Hotels & Hospitality Group | July 2017 Spotlight on the Accommodation & Tourism Industry CHINA Sapa

Hanoi Halong

HAINAN ISLAND

Yangon

Hue THAILAND Foreword Danang Hoi An Vietnam has undergone an astonishing 30 years of development. The World Bank's outlook for the Vietnamese economy remains highly positive, with average GDP growth of around 6% forecast CAMBODIA annually until 2020, whilst Oxford Economics forecast that by Nha Trang Dalat 2020 Vietnam’s economy will be growing faster than China, Indonesia, Malaysia, Philippines, Singapore and Thailand. GULF OF Phan Thiet THAILAND Economic and political reforms have spurred rapid growth, previously high inflation is now under control with the average inflation rate in 2014 – 2016 standing at 2.5% and the exchange Phu Quoc rate being stable over recent years. These factors continue to transform the country, with the middle class expected to grow by 18% from 2016 – 2020, providing one of many catalysts for the rapidly growing tourism industry.

Vietnam's wealthiest are also set to get much richer. In fact, the dramatic growth of "Ultra High Net Worth Individuals" in Asia (which is typically regarded as someone with a net worth of above USD 30 million) is set to be reinforced by stellar growth rates in Vietnam, which is expected to see its ultra-wealthy population rise by the highest rate of growth in the world. Vietnam’s rapid economic development has been led by Capital of Vietnam an industrial renaissance, particularly as multi-national manufacturers look to diverse their operations across developing Asia in a so-called ‘China + 1’ strategy. The political stability, pro- business environment and ‘golden age’ demographics which see 2 25% of the population being between 10 and 24 years of age has km attracted a range of investors from neighbouring Asian’s nations including South Korea, Japan, Taiwan and Singapore. Land310,070 Area In terms of Vietnam’s accommodation demand, there were over ten million international arrivals into the country in 2016, a 26% increase on the year prior. This is the first time Vietnam welcomed over ten million foreign visitors, reflecting the country’s growing status as a business destination and tourist 94.4 million hotspot, this is set to double by 2020. Resident Population in 2016 The industrial renaissance has driven corporate demand for hotels across the country, whilst visa exemptions, the introduction of new direct air routes and improved marketing efforts have boosted the country’s appeal to leisure travellers. Like much of Southeast Asia, leisure demand has been driven by USD Mainland Chinese tourists which hit a record last year in terms of million arrivals growth. 2016 205.3Norminal GDP

2 Vietnam recently announced it would renew its 15-day visa exemption policy for citizens of Germany, France, Britain, Italy and Spain until the end of June 2018, whilst the majority Forecast International Arrivals of Asian nations are already visa exempt and some other European countries are also exempt. 20,000,000 The first five months of 2017 saw the country welcome over five million international travellers according to the Vietnam National Administration of Tourism (VNAT), increasing 26% 10,012,735 over the same period last year. The country appears on track to 11,500,000 meet its annual target this year of 11.5 million foreign visitors.

We cannot discount the mammoth growth of domestic tourism 6,014,032 and what it also means for the country's hospitality sector - complimenting foreign arrivals. In 2015, Vietnam recorded 57 million domestic visitors which was an astonishing 48% growth on the previous year. The domestic tourism stimulus program, themed “Vietnamese travel in Vietnam – Each journey to love the fatherland more” was launched in 2014 and has heavily 2011 2016 2017F 2020F contributed to the increase of locals travelling domestically.

Many local tourism organisations and operators supported the program by boosting advertising and marketing activities. In addition, Vietnam Airlines, Vietjet Air and JetStar Pacific joined the program, offering discounts to various destinations which has underpinned the tremendous growth in airlift recognised over the past two years.

