their properties as tourism is gradually improving. Illustrative photo from the internet

Also in Hoi An ancient town, VietinBank is selling the land use rights of 686.7 square meters and a 3-star villa with 18 rooms for 110 billion VND; a 4-star hotel with a capacity of 55 rooms on a land area of 1,032 square meters for 120 billion VND; a 4-star hotel with a capacity of 137 rooms on a land area of 1,737 square meters for 240 billion VND; a 4-star hotel with a capacity of 95 rooms on a land area of 1,757 square meters for 260 billion VND...

It can be seen that the wave of hotel sales is not only happening in Ho Chi Minh City - which is considered to be facing many disadvantages during the low season of international visitors - but is still continuing in many tourism "hubs" across the country. Including destinations that have recently recorded a very good level of tourism recovery such as Da Nang.

According to Nhip Song Thi Truong , in Hanoi, many hotels worth tens of billions to hundreds of billions are being offered for sale around the Old Quarter. Mr. Trung - a broker in the inner city of Hanoi said that every month, a few more hotels are added to the list of hotels for sale. At the end of June, a hotel on Thuoc Bac Street, Hoan Kiem, Hanoi with 25 rooms was offered for sale at 200 billion VND, negotiable for customers of good will. In mid-July, a 3-star hotel with 30 rooms on Hang Bac Street was offered for sale at 168 billion VND.

In Ho Chi Minh City, a hotel in District 1 has just been advertised for sale at VND250 billion. Or a 3-star hotel also in District 1 with 13 floors and 120 rooms is for sale at VND580 billion.

Besides the information that small and medium-sized hotels are increasingly being advertised for sale, the information that two internationally branded hotels have been transferred to new owners also surprised many people.

Specifically, Jones Lang Lasalle Group (JLL) advised on the sale of the Ibis Saigon South and Capri by Fraser hotel portfolios (District 7, Ho Chi Minh City). This transaction marks the first hotel portfolio sale in the region in 2023. And these are also two rare hotels that have confirmed transactions in the context of the hotel market facing a strong wave of sales.

Paradox of tourism growth, hotels still for sale

According to Thanh Nien , explaining this paradox, a representative of the Ministry of Culture, Sports and Tourism said that thanks to efforts in opening early, stepping up promotion, advertising and diplomacy, the tourism industry is recording positive results, especially since the beginning of the year. The number of international visitors to Vietnam in the first 6 months has reached nearly 70% compared to the pre-pandemic period of 2019.

The increase in visitors means that the accommodation and service system has also begun to recover. In particular, the unexpected boom in the domestic market has partly filled the gap in international visitors, helping hotels, restaurants, and destinations have revenue and financial resources to return.

However, the tourism industry still identifies 2023 as a year with many difficulties, including huge challenges from the context of the global economic recession leading to a trend of people tightening spending, reducing demand for travel and shopping; the Russia-Ukraine conflict has not ended; the purchasing power of the domestic market has also decreased significantly. That has been partly reflected in the gap between the number of visitors and the total revenue of the industry.

For example, during the peak period of Lunar New Year, the number of domestic tourists increased by nearly 50% compared to the same period last year, but revenue and the number of guests staying decreased sharply. Of the 9 million visitors, only 2 million stayed, down 37.5% compared to the same period, the average room occupancy rate was only 40 - 45%. Total revenue from tourists is estimated to decrease by 30%.

The current general trend is that customers are both tightening their spending and changing their spending structure towards less total spending but enjoying maximum services. In addition, people's travel behavior has changed, prioritizing short trips and traveling independently, traveling in small groups, using separate accommodation facilities such as homestays, villas, bungalows, camping, etc. The demand for using concentrated hotels has decreased, especially with traditional models.

On the other hand, although demand has decreased, the supply and new room funds entering the market have increased rapidly. Investment activities in resort tourism have recently recorded a sharp increase, especially in tourist accommodation facilities, hotels, resorts, and the boom in condotels...

Resorts, hotels, and villas in major centers such as Da Nang, Nha Trang, Phu Quoc, Quang Ninh, Da Nang, etc. are continuously being built. This leads to low occupancy rates in some places.

Due to fierce competition, most hotels have to choose to stimulate demand by reducing prices, while all costs of electricity, water, employee salaries, maintenance and repair costs, infrastructure upgrades... have increased, making the business situation of accommodation establishments difficult.

Hotel market expected to recover after 2024

Assessing the hotel segment situation in Hanoi and Ho Chi Minh City in the first 6 months of the year, according to Savills' report, in Hanoi, in the second quarter of 2023, the occupancy rate reached 62%, but was still lower than the 73% level in the second quarter of 2019. The average rental price reached VND 2.5 million/room/night, down -6% quarter-on-quarter but up 26% year-on-year after the recovery slowed down.

In Ho Chi Minh City, of the 404 rooms temporarily closed since the pandemic, 45% are being renovated and the remaining 55% of the supply has no information about the reopening date. In the second quarter, hotel occupancy in Ho Chi Minh City reached 60%, down 8 percentage points quarter-on-quarter. The poor performance occurred in all hotel segments as the number of international visitors to Ho Chi Minh City decreased by 13% quarter-on-quarter. The rate of overnight guests in this city reached only 19%, lower than other destinations. The hotel market only relies on welcoming business guests with the advantage of being a transit point between provinces and cities.

Mr. Troy Griffiths - Deputy General Director, Savills Vietnam said: "The recovery in the number of international visitors to Vietnam is slower than other countries in the region. Chinese visitors are the second largest market in Vietnam in the first six months of 2023 but only equal to 22% of the first half of 2019".

This person said that the hotel business needs to rely on the gradual recovery of Asian tourists and large domestic tourism demand along with the new visa policy, the market is expected to fully recover from 2024.

Dao Vu (T/h)

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