Most hotel investments to Danang area and Hanoi

Times are certainly hard for Vietnam tourism as foreign tourist arrivals are down by 18.7% for the first seven months of 2009. The current downturn will severely impact hotels profitability up to 2010 with declining yields and occupancy, according to a recent CB Richard Ellis (CBRE) report. The gllomy perspective however does not seem to deter foreign investors to go on with many hotel projects all around the country. In the long term, Vietnam’s tourism potential remains in fact promising with six million international travellers by 2012.

Vietnam has developed over the last decade a large number of classified accommodations with many international brands moving into what could be considered as one of the most potential tourism markets in Southeast Asia. At the end of 2007, the country officially recorded 257 classified establishments of international standards over a total of 3,800 establishments (including family-run mini-hotels). According to official data, the number of hotel rooms has surged from 2000 to 2006 by 75% reaching 100,000 units in classified accommodation, half of the total room capacity in the country.

Cities or provinces with the largest number of classified hotels in the three-to five-star categories were in 2007 Ho Chi Minh City, Hanoi, Halong Bay, Quang Nam province (Central Vietnam around Danang-Hoi An) and Bin Thuan province (Southern Vietnam with Phan Thiet as the capital).

Over the years to come, biggest beneficiaries of any hotel opening will be Hanoi and Danang area in Central Vietnam. In Vietnam’s capital, some 8 properties will be inaugurated or renovated as they are being rebranded as part of an international chain. The hotel rush in Hanoi is justified by a lack of classified accommodation as well as the perspective of the city 1,000 years anniversary celebration in 2010. According to the city government, Hanoi needs 13,000 rooms to accommodate an expected 2.5 to 3 million foreign guests by 2020 compared to 8,500 rooms and 1.3 million foreign travellers today. From now until 2012 Intercontinental Hotel Group (IHG) and Accor will open a range of new properties. For IHG, 2010 will see the opening of a Crowne Plaza followed in 2011 by the company new flagship, the Intercontinental Landmark Hanoi, the city’s highest skyscraper and in 2012 a Holiday Inn. The group will put then on the market over 1,000 rooms. For Accor Asia Pacific, 2009 translates in Hanoi with the opening the Mercure La Gare followed in 2010 by another Mercure and Novotel properties, adding close to 760 rooms. Fraser Suites is also showing flag this year with its first Hanoi property (170 rooms) with JW Marriott opening its future flagship hotel with 450 rooms in 2012.

In Danang, they are even more ambitious plans along the coast of Central Vietnam’s largest city. The Furama resort- Danang only five star resort for the time- will be joined by a range of new properties: a Crown Plaza and a Hyatt Regency plan to open this year followed by Intercontinental in 2010, Raffles in 2011 and at an unspecified date Meridien. In nearby Hoi An, the Novotel Imperial opens its doors this autumn followed by Sheraton in 2011. In total both Danang and Hoi An will get an additional 2,141 rooms. But the biggest shock in terms of hotel development might come from the imperial city of Hue. Banyan Tree is moving into this market and look to develop an integrated resort Laguna Hue. Located on 280 hectares of land, the integrated luxury resort will comprise some seven hotels in its ultimate phase. Groundbreaking ceremony took place a week ago in presence of Vietnam’s Prime Minister Nguyen Tan Dung andGroup’s Executive Chairman Mr Ho Kwon Ping for the first phase, comprising a Banyan Tree Hotel and Angsana Hue with 350 rooms due to open in 2012. The investment represents US$ 200 million.