Vietnam's growing tourism and thriving economy have promoted the hotel and resort market with foreign investors from across the region showing significant interest in Vietnam over the past 18 months - the country has become one of the most talked about markets in Asia Pacific. After the recent rebranding of Hoi An’s The Nam Hai, which is now under Four Seasons management, an ever increasing range of resort locations are expected to gain greater attention from international hotel operators, whilst investors continue to circle for deals.

Largest Source Markets (2016) Highest Growth Source Markets (2016)

2,696,848 67.5% y-o-y 51.4% y-o-y

1,543,883 51.4% y-o-y 38.7% y-o-y

740,592 38.7% y-o-y 10.3% y-o-y

3 Infrastructure Investment

Vietnam’s rapid economic development has been underpinned by significant infrastructure and transport spending. In a country famous for its motorbike usage, automobile sales have surged in recent years, as wealth has grown and tariffs on cars have been reduced. Car sales reached 304,427 in 2016, a 24% increase on the previous year.

Recognising this demand, the 2020 Transport Master Plan is targeting to construct 2,000 km of highways, including the much anticipated North-South highway linking Ho Chi Minh City and Hanoi, which is envisaged to complete in approximately three years. Further, the addition of numerous over-passes in both Hanoi and HCMC is accommodating the ever increasing number of vehicles on the roads. Mirroring the activity occurring on ground, Vietnam's skies are Infrastructure Spending seeing brisk transformation. Majority state-owned Vietnam Airlines was the second airline in the world to be operating as a % of GDP both the Boeing 787 Dreamliner and the Airbus A350-900. China % Whilst VietJet Air has transformed the low cost carrier scene 6.8 in Vietnam, the group which operates both domestically Vietnam 5.8 % and internationally alongside competitors including JetStar, placed an order for 100 Boeing jets in 2016 as it targets to India 5.5 % operate 200 aircraft by 2023. Indonesia 2.6 % The precipitous growth rate in demand for air travel is unlikely Myanmar % to slow. AirAsia boss Tony Fernandes is said to be planning 2.5 the launch of AirAsia Vietnam to tap into the increasing Singapore % spending power. To cope with this growth the government 2.3 is investing heavily on its airport infrastructure in both the Philippines 2.3 % financial hubs of Hanoi and Ho Chi Minh City, as well as in Malaysia coastal resort areas and provincial cities across the country. 1.8 % Thailand 1.6 % 4 Source: Asia Development Bank 5 Road Rail & Metro Hanoi’s opening of the Noi Bai–Lao Cai expressway in 2014 has A high-speed railway between Ho Chi Minh City and Hanoi is drastically improved connectivity and reduced travel times being considered in a bid to significantly reduce travel times and between Hanoi and Lao Cai. The road is part of the Kunming – provide an alternative to flying. There are also plans to update Hai Phong Transport Corridor linking Vietnam with China, that the country’s existing railway system to increase travelling speeds also includes the recently completed Hanoi – Hai Phong Highway to 80-90 km/h from the existing 60-70 km/h. which has reduced the travel time between the capital and the Enhancing the already popular Ho Chi Minh City – Phan Thiet strategically important port city from 2.5 hours to 1.5 hours. Mui Ne route, a new five-star service was launched in March 2017 Further expressways have been built providing direct connectivity which will increase domestic and international arrivals to the between the major industrial zones of Bac Ninh and Thai Nguyen. coastal destination. These investments will continue to dramatically enhance the With a total of eight lines, construction is now underway for industrial landscape and potential of northern Vietnam, as well Hanoi’s first metro system, of which six lines are expected to be as potentially facilitating overland travel for Mainland Chinese fully operational by 2030. Upon its commission, the pilot Nhon- tourists into Vietnam. Hanoi line is expected to transport around 157,000 passengers a In Ho Chi Minh City, an upgrading and widening of National day, reaching full capacity of up to 750,000. Highway 22 has been proposed. A new expressway running Ho Chi Minh City’s first metro system is also underway, with two parallel to the Highway has also been recommended. Once of the eight planned lines scheduled for completion in three completed, the expressway, together with National Highway years. Metro Line 1 will connect Ben Thanh Market and Suoi Tien 22 and belt roads No.3 and 4 will better connect Vietnam with Theme Park, linking Districts 1 and 9. Metro Line 2 will connect Thailand and Cambodia. Districts 1, 3, 10 and 12 as well as Tan Binh and Tan Phu Districts. Also on the outskirts of Ho Chi Minh City, the new HCMC – Long Thanh – Dau Giay Highway has dramatically reduced travel times to Phan Thiet Mui Ne – a journey know to often take 5 – 6 hours can now be completed in less than 4 years. A further extension of this highway has been proposed which will further reduce travel time.

