HCMC hotel market 2010 (E) - CBRE Vietnam€¦ · What makes a “five star” in Vietnam .. …Service … ? ... •Feasibility Studies •Investment ... HCMC hotel market 2010 (E)

Presented by:

Mauro Gasparotti Manager HospitalityCB Richard Ellis (Vietnam) Co., Ltd.

HCMC HOTEL MARKET Past, Present and FuturePark Hyatt Saigon, April 2010

CB Richard Ellis | Page 2

2010 Image Growing – Young Market

Tourist arrivals in Vietnam have increased by an average of 10% per year in the past few years

Tourist arrivals in HCMC have increased by an average of 12% in the past few years

Tourist arrivals in 2000 were nearly half compared to 2008.

With only 4.2 Mil arrivals in 2008, Vietnam is still a young market in comparisons to in Thailand (14Mil tourists) or Malaysia (22 Mil tourist).

Also HCMC only 2.6 Mil visitors versus Bangkok 10 Mil or Singapore 10Mil.

Tourist Arrival to Vietnam

0

1

2

3

4

5

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

Mill

ions

Tourist Arrival to HCMC

0

1

2

3

4

2005

2006

2007

2008

2009

Mill

ions

Source GOS Source GOS


…. Why they travel ?

Approximately 65 % of visitors in 4-5 star hotel come for business purposes. Increasing compared to past years.

2010 Image Local Market – Business Visitors

…….. Where is the real market ?

“Tourism sector expects to welcome 4.2 Milinternational visitors and 28 Mil domestic travelers this year” The Saigon Times

Local travelers will count for more than 85% of total travelers.

In 2009, despite the economic downturn, the number of local travelers increase in almost every area of Vietnam supporting the occupancy rates in every category.

2010 Expected Travelers (Vietnam)

0

5

10

15

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25

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35

40

Total Travelers

Milli

ons

Local Travelers International Travelers

Selected 4-5 star hotels- Purpouse of stay

0%

20%

40%

60%

80%

100%

Business/ MICE Leisure Others

Where is the future ? ……..Vietnamese Business Travelers.Vietnamese Business Travelers.

Source CBREvietnam

Source CBREvietnam


In HCMC there are only 52, 3 to 5 star rated properties, providing

about 8,000 rooms.

Shortage of rooms ? ….maybe

2010 Image Hotels Supply

Room Supply by Grade

0500

10001500

2000250030003500

3-Star 4-Star 5-Star 5-Star Luxury

No of rooms

Hotel Market HCMC MILAN BANGKOK Total Number of 3-4-5 star hotels 52 248 >300(estimated)Population(Exc urban areas) 6 Mil 1.5 Mil 6.3 MilInternational Visitors (08/09 appx) 2.6 Mil 2 Mil 10 Mil

Source CBREvietnam


2010 Image Hotels location

Where are the properties located ? Only three main clusters.

Future ? …. Relocation, Relocation, Relocation.


… why not CBD ?

Limited land available for 4-5 star development in CBD

Land Price/m2 (15,000- 25,000/m2 in central D1)

In some cases Value Upon Completion is lower than Land Cost + Construction Cost.

Other obstacles

Unclear Compensation timeframes.

Hotel business license/Star granting

Volatile Performance (complicated to forecast ROI)

High Inflation Risk/Currency Risk

Past and Present Barriers to entry in CBD of HCMC

Green Filed Investment Completed Building Value

Construction costs

Land Cost

Investment simulation


… who owns the properties ?

HCMC dominated by State Owned companies (Saigon Tourist-Hanoi Tourist …)

Also, single high net worth Families will play an important role in the two-three star market.

More than 50% of the four star market and 30% of the five star market is owned/minority participation by State Owned Companies

Almost 30% of three star is own as a Family Business (Own the land-Build the hotel-Run the hotel)

Vietnamese Hotel Chains in rapid expansion: A&M (Family), Liberty Group (Gov Participation),

and Dragon Hotels (Family) ….

