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Hotel Intelligence Vietnam

Vietnam Hotel and Tourism Report | April 2015Hotels & Hospitality Group

Contents

Hanoi

Da Nang

Nha Trang

Ho Chi Minh City

Recent Key Transactions 10

03 Market Overview

06 Ho Chi Minh City07 Hanoi08 Nha Trang09 Da Nang

Cities06

04Market Summary

Hotel Intelligence Vietnam 3

rooms445

rooms rooms rooms rooms300 279318323

Tourism Demand Supply OutlookInternational tourist arrivals to

Vietnam numbered approximately 7.9 million during 2014, a growth

of 4.0% year-on-year. The country has seen a CAGR (Compounded Annual Growth Rate) of 15.9% in

international visitation between 2009 and 2014, however, growth has

been eroding over the past three years.

Ho Chi Minh City and Hanoi remain the most popular cities for tourists to visit with 4.4 million and 3.0 million foreign tourist arrivals in 2014 respectively. Emerging

resort markets have been gaining traction with foreign visitors to Nha Trang (0.86 million) and Da Nang (0.96 million) growing by 14.9%

and 13.9% between 2005 and 2014 (CAGR) respectively.

Branded new room supply is primarily concentrated in Ho Chi

Minh City and Hanoi with an additional 3,729 keys expected

to enter these two markets in the near future. Internationally branded supply in Nha Trang and Da Nang is limited but growing, with Dusit Thani and Hilton branded hotels expected

to open shortly.

The Vietnamese tourism industry is set to continue to grow for the foreseeable future as Vietnam

continues to establish itself as a leading destination in Southeast

Asia. Planned government investment in infrastructure will

improve overall connectivity, while scheduled promotional campaigns by the tourism board should further enhance the country’s exposure.

Market Overview

Dusit Thani Nha Trang – 439 roomsThe InterContinental Hotel at Keangnam Hanoi – 359 roomsLe Méridien Saigon HCMC – 350 roomsIbis Grand Place HCMC – 338 roomsHilton Da Nang – 193 rooms

The Reverie Hotel, HCMC – 257 roomsHilton Garden Inn Hanoi – 86 rooms

UPCOMING HOTELS

OTHER NEW HOTELS

NEW HOTELS(Top 5 major hotels that have opened recently)

Starcity Airport Hotel, Ho Chi Minh City

InterContinental Nha Trang

Lotte Centre Hanoi*

*318 rooms hotel and 258 rooms SA

Novotel Da Nang Premier Han River

JW Marriott Hotel Hanoi

Source: WTTC, Vietnam National Administration of Tourism (VNAT), JLLADR – Average daily rate, RevPAR - Revenue per available room

QUICK FACTS(HCMC and Hanoi) Contribution of Tourism

Industry to National GDP

7.9 millionInternational

Visitor Arrivals in 2014

1,399Number of

New Rooms in 2014

4.6%% of total GDP in 2013

(forecast to rise by 8.9% in 2014)

Source: Vietnam National Administration of Tourism (VNAT), JLL

International Visitor Arrivals to Vietnam

Annual Growth (%)Visitor Arrivals (million)

CAGR (2005–2014) 9.5%

0.01.02.03.0

9.08.0

4.05.06.07.0

10

0

-10

-20

-30

20

30

40Number of Visitors (million) Annual Growth (%)

2005

2006

2007

2008

2009

2010201

1201

22013

2014

4 Vietnam Hotel and Tourism Report

The government is the key driver of the tourism industry providing incentives for investors and promoting Vietnam as a destination overseas.

International tourist arrivals to Vietnam grew by 4% year-on-year to approximately 7.9 million visitors during 2014.

Vietnam continues to emerge as a prominent destination for international travellers within Southeast Asia. With the presence of diverse tourism attractions, Vietnam appeals to a range of visitors. Foreign direct investment into Vietnam continues to grow, stimulating developments in infrastructure, enhancing domestic connectivity. The government continues to be a key driver of the tourism industry providing incentives for investors and promoting Vietnam as a destination overseas.

Growth in tourism and visitation has spurred investment into the country especially in the hospitality, real estate and industrial sectors. Not only are the main economic centres Hanoi and Ho Chi Minh City (HCMC), gradually developing, many other coastal resort destinations such as Da Nang and Nha Trang have been developing due to improvement in tourism infrastructure and enhanced accessibility.