Air Expansion plans are underway for a “Noi Bai 2” airport in Hanoi accommodate greater tourism demand in the Hai Phong region, which will allow for 35 million passengers a year by 2030 and renowned for its proximity to Ha Long Bay. This expansion, which up to 50 million thereafter. A USD 1.7 billion expansion plan has caters for four million passengers and wide body aircraft also been announced for the existing Noi Bai International Airport. seeks to reduce existing pressure on Noi Bai Airport. The airport currently serves direct flights mainly to key source markets of In Ho Chi Minh City, expansion plans for the existing Tan Son China, South Korea, Japan and Thailand. Nhat International Airport are set to increase passenger capacity to 45 million from the current 25 million by 2025. Khanh Hoa province is planning to build an additional terminal by 2018 at the Cam Ranh International Airport (Nha A new airport, Long Thanh International Airport, will be built in Trang), which will be used exclusively for international flights. the southern province of Dong Nai to share the load with Tan Its current terminal will be converted for domestic use. Phu Son Nhat International Airport. Construction is expected to begin Quoc International Airport’s passenger terminal is also set for in 2019. With capacity potentially reaching 100 million arrivals expansion to increase the terminal’s capacity to four million per annum the new airport will not only support arrivals into passengers. Ho Chi Minh City, but facilitate increased demand for tourism destinations in the south of Vietnam including the Ho Tram Strip Phan Thiet is also likely to benefit from a new airport over the and Phan Thiet Mui Ne by reducing travel time from the current coming years to facilitate airlift to this dynamic coastal city and airport and Ho Chi Minh City. resort destination. Initially scheduled to complete in 2019, the airport will have a capacity at opening of 500,000 and rising to Cat Bi International Airport, located 105 km away from Noi Bai one million in subsequent expansions. International Airport in Hai Phong, was also recently expanded to

6 7 6 7 Vietnam Tourism Master Plan 2020

Approved in 2013, Vietnam’s Tourism Master Plan 2020 was designed to provide a blueprint guiding Vietnam’s future tourism development.

By 2020, Vietnam is looking to host 20 million international visitors. The tourism industry is envisaged to create 3.5 million jobs in the tourism sector, generating a total revenue of USD 35 billion which will account for approximately 10% of Vietnam’s GDP. By 2030, total tourism revenue is expected to double that of 2020.

Seven tourism areas have been earmarked for further development due to their unique destination offerings. The seven key tourism areas will seek to provide a host of attractions that will cater to a wider range of tourists.

8 9 Midland & Mountainous areas in North Vietnam Hoa Binh, Son La, Dien Bien, Lai Chau, Yen Bai, Red River Delta & Phu Tho, Lao Cai, Tuyen Quang, Ha Giang, Bac Kan, Thai Nguyen, Cao Bang, Coastal North-East Vietnam Lang Son & Bac Giang Provinces Ha Noi, Hai Phong City, Vinh Phuc, Proposed Product Offerings Bac Ninh, Hai Duong, Hung Yen, Thai Binh, Ha Nam, Ninh Binh, Eco-cultural tourism Nam Dinh and Quang Ninh Provinces Ethnic minority tourism Proposed Product Offerings Sea & water attractions Cultural tourism – Local activities & wet rice cultivation Urban city tourism MICE