2010 Image Hotels ownership

Hotel Ownership in HCMC

0%20%40%60%80%

100%

5 Star 4-Star 3-Star

State Owned Entps Joint Venture FamilySource CBREvietnam


… who manages the hotels ?

International Management Companies expanding in Vietnam.

Past and Present Hotel management

In HCMC, in 2000 there were only 3 International Hotel Companies, currently 10 International Brands are operating hotels in HCMC.

Also local Vietnamese companies offer Hotel Management (Celadon and SS Hotel)

2000 2010Accor AccorSheraton SheratonMarriot Marriot

HyattIHGSwissBelhotelPan PacificNortfolkMovenpick


50

70

90

110

130

150

170

190

210

230

Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09

Average Daily Rate (MAT)

Singapore Thailand Indonesia

Philippines Vietnam Kuala Lumpur

United States - Dollar

Source: STR Global/CBRE Hotels

2009 Second highest Average Daily Rate in Asia Pacific

HCMC ADR in is approximately $130, only 15% lower than Rome ($150) and 30% lower than London ($180).

Past and Present Evolving Market (4-5 Star Hotel Performance )

Crisis … ? … What Crisis ?


2009 Second highest RevPar in Asia Pacific (but getting closer to other markets due to thedecrease in occupancy)

Past and Present Evolving Market (4-5 Star Hotel Performance )


The number of sales peaked in 2007 followed by 2009.

The value per room peaked in 2007(end of) with two major acquisitions in Hanoi.

Past and Present Evolving Market (4-5 Star Hotel Transactions in Vietnam)

Hotel Transactions (Upscale to Luxury)

$0

$100,000

$200,000

$300,000

$400,000

2005 2006 2007 2008 2009 2010(Q1)0

2

4

6

8

10

Number of Transactions Average Value Per Room


Strong recover in Occupancy Rates in Q1 2010 in part due to the rates reduction in the Upper-Upscale category

March occupancy higher than 85% for some properties.

Past and Present HCMC Occupancy rates 2009 – 2010

Source CBRE research

Occupancy Rates HCMC Q1.2009-Q1.2010

30.0%

50.0%

70.0%

90.0%

Jan Feb March

2009 Luxury 2010 Luxury2009 Upper-Upscale 2010 Upper-Upscale2009 Mid-Upper Scale 2010 Mid-Upper Scale


Sharp decrease in room rates especially in the luxury segment

HCMC still Superior ADR compared to other cities

Decreased room rates has positively affected the occupancy

Past and Present HCMC ADR 2009 – 2010

Source CBRE research

HCMC ADR 2009-Q1.2010

$0

$100

$200

$300

Jan.

2009 Feb

Mar

Apr

May Jun

Jul

Aug

Sep

Oct

Nov

Dec

Jan.

2010 Feb

Mar

ch

0%

10%

20%

30%

40%

50%

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100%

Luxury Upper-Upscale

Upscale Average market occupancy


Approximately only 3,840 rooms will enter the market in the 4-5 star segment, indicating a roughly 11% increase per year. This is still very low compared to other real estate sectors (office and residential) or compared to other countries (Milan has seen an increase of 35% in the past five years).

Present and Future New supply

Source CBREvietnam

150D.2Six sensesSIX SENSES LATITUDE

185D.1SelfMAJESTIC EXTENSION

1.000D.7SelfSAIGON CONVENTION AND EXHIBITION

2013(1,150 rooms)

170D.7AccorIBIS SAIGON SOUTH

338D.1AccorIBIS BEN THANH PALACE

350D.1AccorNOVOTEL SAIGON CENTRE

2012(1043 rooms)

320D.1Starwood LE MERIDIEN SAIGON

230D.1SelfTIMES SQUARE

335D.1NikkoNIKKO SAIGON

170D.1SelfGRAND EXTENSION

120D.3SelfNEW PACIFIC

2011(1,175 rooms)

209Phu Nhuan Dist.SelfSAIGON GIVRAL

120D.1SelfGOLDEN TOWER (Completed)

144D.1SelfLIBERTY 6 (Completed)

2010(473 rooms)

Number of roomsLocationManagementProjectsYear of Completion


Present and Future Where the market is moving?

