Phu Quoc Cbre Global Research and Fighting for Identity Consulting

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Phu Quoc Cbre Global Research and Fighting for Identity Consulting VIETNAM SPECIAL REPORT PHU QUOC CBRE GLOBAL RESEARCH AND FIGHTING FOR IDENTITY CONSULTING Contents 3 Terminology Hotel11 Supply & Definition Executive4 14Hotel Summary Performance 16 5 Development Introduction Cost Location6 & 18 Seasonality Final Thoughts Accessibility7 Investors19 Q&A Tourist8 arrivals Appendix21 PHU QUOC – FIGHTING FOR IDENTITY Terminology & Definition . ADR (Average Daily Rate): A statistical calculation often computed by dividing room revenue by the total number of guest rooms occupied. Bungalow: a small villa or cottage within a hotel or resort complex, usually having a single storey and sometimes an additional attic storey. A bungalow is surrounded by greenery, gardens and lawns. Eco-tourism: a form of tourism involving visiting fragile, pristine, and relatively undisturbed natural areas, intended as a low-impact and often small scale alternative to standard commercial (mass) tourism. MICE (Meetings, Incentives, Conferences and Exhibition with the “E” sometimes referring to Events and the “C” sometimes referring to Conventions): is a type of tourism in which large groups, usually planned well in advance, are brought together for a particular purpose. RevPAR (Revenue per Available Room): a key indicator of performance for hotels and can be broken down into two parts reflecting occupancy and rates: RevPAR = Occupancy (percentage of available rooms occupied) × Average Room Rate per night. The term “hotels” in this report is understood to include both hotels and resorts. CBRE has classified hotels at the rating we deem appropriate within the Phu Quoc hotel market, and not necessarily by the standards set by the Vietnam National Administration of Tourism (VNAT). The criteria used are based mainly on the OHRG (Official Hotel and Resort Guide) hotel system ratings. This system is recognised as being comparable for almost all countries around the world, especially developing countries. CBRE considered the following factors when classifying the respective hotels in Phu Quoc: Location of the hotel Room service and quality of staff Design and layout – size of the rooms, lobby, number of lifts Facilities, amenities provided – a wide range of recreational facilities, food and beverage outlets, meeting and conference facilities Internal finishes – high quality of furniture and fittings External facade – attractive design and finishes Size of hotel (number of guest rooms) Average daily room rates Hotel management: whether the hotel is managed by a hotel operator or is self- managed. For the purpose of this report, CBRE classifies the top-tier hotel market in Phu Quoc into three categories: luxury four-star, standard four-star and luxury three-star hotels. Information used in this report has been collected through interviews with representatives of hotels, from our in-house database as well as from statistics provided by VNAT and other Governmental sources. © CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 3 PHU QUOC – FIGHTING FOR IDENTITY EXECUTIVE SUMMARY SIGNIFICANCE Phu Quoc has huge potential to develop into a 150 km coastal length favoured beach escape HOWEVER 99 scenic mountains The island is still largely 62% forest area undeveloped. CONCERNS Infrastructure: Poor infrastructure, low progress on road upgrading Facilities and amenities : Lack of international hospitals, supermarkets or retail chains, nightlife, bars and clubs Master plan: Too many projects under planning while local government keeps changing the island’s master plan Labour force: Lack of skilled workforce s Development cost: High cost of construction and operation OPPORTUNITIES eco Potential for eco-tourism and eco-resort development s Investors: A few number of top-tier hotels/resorts and no existing second home villa creates a good opportunity for the hospitality investors Hotel operators: lack of big brand names also creates a good opportunity for international operators © CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 4 PHU QUOC – FIGHTING FOR IDENTITY Introduction Back in 2006, an American group, Rockingham, applied to invest in a 1,000ha tourism project worth US$1 billion on Phu Quoc Island in the southern province of Kien Giang. This project would have included a car racing track. Shortly after that, Swiss-backed Trustee Suisse Group also announced plans to invest $2.6 billion into the Asia Pearl tourism project, the largest tourism project to have ever been proposed for Phu Quoc. Since the Prime Minister issued a decision encouraging investment on Phu Quoc Island in 2006, the wave of investment into this island has soared. Preferential policies of the highest level for investment are being applied on this island. Alongside destinations such as Da Nang, Mui Ne, Nha Trang and Vung Tau, Phu Quoc is one of the key coastal tourism destinations