North-Central Vietnam Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri & Thua Thien-Hue Provinces Map of Proposed Product Offerings World heritage sites Marine tourism Vietnam Eco-cultural tourism Historical tourism

Central Highlands Kon Tum, Gia Lai, Dak Lak, Dak Nong & Lam Dong Provinces Proposed Product Offerings Coastal South-Central Vietnam Eco-cultural tourism Da Nang City, Quang Nam, Quang Ngai, Binh Dinh, Phu Yen, Khanh Hoa, Ethnic minority tourism Ninh Thuan & Binh Thuan Provinces Proposed Product Offerings Marine & ecological tourism Resorts Food, beverage & dining tours South-Eastern Vietnam Heritage tourism Ho Chi Minh City, Dong Nai, Binh Duong, Ba Ria-Vung Tau, Binh Phuoc, & Tay Ninh Provinces Proposed Product Offerings Historical tourism Marine & ecological tourism Mekong Delta Resorts Long An, Dong Thap, An Giang, Kien Giang, Urban city tourism Ca Mau, Bac Lieu, Soc Trang, Ben Tre, Tra Vinh, Vinh Long, Tien Giang, MICE Hau Giang Provinces & Can Tho City Proposed Product Offerings Eco-tourism River life Marine & ecological tourism MICE 8 9 Ho Chi Minh City

International visitor arrivals have consistently been on an Hotels in Ho Chi Minh City are witnessing growth in demand upward trend in Ho Chi Minh City and 2016 was a record from Chinese independent travellers and groups which are breaking year reaching 5.2 million arrivals, an uplift of almost increasingly booking through online travel agents (OTAs). 11% year on year. Other growth markets include Australia, Malaysia, Singapore and Hong Kong. The city enjoys strong corporate support and is increasingly recognised as a centre for business in Vietnam. Ho Chi Minh While Japan and Korea remain key source markets, brand City is also a leisure destination with its many museums, recognition is a factor in where a guest ultimately chooses to shopping and developing food and beverage scene. stay. In terms of corporate source markets, a high proportion of total inbound arrivals comes via these two countries which A wide range of international upscale and luxury hotel both have a history of heavily investing in local real estate and brands are already well represented in Ho Chi Minh City. manufacturing. These include IHG, Accor, Marriott and Hyatt. Domestic hotel brands in the upscale and luxury segment are more prevalent Tourism initiatives within the city are also driving demand compared to Hanoi, providing some competition to these over the short to medium term. A key initiative is the proposed international operators. These include the Reverie Hotel, revamp of the city’s waterway tourism programme, which Caravelle Hotel, Hotel Majestic and the . aims to leverage on Ho Chi Minh City’s vast canals and rivers to develop waterway tourism, potentially including floating Similar to trends witnessed in neighbouring countries markets. including China, Indonesia and Thailand, there is an emerging budget and mid-scale travel scene, with local operators such Local authorities are also expanding in new areas such as A & Em, Alagon, Odyssea and SilverLand being just a few as farm and sports tourism. An example is the proposed of the groups participating in this segment. It is expected that partnering with nearby outlying areas such as Can Gio and this trend will continue to grow across the country. Hoc Mon districts to promote leisure and culinary attractions.

Over the next three years, approximately 3,500 rooms across thirteen individual hotels are set to open across the city. 10 Planned Year Project Name Positioning No. of Rooms of Opening

