hospitalitystyle.com

(2008 Year November December) posted on Mon Nov 10, 2008 10:57am EST

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THE PULSE: Good market, Vietnam! Multi-national hospitality chains are stampeding into this once war-torn country, drawn mainly by its strong economy and growing stature as a destination of choice for international travelers-especially those from China, Japan, South Korea and the United States. Top-tier hoteliers currently building in the country include Accor, Banyan Tree, Hyatt Hotels & Resorts, InterContinental Hotels Group, Kingdom Hotel Investments and Kor Hotel Group.

 

THE HOT SPOTS: Ho Chi Minh City (formerly Saigon) and Hanoi, the country's two largest metropolitan areas, along with the fabled China Beach region along the country's eastern shore, where at least three major resorts are in the pipeline-the Hyatt Regency Danang Resort and Spa (opening late 2009); Kor's Viceroy China Beach (2010); and KHI's Raffles Da Nang (2011). A recent report by The Economist on Vietnam's growing tourism trade noted that most of the properties now on the boards in those areas will cater to a distinctly different type of traveler than was the case during the past couple of decades. "After the backpackers and a few nostalgic American war veterans, tourists with fatter wallets are now arriving in large numbers," the magazine reported.

 

THE NUMBERS: Vietnam is the 13th-largest country in the world by population, with 85 million people, and that number is predicted to grow to 100 million by 2025. Its GDP grew by 8.5 percent in 2007, and is expected to grow by 9 percent in 2009. The country's long-term growth prospects are strong, as well, notes John Hawksworth, head of macroeconomics at PriceWaterhouse Coopers LLC. "Vietnam has a potential growth rate of almost 10 percent per year, in real dollar terms, that would push it up to around 70 percent of the size of the U.K. economy by 2050," he notes. Helping drive that growth is the country's ongoing economic evolution-it's leaving behind its agrarian roots and becoming the home to a rapidly expanding electronics and software industry. Another major economic engine is international tourism. Vietnam's exotic sites and pristine beaches attracted 4.2 million international visitors in 2007, a 17 percent increase from a year earlier, according to the Vietnam National Administration of Tourism. By 2010, the country expects the number of overseas visits to hit 6 million.

 

THE HURDLES: The biggest obstacles to getting a deal done are "the country's low administrative efficiency, an underdeveloped legal system and its need for significant infrastructure improvements," says Buu Le, senior manager, consultancy and research for Vietnam at Jones Lang LaSalle. "Despite those obstacles, Vietnam remains very attractive to foreign investment-but it will require long-term commitment, deep pockets, flexibility, patience and persistence."

 

THE PAYBACK: Hotel operators setting up shop in Vietnam are netting some sizable returns on their investments, as evidenced by the RevPAR statistics for the region tracked by Jones Lang LaSalle Hotels. According to that group's "Asia Overview 2008" report, five-star accommodations in Ho Chi Minh City notched a 42.2 percent RevPAR growth in 2007, while those in Hanoi enjoyed a healthy 24.4 percent jump.