New Type of Properties are being built or recently completedBoutique Hotels (Corner Thai Văn Lung and Hai Ba`Trưng )

International Hotels in Industrial Areas (SwissBelHotel or Marriot in Dong Nai)

Convention Centers (D7)

Also … New International Brands coming to HCMC

Annunced PlannedIbis Holiday InnNovotel WhyndamMarriot Golden TulipLe Meridien Pan PacificNikko Alila

Absolute Best Western Source CBREvietnam


Are Developers adapting to market changes ?

In some cases yes…. In other cases no ….

Do they need to change to “international standard” ?

In some cases yes…. In other cases no ….

In some areas still 90% is a Vietnamese market (Pleiku-Dalat)

In some segment 90% is an International market (4-5 Star City hotel)

Present and Future Developers/Consumers evolving

Changes in the marketPast Future

Vietnamese Clients looking for "value" ( high price awarness) International Clients looking for valueMove from 5 to 4-3-2 star

International Clients more Demanding Vietnamese Client more DemandingMove from 2-3 to 4-5 star


This rapid progress has lead to Confused Segmentation/Clients/Categories4 star pricing more than 5 (in some cases)

3 star pricing more than 4 (in some cases)

3 star offering more facilities than 4 star( in some cases)

What will happen ?

Re-branding

Re-segmentation

Room Rates still not in defined

Service and Facilities developed as addition value

Present and Future Re branding- Re segmenting

…… What makes a What makes a ““five starfive star”” in Vietnam .. ? in Vietnam .. ? ……Service Service …… ?... Italian marble on the lobby ??... Italian marble on the lobby ?


New Reservation systems

Agoda.vn ( in Vietnamese !!) - Hotel.com- Wotif.com-

Hotel Web sites (two-three-four star)

New Marketing systems (Email)- Magazine

Newsletter from Sofitel Saigon.

Saigon times-Time Out …. Local magazines …

Furama Resort on Star World Channel …

New airlines

Air Asia investment in VietJet

Charter Jets (China, Russia, Singapore and Taiwan)

New Information Sharing in and about Vietnam

Trip advisor, Travel blogs…

Consumers evolving more choicesConsumers evolving more choices-- more information more information more demandingmore demanding

The Future Market changing


Existing HotelExisting HotelImprovement in Service in F&B

• Breakfast from “Pho only ” to “Pho and Lavazza ”

Improvement F&B alliances

• Liberty Group with Highland coffee in Pham Ngu Lao.

Improvement in facilities

• From “Massage room” to “S.p.a treatments”• From VTV1 to Bloomberg television• From General Service to Tailored Service (Russian or Korean Menu)

Under ConstructionUnder ConstructionImprovement in Design- Efficiency

Improvement in Management ( is your job to build or to managed hotel ???)

New Marketing Strategies (example a Pre-opening Process)

Plan, plan , plan … before you act …

• Who will it be your Client ? • Who will be your Management Company ? • What return do you target ?• What is you exist strategy ?

The Future Where is the market going ?


STAY COMPETITIVE – BE UNIQUE

Differentiate design

Improve management

Build your Brand

Additional Amenities

Different Marketing

Additional Services

Identified Segmentation

..Choose the right operator – Choose the right brand …

….Plan before you build …

The Future


CBRE Vietnam – Hospitality Services

•Valuation and Advisory services

•Market Studies

•Feasibility Studies

•Investment

•Operator Finding

•Management consultancy

•Project management


KEY CONTACTS

Mauro Gasparotti

Manager – Hotel Services

M 84 903 028 722

Email: [email protected]©2009 CB Richard Ellis (Vietnam) Co., Ltd.©2009 CB Richard Ellis (Vietnam) Co., Ltd.©2009 CB Richard Ellis (Vietnam) Co., Ltd.

Documents

HCMC hotel market 2010 (E) - CBRE Vietnam€¦ · What makes a “five star” in Vietnam .. …Service … ? ... •Feasibility Studies •Investment ... HCMC hotel market 2010 (E)