Ascott Waterfront Saigon 2017 Upscale 217

Citadines Regency Saigon 2018 Upscale 200

Hotel Majestic (Expansion) 2018 Upscale 325

Holiday Inn & Suite Saigon Airport 2018 Midscale 350

VinPearl Hotel (Landmark 81) 2018 Luxury / Upscale 450

Dragon Tower 2019 Upscale 120

Hilton Saigon 2019 Upscale 350

Okura Prestige Saigon 2020 Luxury 250

Ritz-Carlton Saigon 2020 Luxury 250

Ibis Ben Thanh Palace TBC Midscale 338

Eden Hotel (Union Square Hotel) TBC Luxury / Upscale 300

Source: JLL

11 Hanoi

In Hanoi, international visitor arrivals reached a record four invested USD $14.5 billion in Vietnam, according to Vietnam's million in 2016, an increase of 21% year on year. Around 3,000 Association of Foreign Invested Enterprises, equivalent to 10% rooms in 12 hotels are due to open in Hanoi, with most of of the country's total foreign investment over the past three this new supply in the upscale segment, which will support decades. increasing corporate demand. There does however appear to be an element of dependence International operators IHG, Pan Pacific, Accor, Hilton and on Samsung from selected Hanoi hotel owners with some Marriott currently have their hotel brands in the market. In accommodation operations thought to generate as much contrast to Ho Chi Minh City, there are very few domestically 80% of their total room nights sold from the group. To achieve operated hotels in the upscale and luxury segments, with sustainability, diversification of room night sources will be key the Apricot Hotel, a boutique luxury hotel located on the as the market continues to mature. west of Hoan Kiem Lake, one of the few to compete with the international brands on average room rates. Local government authorities have recently called on potential investors to focus on further developing existing The majority of locally operated hotels cater to the midscale tourism areas of West Lake and Red River in Hanoi, which and budget segments, especially in the popular ‘Old comes on the back of ongoing plans to establish an exclusive Quarter’ which is dominated by low cost and backpacker tourist zone in Dong Anh District. accommodation.

Samsung is a major driver of corporate room demand. The Korean electronics giant produces almost half of its smartphones at two factory complexes in Bac Ninh Province and Thai Nguyen Province, near Hanoi. Samsung has

12 Planned Year Project Name Positioning No. of Rooms of Opening

Novotel Ciputra Hanoi 2017 Midscale 250 Mercure Hanoi 2017 Upscale 100 Novotel Hanoi Thai Ha 2017 Midscale 345 Somerset West Point Hanoi 2017 Upscale 247 Somerset West Central Hanoi 2018 Upscale 252 Park Hyatt Hanoi 2018 Luxury 300 Westin Hanoi 2019 Upscale 212 InterContinental Hotel Landmark 72 2020 Luxury 359 Holiday Inn Hanoi Dong Da 2020 Upscale 300 Hilton Hanoi West Lake 2020 Upscale 240 DoubleTree by Hilton Hanoi West Lake 2020 Midscale 370 Four Seasons Hanoi 2020 Luxury 100 Vietin Bank Tower 2020 Upscale TBC