Market Summary

International tourist arrivals to Vietnam grew by 4% year-on-year to approximately 7.9 million visitors during 2014. International visitation grew by 15.9% per annum (CAGR) between 2009 and 2014, however, growth has been eroding over the past three years. Investments in marketing campaigns to promote Vietnam’s tourism industry since 2010 has increased interest from international tourists.

According to recent information, international visitor arrivals to Vietnam have declined 14% during the first quarter of 2015 compared to Q1 2014. This decline has been caused by a simultaneous drop in the number of arrivals from Russia and China. While continuing territorial disputes between Vietnam and China is the likely reason affecting Chinese arrivals to the country, the devaluation of Russian Ruble has limited travel of Russians overseas.

Each of the major tourist destinations in the country provides unique offerings for the discerning tourist as follows:

Ho Chi Minh CityFormally known as Saigon, Ho Chi Minh City is largest city in Vietnam and is the main commercial and cultural city of the country. It is located in the southern part of the country and houses a number of museums and war memorial sites. Among other tourist attractions, the city offers a French colonial architecture which adds to the cultural and historical significance and draws a number of tourists.

As part of its initiative “River Tourism Development Strategy of Ho Chi Minh City in the period of 2013 to 2015 and towards 2020”, the city plans to renovate and build 50 new docks, wharfs, waiting rooms by 2015 and plans to also redevelop more than 65 tourist sites within the city’s districts.

As a result of growing lodging demand, a number of internationally branded hotels positioned across all star categories, entered the market over the past few years.


The implementation of the ASEAN Economic Community may prove to be a major contributor to Vietnam’s overall economic development.

Various industry players such as tour agencies, airlines and lodging establishments (both local and foreign) will play a major role in promoting the country.

HanoiHanoi, the capital of Vietnam, is a city where old meets the new, where old sites are preserved in some areas while other areas are being developed. The city is located in the northern part of the country, close to Mainland China.

Hanoi has become an increasingly attractive destination for international investors and visitors. The city benefits from long-standing historical and cultural traditions and a stable socio-political environment. As Vietnam’s capital and the seat of government, Hanoi benefits from being a bureaucratic centre for foreign business and investment activity in Vietnam. In addition, the city’s tourism department also organises events and provides a platform for Hanoi to promote both its tourism and business opportunities.

An important infrastructural development in Hanoi is the completion of the second terminal and associated facilities at the Noi Bai International Airport, which officially opened on 4th of January 2015. Terminal 2 will see capacity increase to 25 million passengers by 2020 and 50 million passengers by 2030.

Da NangDa Nang is one of the preferred resort destinations along the long coastline of the country. The Da Nang tourism market extends from Da Nang to Hoi An in the adjoining Quang Nam province, some 30 km along China Beach south from Da Nang City, and also extends along the coastline north from Da Nang to Langco and on to Hue in the adjoining Thua Thien Hue province.

The coastline features some scenic beaches, including China Beach, three UNESCO World Heritage Sites located within 100 kilometres of Da Nang, namely the 16th century silk route trading port of Hoi An; My Son Valley which features the remains of the ancient Cham civilization, as well as the ancient imperial city of Hue.

Nha TrangNha Trang is a coastal city and the capital of Khanh Hoa Province. Khanh Hoa Province benefits from a coastline of approximately 200 kilometres, with more than 200 islands offshore. Nha Trang is located 1,278 kilometres south of Hanoi and 441 kilometres north of Ho Chi Minh City.

Nha Trang is regarded as one of Vietnam’s premier beach destinations. The Nha Trang area is known for its natural beauty comprising of a largely unspoilt coastline. Often called Vietnam’s Mediterranean area, it is mainly popular for its beaches, and is a holiday destination for locals offering activities ranging from amusement parks, golf, mud baths and historic tracks such as the Po Ngar temple complex. The coral seabed near the city is popular for diving and snorkelling.

Other industries contributing to the local economy are shipbuilding, fishing and lobster farming. Several industrial parks are located to the south of the city. With a number of academic institutions in the area, Nha Trang is also a centre for training and scientific research in Southern Central Vietnam.

OutlookVietnam has made considerable developmental strides over the past decade, thanks primarily to a multi-fold expansion in external trade following entry into the World Trade Organization (WTO) in 2007. However, the unlocking of Vietnam's economic potential rests on reviving the reform drive.

The tourism industry has considerably developed mostly in the last decade, with the number of international tourist arrivals increasing from 3.8 million visitors in 2009 to 7.9 million visitors in 2014.

The implementation of economic integration to create a single market across ASEAN states, referred as the AEC 2015 (ASEAN Economic Community 2015) may prove to be a major contributor to Vietnam’s overall economic development.

