City hotel off-loading reaches fever pitch
City hotel off-loading reaches fever pitch
A series of hotels are being sold in tourist cities such as Hanoi, Ho Chi Minh, Danang, and Nha Trang due to financial pressure on investors.
Nguyen Manh, an owner of accommodation located in Ho Chi Minh City’s District 1, said that before the pandemic his homestay-style complex was always full of guests. At the end of 2018, Thanh decided to invest in a second homestay with six floors, also located in the heart of the city.
But the ensuing restrictions left the facilities with heavy debt. “Currently, tourist numbers remain unstable, while prices have decreased alongside bank interest rates increasing rapidly. As a result, I was forced to put the buildings up for sale because I could no longer afford to pay interest or salaries,” Manh said.
On online real estate platforms, the number of hotels for sale in Ho Chi Minh City is vast. In the centre of District 1, many 3-star and 4-star hotels are for sale. For example, the 4-star California Hotel with 12 floors with 105 standard rooms is being offered for $33 million. The 4-star Golden Central Saigon, which has 17 floors and almost 130 rooms, is on offer for $42.6 million.
Streets that are considered “golden land”for the hotel industry in Ho Chi Minh City such as Bui Thi Xuan, Ly Tu Trong, and Le Thanh Ton are full of hotels that are currently closed and being offered for sale or lease.
Some other hotels have changed their function. The Lavender Hotel in District 1 used to be 4-star accommodation but is now being renovated to become an office tower.
Up in Hanoi, many hotels dotting the capital’s ancient streets are also for sale. Nguyen Duc, a broker in the iconic Hoan Kiem district, said that he is now representing hotel owners hunting for transactions.
Duc said that he has a 13-floor hotel on sale for $26 million – it boasts 91 rooms, a gym, spa, restaurant, and rooftop swimming pool. “The hotel has full legal documents and is located right in the centre of Hoan Kiem, so the profitability will be high when international tourist numbers get back to normal,” he said.
According to Duc, in the central old town area, the price per square meter of land ranges from about $40,000-70,000. With a 4-star investment cost, the asking price is not high. However, he also acknowledged that due to the current difficult economic situation, finding a new owner is not easy.
Current hotel prices in the district range from around $4.5 million to as high as $25 million. Most hotels, however, are 4-star or lower, and self-managed and operated.
Elsewhere, despite being a locality attracting international tourists, a series of 3-5 star hotels in Danang are also looking for new owners. In particular, a 5-star hotel on Vo Nguyen Giap Street is for sale for $41 million.
Data from the Batdongsan real estate website shows that more than 100 hotels are for sale in Danang, with prices ranging from $1.5 million to $48 million.
Industry experts believe the sale of hotels is mainly due to investors having financial difficulties, due to increased interest on loans while their operations were not at full capacity.
Most hotels in the heart of cities previous welcomed international tourists, but the flow of travellers has not fully returned to 2019 levels. In particular, tourists from major markets such as China and South Korea are trickling in very slowly.
In an expert event held by Savills Hospitality and WeHub Vietnam in Ho Chi Minh City on March 30, Fenady Uriarte, business development manager of Southeast Asia at STR, said that while Southeast Asia’s revenue per room for February moved closer to 2019 levels, Vietnam remains behind other nations. However, average daily rates are moving in the right direction and gaining more tourists from the likes of China and Japan should present an upside for Vietnam.
“Many hotel developments are delayed or on hold because of tightened credit controls. However, the conversion of existing developments shows that many hotel owners are looking to collaborate with chain brands. Owners of independent hotels and chains are increasingly attracted to the opportunity to benefit from the scale, expertise, and network of global hotel operators,” said Uriarte.
According to the General Statistics Office, more than 2.7 million international visitors came to Vietnam in the first quarter of 2023, a near 30-fold increase over the same period in 2022. However, this number is only equal to 60 per cent compared to the same period in 2019.