Source: JLL 13 Danang & Hoi An

Danang City is the major economic hub of central Vietnam. feasibility stages as the market continues to receive solid Like Ho Chi Minh City and Hanoi, recent years have seen interest from developers. The soon to be open Sheraton Hoi improved economic fortunes, predominantly driven by Tam Ky Resort and master-planned Hoiana integrated casino industrial manufacturing and production. The city is also development that will include Vietnam’s first Rosewood hotel, slowly gaining a reputation for its tech-savvy workforce with both to the south of Hoi An old town, will further expand the some referring to it as the Silicon Valley of Vietnam. Danang length of coastline accessible to visitors. City and the surrounding areas are also one of the major In addition to the forthcoming second casino, Hoi An’s resort destinations in Vietnam. credibility was further enhanced in late 2016, when the The area features a coastline of scenic beaches, including newly-rebranded Four Seasons Resort The Nam Hai, Hoi An, the famous My Khe Beach. There are three UNESCO World started welcoming guests, marking the group’s first foray into Heritage Sites located within 100 km of Danang, namely the Vietnam. 16th century silk route trading port of Hoi An, My Son Valley International airlift has grown substantially as the airport, which features the remains of the ancient Cham civilization, freshly expanded with a new terminal opening in the first as well as the ancient imperial city of Hue. quarter of 2017 that now has a capacity of circa. 6.5 million Other attractions in the area include the Marble Mountains, arrivals per year. The airport is the third largest in the country Hai Van Pass Son Tra peninsula and the Ba Na Hills resort after Noi Bai International in Hanoi and Ton Son Nhat in area. In addition, Danang features numerous world-class golf Ho Chi Minh City. A key opportunity for Danang is in further courses including Montgomerie Links and a thriving casino improving flight connectivity, AirAsia Thailand started connected to the Crowne Plaza hotel and forth coming JW operating a Bangkok-Danang route in April 2017, and further Marriott. growth in such flights to larger travel hubs with European connections are welcomed. Danang City and the adjacent province of Quang Nam have agreed to co-operate to develop into a major economic hub, The expanded airport is part of Danang’s preparations to host with a focus on tourism. Danang and Quang Nam have also the 2017 Asia Pacific Economic Conference (APEC) Summit in joined Thua Thien-Hue Province for the "Three localities, One November. Hosting APEC will bring much focus to Vietnam's Destination" program, promoting popular tourist products, stellar growth as one of Asia's emerging economies further natural attractions, and the historical and cultural heritage of promoting its MICE capabilities nationally. By hosting the the central region. forum, Vietnam hopes it can make practical contributions to APEC’s development and increase the efficiency of APEC There are a number of notable projects currently under cooperation, while boosting the country’s partnership with different stages of planning and construction along the other member economies. coastline whilst several projects remain in various pre- 14 15 Planned Year Project Name Positioning No. of Rooms of Opening

Hilton Danang 2017 Upscale 226

Sheraton Danang 2017 Upscale 250

CocoBay Project 2017 Midscale TBC

Mercure Son Tra Resort 2018 Upscale 142

The Empire Residences & Resorts 2018 Upscale 350

Hoi An Marriott Resort & Spa 2018 Upscale 250

Wyndham Hotel 2019 Upscale 568

Source: JLL 14 15 Nha Trang & Cam Ranh

Whilst supply remains in the pipeline, the presence of a Development and investment in Nha Trang and Cam Ranh greater variety of international brands and accommodation has historically been driven by domestic groups, but the is expected to attract more demand to Nha Trang and Cam growing profile of the destinations is now starting to attract Ranh. However, the success of this destination will remain the attention of international investors also. dependent on the volume of inbound flights and airport air Like elsewhere in the country, the local economy is capacity. strengthening. The recent revival of the Van Phong Port Cam Ranh International Airport currently connects Nha Trang Project, set to be located in Van Phong Bay in Khanh Hoa to international destinations including Russia, Mainland China province, north of Nha Trang, will bring further commercial and Korea. Moving forward, more air connectivity is expected, development to the area. Once completed, the project is both in the form of domestic flights and international targeted to be the largest port in Vietnam. connections to regional Asian destinations, when a new Given its proximity to the port, Nha Trang is well-positioned runway is added. to receive any spill over in corporate demand which is Development in the area has historically being concentrated anticipated to increase following the completion of the port. around Nha Trang City, with properties fronting the beach This will likely diversify demand to a destination currently front promenade of Tran Phu street, or the roads running known more for its leisure tourism offerings, as well as parallel to and behind it. Recent years has seen a growth in opportunities to develop MICE tourism. development of the Cam Ranh area. Cam Ranh is known for its natural surroundings, most obviously pristine beaches, recent development have included the Fusion Maya resort whilst international operators including Movenpick and Radisson will shortly see arrivals to the market. 16 17 Planned Year Project Name Positioning No. of Rooms of Opening