In light of growing government investment in infrastructure across the nation in the form of construction (and expansion) of airports, highways and tourism promotional campaigns, the Vietnamese tourism industry is set to continue to grow for the foreseeable future. In addition, various industry players such as tour agencies, airlines and lodging establishments (both local and foreign) will increasingly play a major role in promoting the country.

A continuing area of concern for the Vietnam tourism industry has been the inability to generate repeat business. Industry leaders have highlighted this as an issue that needs to be addressed in order to compete with regional rivals over the long term.

ASEAN

Source: JLL Research

Select Future Openings

Hotel Rooms Opening Le Méridien Saigon 350 2015Ibis Grand Place 338 2015Ritz-Carlton Hotel 250 2017Total 938

Occupancy ADR (USD) RevPAR (USD)

0

50

100

150

200

50403020

010

60708090100

ADR/RevPAR (USD) Occupancy (%)

2009

2010

2011

2012

2013

2014

YTD Feb 201

4

YTD Feb 201

5


2014 stats compared to 2013

RevPAR declined 5.2% y-o-y to USD 77.

Occupancy fell from 67.6% to 66.4%.

ADR declined from USD 120 to USD 116.

Demand• Ho Chi Minh City (HCMC), the largest city in Vietnam, is the country’s

commercial, tourist and cultural hub.

• Being an international gateway to the rest of the country, it welcomed 4.4 million foreign visitors during 2014, up 7.1% over the previous year.

• Mainland China, Malaysia, Russia, Australia and Japan are the top source markets to Ho Chi Minh City.

Supply• Existing branded supply in Ho Chi Minh City comprises of 4,442 rooms

across different segments.

• Recent new supply in HCMC include the 300 key Starcity Airport Hotel in 2014 and the 257 room Reverie Hotel in February 2015.

• Future supply includes 2,770 keys from seven hotels expected to enter the market in the near future.

Ho Chi Minh CityTrading Performance• Trading performance in 2014 was down over the previous year,

with RevPAR declining 5.2% relative to 2013 to USD 77 driven by a simultaneous decline in occupancy from 67.6% to 66.4% and average room rates from USD 120 in 2013 to USD 116 in 2014.

• Figures for YTD February 2015 indicate a decline in RevPAR performance of 3.1% y-o-y to USD 77 compared to the same period in 2014, which is driven by both a fall in ADR from USD 118 to USD 114, and a marginal decline in occupancy from 67.8% to 67.7%.

Source: STR Global / JLLSource: VNAT / Press Release /JLL

Trading Performance – Ho Chi Minh City

Outlook• With the development of new international routes from regional airports,

more foreign tourists have been flying direct to resort destinations such as Da Nang instead of transiting through Ho Chi Minh City.

• With a continued growth in the number of international arrivals, we expect lodging demand levels to strengthen further over the short to medium term.

• However, fresh supply slated to enter the market should continue to put pressure on ADR in the near term.

• Territorial disputes between Vietnam and China may continue to affect Chinese visitor arrivals to Ho Chi Minh City (currently the top source market to Vietnam) in the short term.

The NewsKey Recent Additions

• Starcity Airport Hotel, 300 keys;

• The Reverie Hotel, 257 keys.

International Visitor Arrivals to Ho Chi Minh City

Annual Growth (%)International Visitor Arrivals

0.00.51.01.5

5.0

4.04.5

2.02.53.03.5 60

40

20

0

–20

80

100Visitor Arrivals (million) Annual Growth (%)

2005

2004

2003

2002

2001

2006

2007

2008

2009

2010

2011

2012

2013

2014

Occupancy ADR (USD) RevPAR (USD)

0

50

100

150

200

50403020

010

60708090100

ADR/RevPAR (USD) Occupancy (%)

2009

2010

2011

2012

2013

2014

YTD Feb 201

4

YTD Feb 201

5

Annual GrowthInternational Visitor Arrivals

0.00.51.01.5

3.5

2.02.53.0

40200-20-40

6080100

Visitor Arrivals (million) Annual Growth (%)

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014



Hotel Rooms Opening The InterContinental Hotel at Keangnam 359 2015Novotel Ciputra Hanoi 300 2017Total 659


2014 stats compared to 2013

RevPAR increased by 0.8% y-o-y to USD 74.

Occupancy grew from 66.4% to 68.0%.

ADR declined marginally to USD 109.

Demand• Hanoi is emerging as an increasingly attractive destination for

international investors and visitors supported by long-standing historical and cultural traditions.

