The Method to the Madness Behind Vietnam’s Crazy Hotel Boom
Photo Caption: Aerial view of Anantara Quy Nhon, opened in December 2018, one of many, many new openings in Vietnam
Skift Take
A pending 40 percent increase in room supply should keep investors at bay, you would think. But Vietnam still attracts them like flies. Development is off the charts. Here's why.
Massive hotel and resort construction in Vietnam can easily elicit disbelief, and the ensuing dubiety or distrust.
The view from Halong Bay until recently was still pristine. Today it’s a huge building site. The new image of Vietnam rolls through its resort destinations.
It all seems too much too soon. Can all those new hotels, resorts and blocks of condotels be filled, even as recent openings throughout Vietnam’s popular tourist spots are being absorbed by the market? Is it sustainable or will ghost buildings be a major tourist attraction one day? Could it all really be tourism driven?
For some, the pace is so unreal that the possibility of money laundering by rich Chinese or Americans have even been murmured to Skift. An owner operating a small hotel in Phu Quoc went down that route in trying to come to terms with calculations he said that didn’t make sense — the kind of room rate and revenue per available room (RevPAR) that would be needed to get a return, the critical labor shortage which is shooting up costs faster than you can say "high rise," the investment needed to ensure a quality product long after it’s been built, he could go on.
But consultants and legal advisors to hotels Skift spoke to all say there is a method to the madness, with the exception of the condotels phenomenon. The hybrid of hotels and condominiums is the only "crazy" thing about the boom currently and could indeed get ugly for small retail investors, say consultants.
“One must be careful not to apply Western logic to issues and situations in Vietnam, especially where real estate is concerned,” Kenneth Atkinson, executive chairman of Grant Thornton Vietnam, told Skift.
More amazing than ThailandVietnam is actually more amazing than Thailand, at least in arrivals growth history.
It took Thailand 15 years to get from six million to 15 million arrivals. Vietnam? Only seven years, said Atkinson.
Last year’s 15.5 million international visitors also shows that Vietnam doubled its number of arrivals in just three years. A third of arrivals are from China. So