Eastin Duyen Ha Resort 2017 Upscale 651

Westin Resort & Spa Cam Ranh 2018 Upscale 330

Movenpick Cam Ranh Resort 2018 Upscale 488

Alma Resort Nha Trang 2018 Upscale 600

Champarama Resort & Spa 2018 Luxury 134

Dusit Thani 2019 Upscale 276

A&B Central Square 2019 Upscale 484

Radisson Blu Cam Ranh Bay 2019 Upscale 290

Vogue Resort Cam Ranh 2020 Upscale 250

Source: JLL

16 17 Phu Quoc

Previously a relatively untouched resort destination, Phu accommodation can be categorised as small guesthouses, Quoc has seen dramatic development over the past couple economy and midscale hotels which are owner operated. It is of years with some of the nation’s largest developers having notable that the hotel industry in the upscale segment is likely targeted the island. The small amount of internationally to be challenged in the short term, as this existing supply will branded product which previously existed has increased be added to by a notable pipeline of new developments just with recent openings and will do so further with those in the entering or set to enter the market over the next three years. pipeline. Key source markets include Europeans from France, Germany, Several infrastructure projects are under construction on the Switzerland, Scandinavian countries, the UK and Sweden as island, namely major road works, as well as plans to increase well as expatriates working in Vietnam and regional visitors the capacity of the airport. Work continues on Phu Quoc from Singapore, South Korea and Japanese. Direct charter International Passenger Port, set to be built in Duong Dong flights from China, Guangzhou in particular, have also seen an Town, Phu Quoc’s main town. The new port is designed to increase in Mainland Chinese visitors to the island. handle cruise liners carrying 5,000 to 6,000 visitors and 20,000 There is also some supply side pressure in the second home tonne cargo ships. market, especially the "condotel" model where barriers Phu Quoc is unique across Vietnam in offering a 30-day visa to entry are lower as compared to some other real estate exemption for all nationalities – a move directly aimed at developments. This condotel or condominium market began promoting leisure travel to the island. The visa exemption has to flourish around two years ago in Vietnam resulting in new undoubtedly helped to put Phu Quoc on the radar of visitors supply in some coastal cities and resorts, including Phu and therefore created demand for more flights to the island. Quoc. If infrastructure and health care services improve, the opportunities for retirees to relocate to these more agreeable Currently, there are approximately 6,000 hotel rooms and living conditions may provide further demand for this guesthouses located in Phu Quoc. The majority of the accommodation. 18 19 Planned Year Project Name Positioning No. of Rooms of Opening

Novotel Phu Quoc Resort 2017 Upscale 366 JW Marriott Phu Quoc Emerald Bay Resort & Spa 2017 Luxury 243 Sol Beach House Phu Quoc 2017 Upscale 284 Moevenpick Phu Quoc 2017 Upscale 300 Crowne Plaza Phu Quoc Starbay 2017 Upscale 300 InterContinental Phu Quoc Long Beach Resort 2018 Luxury 459 Regent Phu Quoc 2018 Upscale 150 Pullman Phu Quoc 2019 Upscale 313 Fusion Suites Phu Quoc 2019 Upscale 97 Soansea Villa & Resort 2019 Midscale 360 Eastin Resort Phu Quoc 2020 Upscale 220 Premier Village Phu Quoc 2020 Luxury 120 Sunset Sanato TBC Midscale 99 Sailing Club Phu Quoc TBC Upscale TBC Mini House Waterfront TBC Upscale TBC Ritz-Carlton Reserve TBC Luxury TBC

Source: JLL 18 19 Vietnam Hotel & Tourism Market Outlook

Vietnam has enjoyed rapid growth in foreign tourist & Cam Ranh, Mui Ne and Phu Quoc which are breaking arrivals and has already exceeded the target of ten million the strangle hold on arrivals and tourism spending that is international arrivals by 2020 originally set by VNAT. currently held by Ho Chi Minh City, Hanoi and Danang/Hoi An.