• International arrivals to Hanoi reached an all-time high of 3 million during 2014, an increase of 16.3% from 2013.

• Top source markets to Hanoi include Mainland China, Japan, South Korea and Singapore.

Supply• Existing supply in Hanoi comprises of 44,278 keys, with more than half

being unrated.

• Some of the existing hotels are being upgraded, expanded and rebranded to remain competitive as new supply continues to enter the market.

• Future supply includes three hotels with a total inventory of 959 rooms expected to enter the market in the near future.

Hanoi

Source: STR Global / JLL

Trading Performance – Hanoi

Source: VNAT / Press Release / JLL

International Visitor Arrivals to Hanoi

Trading Performance• RevPAR increased by 0.8% year-on-year during 2014 to USD 74,

driven by an increase in occupancy to 68.0%, while ADR declined marginally to USD 109.

• Figures for YTD February 2015 show a similar trend, a 3.4% increase in RevPAR to USD 77 compared to USD 75 in 2014, which is driven by an increase in occupancy from 66.1% to 71.9%, while ADR declined from USD 113 to USD 107.

Outlook• Growing number of domestic flights from Hanoi is benefiting the

overall tourism industry as visitors are encouraged to travel to multiple destinations throughout Vietnam.

• With a recent decline in the number of Chinese visitors to Hanoi, the tourism authorities are planning focused promotion campaigns in other markets including Japan, South Korea, Malaysia, Singapore, Russia and other East European countries in the near future.

• The political friction between Vietnam and China may continue to affect Chinese visitor arrivals to Hanoi (currently the top source market to Vietnam) in the short run.

• The completion of the second terminal at the Noi Bai International Airport will help facilitate international arrivals to Hanoi as it will see capacity increase to 25 million passengers by 2020 and 50 million passengers by 2030.


• Hilton Garden Inn Hanoi, 86 keys

• JW Marriott Hotel Hanoi, 445 keys

• Lotte Centre Hanoi, 318-key hotel and 258-key Serviced Apartment

Re-brandings

• Hanoi Horison Hotel rebranded as Pullman Hanoi, 250 keys

Source: Tourism Department of Khanh Hoa, JLL

International Visitor Arrivals to Nha Trang

Annual Growth (%)No. of Visitors ('000)

Visitor Arrivals ('000) Annual Growth (%)

-20%

0%

20%

40%

60%

80%

100%

100 200 300 400 500 600 700 800 900

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014



Hotel Rooms Opening Dusit Thani 439 2016Eastin Duyen Ha Resort 450 2017Total 889


Demand• The total number of visitors to Nha Trang via Khanh Hoa Province has

increased significantly over the period from 2005 to 2014 at an annual rate of 14.9% (CAGR).

• International visitor arrivals reached approximately 856,000 in 2014, representing a year-on-year increase of 18.2%.

Nha Trang

International visitor arrivals reached approximately 856,000 in 2014, which represents a year-on-year increase of 18.2%.

The existing supply in Nha Trang is largely dominated by independent and family-run hotels targeting domestic and cost-conscious travelers.

• Key source markets to Nha Trang include Japan, South Korea, Russia and USA.

• Nha Trang Bay has been voted as one of the top 29 most beautiful bays in the world by Travel + Leisure magazine for two years in a row. This has helped bring the destination under international spotlight.

Supply• The existing supply in Nha Trang is largely dominated by independent

and family-run hotels targeting domestic and cost-conscious travellers. These independent and family run hotels are largely located on Biet Thu and Nguyen Thien Thuat Streets, while independent midscale hotels are located along Tran Phu Boulevard and its sub-streets.

• Internationally branded supply in Nha Trang is limited but growing. Key players in the market include InterContinental, Best Western, Sheraton, Novotel and Evason (a brand of Six Senses Hotels Resorts Spas).

Outlook• With an improvement in tourism infrastructure, the Nha Trang tourism

market has seen substantial growth over the past few years with increasing number of domestic as well as international tourist arrivals.

• Factors such as the addition of internationally branded resorts, improving domestic as well as international connectivity and the launch of focused tourism promotion campaigns bode well for the outlook of the Nha Trang tourism market.


• InterContinental Nha Trang, 279 keys

• Best Western Premier Havana Nha Trang, 680 keys

Source: Da Nang Tourism Board, JLL

International Visitor Arrivals to Da Nang

Annual Growth (%)Visitor Arrivals (million)

0.0

0.2

0.4

0.6

1.2

0.8

1.0

40

20

0

-20

-40

60

80

100Number of Visitors (million) Annual Growth (%)

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014



Hotel Rooms Opening Hilton 193 Q1 2016Four Points by Sheraton 390 2017Total 583


Demand• International visitation to Da Nang has shown a steady increase since

2009 growing at a rate of 25% per annum (CAGR) between 2009 and 2014 to 0.96 million.

