The trend of developing accommodation on the seaside looks set to continue.
According to CBRE's quarterly report for the Da Nang market, in the first three months of 2015, Da Nang welcomed 878,076 tourist arrivals, of which international tourists accounted for 313,096. This represented a year on year increase of 19 per cent for international and 15 per cent for domestic arrivals.
According to Da Nang's Department of Culture, Sport and Tourism, in 2014 Korean and Chinese arrivals to Da Nang went up 93 per cent and 44 per cent, respectively. In the first quarter of 2015, eight additional chartered routes from China combined with more flights between Korea and Da Nang by Vietnam Airlines and Asiana Airlines have brought about a significant growth in North Asian tourists to the city following the East Sea tension last March.
"Hosting APEC 2017 is good news for Da Nang City as this is a chance to promote the city's image to the world, promising a greater number of visitors from various countries and positive impacts on the city's hospitality market," said Ms. Duong Thuy Dung, Associate Director, Head of Research and Consulting Department of CBRE Vietnam.
On the supply side, the review quarter welcomed a total of 323 new rooms from five three-star hotels.. New developments, especially of budget hotels, started to spread out to seaside areas, helping to spread the city's incoming hordes. "The recent introduction of some new bridges like Dragon Bridge and Tran Thi Ly Bridge have shortened the distance between the beach and the CBD," noted Ms Dung. "Therefore, the trend of developing new properties on the seaside will strongly increase in the future."
In order to capture a large number of domestic arrivals to Da Nang for the Danang International Fireworks Competition and national holidays in April, approximately 1,300 new properties will be launched in the next quarter, of which 90 per cent are three and four-star properties while future five-star developments will only come online starting from 2016.
Existing international operators are expanding their market share in Da Nang through new developments such as Fusion Suites (Fusion) and French Village (Mecure and Ibis). In the near future, Melia Da Nang (Melia) and Hilton will also enter the market. The introduction of these international brands will improve the quality and enhance the image of Da Nang's hospitality market.
As far as market performance is concerned, the long Tet holiday helped to improve room rates and occupancy rate at most hotels and resorts, therefore all segments saw an increase on a year on year basis. High average room rates at Novotel Premier Han River Hotel and A La Carte Hotel partly raised the revenue per available room rate of five and four-star city hotels significantly, by 66 per cent and 29 per cent, respectively.
In the next quarter, due to holidays and the peak season, Da Nang's hotels and resorts will achieve much higher average occupancy rates. However, as a large number of new properties will open in the second quarter, it will be interesting to see how the influx influences room rates, especially at existing properties.