VNAT is forecasting a further 15% increase in international As these destinations continue to rise so do those behind tourist arrivals to 11.5 million in 2017 and for the tourism them. Halong Bay in the north of Vietnam has long been a sector to generate USD 20 billion in revenue. To facilitate mainstay of tourist itineraries, other destinations which may the increase, the government has introduced an online visa begin to flourish behind those listed include Sapa in the system for short-term and business travellers from top source mountainous north, the idyllic beaches of Quy Nhon located markets and is also extending the waiver of visa requirements midway between Danang and Nha Trang, as well as the to more countries. beaches surrounding Ho Chi Minh City, including Ho Tram.

As a result of the rapid growth in international tourist arrivals International casino developers have been circling Vietnam and revenue, the 2020 target has been revised upwards to given the recent lifting of a ban on local gambling. Many hotels 20 million generating USD 30 billion in tourism revenue and across the country have chosen to add electronic gaming creating 3.5 million jobs in the tourism sector, up from the to boost revenues. In the south, whilst initially criticised by initial target of three million jobs. some during its opening phase, the Ho Tram Grand project continues to mature, the second phase of 559 rooms is This growth will be driven by a number of key strategies and currently under construction and slated to open in 2018, increased investment into tourism product development whilst a third phase has also been announced. Phu Quoc is to leverage the existing strengths in the country’s existing another destination likely to benefit from casino operations in tourism industry, as well as developing new areas. the coming years. As infrastructure investment continues apace and is matched Whilst casino projects across Asia have often being much by equally entrepreneurial private groups investing into the maligned by industry and mainstream press, particularly transport and hospitality sectors, Vietnam is likely to see a highlighting the social ills, Melco Crown Philippines was further opening up of destinations. Those already mentioned recently recognised as being the best performing casino stock which set to benefit from this spending include Nha Trang 20 globally in 2017 and demonstrates that financial success can Golf is another area where Vietnam has sought growth – be achieved with the right planning and thus investors will demand for the four Championship courses in Danang and continue to pursue such opportunities. Hoi An has driven a mini-surge in Korean arrivals keen to test themselves against the courses. This is on the back of the It has long been perceived that Vietnam struggles to attract inaugural Ho Tram Open, won by current Masters Champion repeat visitors, particularly in the leisure sector. Historically, Sergio Garcia, which was Vietnam’s richest ever sporting event tourism demand has been from European arrivals content with a total purse of US$1,500,000. on a two-week trip from north to south (or vice-versa) to tick off the key attractions. Those repeat visitors were likely those Historically, the lack of funding applied to marketing who come back to Vietnam for work, or are overseas-based Vietnam was a regular critiscism, with it being suggested that Vietnamese visiting relatives. stronger support would further drive tourism growth. There is a significant return to be made for the wider economy Our observations show this trend of one-time only visits by increasing marketing investment, a key component to is changing – in part a reflection of the shift in arrival promoting repeat visitation. Given the growth and success demographics to Asian nations. Investment into tourism- that has already been achieved, increased spending on related industries by government and private enterprises has tourism marketing is only likely to further turbo-charge a also enticed repeat visitation. rapidly developing industry. Vietnamese culture, and food in particular, has been well Given the recent rapid growth in international visitor arrivals, promoted. The country is quickly becoming a 'foodie' continued marketing efforts, improvements to infrastructure destination with a vastly improving food and beverage scene, and further development of human resources and services from local driven beer gardens to hip coffee shops to the in Vietnam, the outlook for tourism and the accommodation almost weekly opening of a new gourmet restaurant. The sector is bright. food and beverage scene is now such that the orange helmets of the famous Saigon Vespa Food Tour are now a regular site even outside five-star properties in the city.

21 Key Contacts

Research Frank Sorgiovanni Head of Research Asia Pacific [email protected]

Investment Sales Adam Bury Trang Vo Senior Vice President Asia Vice President Asia [email protected] [email protected]

Strategic Advisory Andrew Langston Giuliano Esposito Executive Vice President Asia Vice President Asia [email protected] [email protected]

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