Luxury Hanoi hotels attract more domestic investor cash
Luxury Hanoi hotels attract more domestic investor cash
As foreign owned high-end hotels in Hanoi struggle with a number of issues, including the country’s economic downturn, the real estate market crash, over supply and the reality that many international tourists are tightening their belts, domestic investors are relishing the opportunity to acquire them.
According to Phan Xuan Can, chairmanof SohoVietnam, a merger and acquisitions consulting firm, many domestic investors are actively finding opportunities to either partly or fully take over Hanoi’s high end hotels.
Can said he had advised a new investor to obtain a site in the heart of Hanoi to develop a four-star hotel. “This investor has been looking for a hotel project for a long time and now is the time for them to take advantage by getting a prime location at a suitable price,” Can said.
According to Can, many other investors were coming to him for advice on hotel development projects. “However, operating a hotel is a long term capital investment, so investors must be very consistent and have long investment vision,” Can countered.
In order to be successful in the hotel business, the top condition for any investor is location. “The location must be in a central street and have convenient transportation links,” said Can.
Hanoi is now home to eight high-end hotels. In the past, foreign ownership was widespread, but that has been reversed as domestic investors become increasingly dominant.
An outstanding case is Metropole Sofitel, one of the city’s oldest and most prestigious hotels. The hotel was built in 1901 by two French companies and was the first ever five-star hotel in Hanoi. Today the hotel now is co-owned by VinaCapital and Hanoi Tourist.
Opened in 1996, Daewoo Hanoi was one of the first luxury hotels in Hanoi following the renovation period, and used to be a symbol of the presence of Korean business in the country. The hotel was taken over by Hanel, the domestic partner of its original joint venture in 2012.
The trend to domestic ownership in the five-star hotel market continued with the case of Hilton Hanoi Opera. In operation since 1999, Hilton Hanoi Opera was originally a joint German-Austrian project. In 2006 VinaCapital bought 70 per cent of the company as part of a joint venture with domestic Thang Long Corporation. Three years later, VinaCapital announced that it sold its entire stake to BRG – a strong domestic financial group.
Meanwhile, notable exceptions to the trend are Sofitel Plaza West Lake and Melia which continue to be dominantly foreign owned joint ventures.
Melia was initially built in 1994, by Thai Group SAS Trading in a joint venture with Hanoi Electromechanical Manufacturing JSC, and is today owned by renowned Thai billionaire Charoen Sirivadhanabhakdi.
Similarly, Sofitel Plaza West Lake (formerly known as Meritus Westlake Hanoi) has been a joint venture between Singapore UOL Group and the Hanoi Construction Corporation since its beginnings in 1998.
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