Factors that make Phu Quoc resort real estate difficult to exploit and operate

According to research data from DKRA Group, as of June 2023, the inventory of resort real estate in Phu Quoc has reached more than 17,600 products. Making this place the third largest market in terms of resort real estate inventory, accounting for 24% of the total inventory in the country, only behind Binh Thuan and Ba Ria - Vung Tau .

Excess supply is also the biggest factor that puts resort real estate in Phu Quoc in a difficult position. Currently, Phu Quoc has nearly 300 tourism investment projects, but only 47 projects have been put into operation, which could severely affect the market here due to oversupply, causing many projects to fall into disrepair.

Not to mention, many investors have entered the market hastily, without considering long-term business orientation, focusing on developing luxury accommodation, causing this segment to fall into a state of surplus. There are currently about 14,000 hotel rooms in the mid-range to high-end segment in Phu Quoc, accounting for nearly 50% of the number of rooms here. However, the number of rooms for the economy segment is under-exploited, while the demand in this segment is still quite high.

Factors that make Phu Quoc resort real estate difficult to exploit and do business image 1 — Many investors who bought houses in Phu Quoc for rental business had to sell at a loss because of difficulties in operating them.

By competing in the same segment, the efficiency of resort real estate exploitation in Phu Quoc is recorded as very low. According to DKRA Group, even in peak season, boutique hotel, resort villa, mini hotel models achieve occupancy rates of 28 to 32%, in which domestic guests account for the majority. With an occupancy rate of less than 30%, the profit margin is only 0.5-1%.

The average room rate of high-end hotels in this market currently fluctuates between 100-120 USD/night and the occupancy rate is only 30-35% due to too much competition at the same price level. However, there seems to be no solution to this problem, because to lower the price to match the demand, it is difficult to get a profit commensurate with the investment.

In addition, according to experts, a factor that makes Phu Quoc resort real estate unattractive to tourists is the lack of uniqueness. This is considered a harmful effect of ignoring the market research and local culture. Instead, there are stereotyped models, copied from other cultures. This problem has affected the experience of tourists when they come here but do not feel the spirit of the local culture. This is a difficult weakness to fix in Phu Quoc resort real estate when the sustainable tourism factor is not focused on by investors.

Factors that make Phu Quoc resort real estate difficult to exploit and do business image 2 — With many advantages to exploit resort real estate, many investors are facing difficulties due to the problem of oversupply.

Compared to other tourist destinations in Vietnam, Phu Quoc has a competitive advantage in terms of visa exemption policy for international visitors. According to this policy, tourists of all nationalities are exempted from visas on the condition that they enter Phu Quoc directly and do not travel to other localities.

However, the number of routes and flight frequency is a barrier for Phu Quoc to promote the above mentioned competitive policy. For example, at some other famous tourist destinations around Vietnam such as Phuket (Thailand) and Bali (Indonesia), the flights connecting to these tourist destinations are quite diverse and come from many major regions in the world . The flights to these two locations are 150% and 430% compared to Phu Quoc, not to mention the domestic connecting flights in the two countries mentioned above.

Many opinions say that, to improve the current situation as well as help the resort real estate market in Phu Quoc develop, there needs to be orientation from the locality in improving infrastructure, traffic connection, promoting image to attract tourists. At the same time, focus on developing sustainable tourism factors with indigenous culture, enhancing the experience for tourists, especially for potential foreign tourists.

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