• The availability of a variety of accommodation options ranging from locally managed resorts and villas to internationally branded hotels as well as the increase in direct international flight routes have led to an increase in inbound visitation.

• The opening of the Crowne International Club in 2009, the only casino today with a licence to operate live gaming tables in Da Nang, has also contributed to the increase in visitor arrivals since 2010, particularly from Mainland China, Da Nang’s second largest source market.

• Top source markets to Da Nang include Thailand, Mainland China, USA, Japan and Australia.

Da Nang

International visitor arrivals reached approximately 960,000 in 2014, which represented a y-o-y increase of 28.6%.

The Majority of existing hotels are one-star to two-star properties (83.3%), and only 16.7% of hotels are categorised as three-star to five-star.

Supply• According to the Da Nang Tourism Department, supply comprises a

total of 426 hotels with 15,465 rooms as of September 2014 (latest available statistics).

• The Majority of existing hotels are one-star to two-star properties (83.3%), not considered as being of international standard, and only 16.7% of hotels are categorised as three-star to five-star, most of which are of international standard.

• International operators with a presence in the market include Accor, Hyatt and IHG.

Outlook• In the short to medium term, with an improved airport infrastructure,

launch of additional direct international flights and with the entry of additional international branded hotels in Da Nang, we anticipate visitor arrivals to continue to grow at a healthy pace in line with growth observed over the past few years.

• The regional markets including Thailand and Mainland China, continue to be key international source markets in the Central Vietnam region. However, territorial dispute with China and a sluggish Thailand economy is likely to continue to negatively affect tourism arrivals in the short term.


• Hotel Premier Village Da Nang Resort (Managed by Accor), 111 keys

• Novotel Da Nang Premier Han River, 323 keys

Property Name Location Year Rooms Price (USD) Price per room (USD)Six Senses Con Dao 2014 50 Confidential ConfidentialThe Nam Hai Resort & Spa Hoi An 2014 100 Confidential ConfidentialMovenpick Saigon (50% stake) Ho Chi Minh City 2014 268 32 million* 119,440*Sheraton Nha Trang (50% stake) Nha Trang 2013 280 42 million* 150,000*Life Heritage Resort (rebranded as Anantara) Hoi An 2013 96 9.6 million 100,000Life Wellness Resort (rebranded as Avani) Quy Nhon 2013 63 6.4 million 101,587

Recent Key Transactions

Source: JLL*Price reflects 100% interest

Hanoi

Da Nang

Nha Trang

Ho Chi Minh City

VietnamKeyDestinations


Front cover Halong Bay, Vietnam

About JLL JLL’s Hotels & Hospitality Group serves as the hospitality industry’s global leader in real estate services for luxury, upscale, select service and budget hotels; timeshare and fractional ownership properties; convention centers; mixed-use developments and other hospitality properties. The firm’s more than 320 dedicated hotel and hospitality experts partner with investors and owner/operators around the globe to support and shape investment strategies that deliver maximum value throughout the entire lifecycle of an asset. In the last five years, the team completed more transactions than any other hotels and hospitality real estate advisor in the world totaling more than US $48 billion, while also completing approximately 4,500 advisory, valuation and asset management assignments. The group’s hotels and hospitality specialists provide independent and expert advice to clients, backed by industry-leading research.For more news, videos and research from JLL’s Hotels & Hospitality Group, please visit: www.jll.com/hospitality, download the Hotels & Hospitality Group app for iOS and Android, or view our e-magazine The Hotel Investor, available for iPad.

www.jll.com/hospitality

Jones Lang LaSalle Property Consultants Pte Ltd | CEA Licence No. L3007326E© 2015 Jones Lang LaSalle IP, Inc. All rights reserved. All information contained herein is from sources deemed reliable; however, no representation or warranty is made to the accuracy thereof.

For inquiries, contact

Strategic Advisory and Research

Andrew Langdon Executive Vice President Thailand & Indochina [email protected] +66 8184 42049

Investment Sales

Jonathan Ottevaere Senior Vice President Thailand & Indochina [email protected] +66 81901 2901

Mike Batchelor Managing Director Investment Sales, Asia [email protected] +6681 984 8970 (Bangkok) +65 9654 6255 (Singapore)

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