june 30, 2020 prepared by: colliers international · recovery 4-6 months. colliers international |...

COLLIERS INTERNATIONAL | PRIVATE & CONFIDENTIAL I 1

June 30, 2020Prepared by: Colliers International


ROAD TO RECOVERY“We face a period of enormous uncertainty and volatility where experience and decision-making anticipation will be key for the survival and recovery of hotels”.

• The hotel sector is one of the most affected by the current crisis. The overall closure of establishments has meant a total reduction in income and job destruction as never seen before.

• The phase of the establishments’ reopening will be marked by a weak demand which will make it difficult to reach breakeven levels. Hotels will be forced to use their liquidity reserves or to obtain new financing to guarantee a return to short and medium-term profitability.

• The duration of the crisis for the sector is difficult to predict and will depend largely on containment measures and a perhaps, a successful drug or vaccine.

• Nevertheless, the tourist sector will re-emerge strongly and will become once again, the key driver of Vietnam’s economic growth.COLLIERS HOTELS

80 experts located in Singapore, Hong Kong Sydney, Auckland, Toronto, London, Amsterdam, Madrid, Los Angeles and Dubai

OVER 60 HOTELS UNDER ASSET MANAGEMENT GLOBALLY

Most of our experts have worked in hotels so know operations intimately

We have undertaken over 200 hotel studies across Asia and transacted over 10 hotels each year

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20.0

40.0

60.0

80.0

100.0

120.0

140.0

2015 2016 2017 2018 2019 2020F 2021F 2019 YTDMay

2020 YTDMay

Vietnam Hotel KPIs 2015 - 2021F

Room Occp. ADR (US$) RevPAR (US$)

Source: STR


HOTEL PERFORMANCE: PRE AND POST COVID-19 SARS REDUX?

Colliers Hotels - Govinda Singh

• “Crises don’t create trends, but accelerate them, positively or negatively”

• Will we see a repeat on 2003? Unlikely

• Same, same but different

• Expect return to 2019 performance levels not before Q4 2021/2022

Updating budgets and business plans in an environment of uncertainty.

Manage cash-flow stress situations.

Need for restructuring of existing financial instruments.

Volatility in property valuations.

Uncertainty in the reopening of hotels and the evolution of demand.

Short term adaptation of the offer to a new profile of demand (national customer vs. foreign customer).

-

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Dec Jan Feb Mar Apr May

Key Asian Cities Hotel Room Occupancy Dec '19 - May '20

Shanghai

Beijing

Hong Kong

Hanoi

HCMC

Bangkok

Singapore

Jakarta

Recovery 4-6 months


V or SWOOSH – WHEN IS THE RIGHT TIME TO BUY OR SELL IN THE INVESTMENT CYCLE


What’s going for Vietnam Robust economic

fundamentals Infrastructure investment 91+ million people –

young and educated Increasing GDP per capita Record FDI growth Stable politics The next factory of Asia? Supportive investment

laws Strong future growth

potential with room for more visa easing and increase in airlift

Relevant income reduction.Updating budgets and business plans in an environment of uncertainty.



Access to new funding.



Vietnam Hotel Revenue Growth 2018 – 2023F

easing contracts.

Business restructuring and reduction of structural costs.

-

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2015 2016 2017 2018 2019 2020F 2021F

Vietnam GDP and GDP per capita 2015 - 2021F

GDP growth (%) GDP per capita (US$000s)

Source: IMF Source: Trading Economics


HOTEL DEMAND: PRE AND POST COVID-19


• We expect strong domestic weekend demand followed by extended domestic and business travel to lead the bounce back.

• This will be followed by intra-Asia travel, long-haul and lastly MICE.

• Phu Quoc, Nha Trang, Vung Tau and Da Nang will be top destinations, followed by HCMC and Hanoi.





Decisions on WIPs (shutdown/reactivation).




Need to defer rent payments and/or restructure current leasing contracts.

Source: Vietnam Tourism and Colliers International reduction of structural costs.

5.0 6.0 6.8 7.5 7.8 7.9 10.0 12.9

15.4 18.0

11.2

19.0 21.0

28.0 30.0 32.5

35.0 38.5

57.0 62.0

73.2

80.0 85.0

72.3

88.0 90.0

33.0 36.0

39.3 42.5

46.3

64.9

72.0

86.1

95.4

103.0

83.4

107.0 111.0

-

20.0

40.0

60.0

80.0

100.0

120.0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F

Vietnam Tourism Arrivals 2010 - 2022F (millions)

Foreigners Domestic Total

Easing of visa restrictions July

2015

COVID-19


INVESTMENT YIELDS - A COMPELLING STORY


• Attractive yields compared to mature destinations

• Opportunity for geographic diversification

• Spreads in excess of 5% on local bonds although compressing in key cities

• Higher returns compared to office and retail

• Widening yields in H22020 giving way to compression by Q22021










Business restructuring and reduction of structural costs.

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

2013 2014 2015 2016 2017 2018 2019 2020F 2021F

Vietnam Hotel Investment Yields - Major Destinations

Spread Hotel Yields 10-Yr Bonds


INVESTMENT TRENDS: WHO’S BUYING AND WILL THIS CHANGE POST COVID-19












Source: RCA


INVESTMENT TRENDS: PRE AND POST COVID-19


HCMC and Hanoi represent majority of the deal volume.

Increasing activity for Da Nang and Nha Trang.

Inline with emerging market investment to start with key gateway cities and as local knowledge and brand proliferation increases, then investors spread out in search of higher returns.

We expect deal volume to remain subdued until international airlift without quarantines return, with a bounce in investors seeking to snap up deals. Deal volume to significantly increase possibly end Q12021.

It’s all about timing and pricing!











june 30, 2020 prepared by: colliers international · recovery 4-6 months. colliers international |...

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