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International hotel brands and management companies find favor

Released at: 07:29, 13/06/2018

International hotel brands and management companies find favor

Photo: Movenpick in HCMC

Latest Savills report notes increasing popularity of foreign brands and managers over recent years.

by Linh San

Vietnam has witnessed major growth in the presence of international hotel brands and foreign management companies over the last few years, according to the latest report from Savills. From 30 hotels operating under international brands in 2010 there were a total of 79 as at the end of 2017.

2018 has already had announcements from Mandarin Oriental and Movenpick in Ho Chi Minh City and Best Western Premier in Quang Binh and Long Hai.

“The number of international operators is expected to grow in the coming years along with local management companies,” said Mr. Mauro Gasparotti, Director of Savills Hotels Asia Pacific. “We are very positive about the growth of the sector and the attraction of international operators in Vietnam.” Savills has forecast that more than 30,000 keys will be opened by the end of 2019.

He added that compared to a few years ago, the number of projects that can appeal to international operators is much greater due to better quality, more international design concern, improved trust in foreign management companies, and an increased need for creating competitive advantages. “We have observed a large increase in interest from operators in the country over the last three years, following the expansion of the hospitality market,” he said. “Vietnamese developers are still new to hospitality products, but with the large amount of supply coming there will be a fast learning curve for some of them and more quality assets are expected to get under way.”

With experience from working as a representative of Vietnamese developers in the selection and negotiation of management agreements for several years, Savills has found that if the developers aim to develop well-built and well-designed projects, the planning stage is an extremely important part of the process that should be done properly. In several cases, developers rush into design and construction without properly conducting a business study or involving management experts in the design process.

“This will lead to projects that are not designed with operational efficiency or have a business concept that does not suit market conditions,” Mr. Gasparotti said. “Therefore, we strongly advise developers to involve management companies from the early stage of design. Some developers forget that architects are not hotel operators. Instead, developers should support them with professional management guidance during the design process.”

Vietnam has also experienced strong growth in condotels in the last two years. It is anticipated that, by 2020, approximately 65 per cent of new supply will be condotel or second home products, which means that one in four of total supply will be categorized as condotel.

It is also very interesting to see that operators themselves are launching new brands to target all new types of clients, such as millennials or health-conscious travelers. “Vietnam would be a potential market for them to introduce focused brands, as the categories of travelers here are diversified,” Mr. Gasparotti added.

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