in Vietnam. What brings international travelers and, thus far, restrained development to Phu Quoc are its warm, turquoise waters, secluded, deep sandy beaches, and its lush, mountainous interior, which is protected as a national park. With all these advantages, Vietnam’s government has an ambition to turn Phu Quoc from a sleepy backwater to a favoured beach escape for Western tourists that can compare successfully neighbouring destination such as Phuket or Bali. The scramble to develop Phu Quoc is in earnest, and large numbers of high rolling investors have come to the party. A total of 190 local and foreign investors have applied to invest on the island. Some 100 projects have been approved on a total area of nearly 4,296 ha including high-end resort projects on Long Beach, multiple golf courses, kite-flying areas and even a casino. However, beyond the chain of small to medium scale local resorts lining Long Beach, the island is still largely undeveloped – and unlike Phuket, which it aspires to emulate, visitors cannot find anything to do here after dark. Only a few major projects have been constructed recently, while all the others, many of which are foreign-invested, are still on hold. The new international airport that was opened in late 2012 to replace the old local one is expected to open the door wide for tourism and eco-social development for the island. If Vietnam’s government has its way, by 2030 it should be able to serve 7 million passengers per year. The Phu Quoc that those 7 million passengers visit then will be totally different from the Phu Quoc we know now, if the current plans come to fruition. But will these plans actually deliver? Obviously ambitious plans are one thing, but getting them realized is another. So what improvements have been made on the island recently, what are the challenges that the island is still facing and what will be the future for Phu Quoc in the years to come? © CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 5 PHU QUOC – FIGHTING FOR IDENTITY Location & Seasonality An island with 150km coastal line Situated in the west of Vietnam, Phu Quoc is the country’s largest island with a land area of 563 square kilometres, equal to the area of Singapore. It is approximately 120 kilometres from Rach Gia City on the mainland and approximately 4.5 kilometres from the coastal border between Cambodia and Vietnam. It lies almost at the geographic centre of Asian Southern East countries as it is approximately a 1-hour flight from Phu Quoc Island to Ho Chi Minh City, Phnom Penh, Bangkok, Singapore and Kuala Lumpur. The population of the island is only 103,000 people. The island is home to several of the nicest beaches in Vietnam. On the west side of the island lies the main beach called Long Beach where most of the hotels and resorts are located. Further to the upper west coast is a long stretch beach called Bai Dai which is among the most remote and pristine. Just offshore rises Turtle Island (Doi Moi), a snorkeler’s delight with coral reefs and tropical fish galore. On the east side of Phu Quoc lie the most wild idyllic and also the most isolated beach: Sao Beach. Phu Quoc however has a lot more to offer than just beaches. The island is famous for producing two traditional products: fish sauce and pepper. Fish sauce produced in Phu Quoc is one of the most popular and preferred by most Vietnamese people. Phu Quoc is surrounded by the sea which supplies the main material (fish) for this industry plus the secret ingredients that give the Phu Quoc fish sauce such a good smell and taste. Pepper is cultivated inland by many farmers and is well known for its strong taste. Phu Quoc also offers travelers some of the most beautiful pearls in the world. Safe from the wrath of the sea Nature generously endowed this land with sunshine all year round. Almost no storms affect the island. The temperature rarely falls under 15°C and averages 27°C. April is the hottest month of the year at around 28.3 Celsius degrees while it is about 25 Celsius degrees in January. Winds on the island have two directions: The Northeaster lasts from November to March and the Southwester from May to October. There are two distinct seasons: the dry season and the rainy season. The rainy season lasts from April or May to October or November while the dry season lasts from October or November to March or April. 90% of the rainfall occurs in the rainy season. Mid winter is the best time to visit Phu Quoc, when the sky is blue and the sea is calm. Source: phuquocexplorer.com, CBRE, Q2 2014. © CBRE Ltd. 2014 CBRE GLOBAL RESEARCH AND CONSULTING 6 PHU QUOC – FIGHTING FOR IDENTITY Accessibility New airport raises seat capacity by 60% Being an island, there are only two ways of getting to Phu Quoc: by air and by sea. Travelling by sea normally takes two and half hours by boat from Rach Gia, the nearest inland town, and it takes seven hours to travel by car from HCMC to Rach Gia.
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