Tourism real estate must create real cash flow

Tourism real estate must create real cash flow

To generate sustainable values, tourism real estate must operate as a destination ecosystem to generate real cash flow and long-term trust.

Tran Diem My, vice chairwoman of Five Star Group shared her insights at a VIR seminar in Hanoi on June 23. She said, “In the new cycle, tourism real estate is no longer valued by expectations but by the ability to generate tourist flows, cash flows, and long-term trust.”

Vietnam boasts a unique tourism goldmine with a 3,260-km coastline, a rich heritage system, a diverse culture, and increasing attractiveness to international tourists. Indeed, tourism is becoming an important growth driver, stimulating the development of accommodation, transportation, trade, entertainment, and tourism real estate.

"Against the backdrop, it is important for Vietnam to transform the potential into real economic value,” My said. “While tourism creates tourist flows, it is tourism real estate that creates spaces for tourists to stay, experience, spend, and return.”

She pointed out three factors opening up opportunities for tourism real estate, including the strong recovery of domestic and international tourism, an increasingly refined legal framework, and investment capital seeking stable profit channels.

“Opportunities will not be accessible to all. Only businesses with quality products, transparent legal frameworks, secure finances, and operational capabilities can seize opportunities in the new cycle,” she added.

After a challenging period, real estate businesses have undergone transformation to adapt to new trends. Instead of chasing rapid growth at all costs, businesses focus on product quality, operational efficiency, and execution capacity. The market is moving towards real-world value rather than promising profits. The market is also shifting away from standalone projects towards the development of integrated resort ecosystems.

“Today’s customers don’t buy expectations, they buy certainty,” she said. “Customers are paying more attention to project legality, operating units, occupancy rates, customer base, and the ability to generate cash flow, rather than promises of profits.”

She noted the biggest issue today was not sales but restoring and sustaining trust. Customer trust isn't built on beautiful advertising messages, but on commitments made after customers have made their payment.

In addition, trust is built on transparent legality, on-schedule delivery, consistent quality, and especially proper operations as promised. A resort project only truly comes to life when it attracts guests, generates revenue, and encourages people to return.

However, it is vital to resolve some bottlenecks related to legal frameworks, capital flows, investor sentiment, and destination development capabilities.

Five Star Group is pursuing the strategy of creating iconic tourism destinations rather than developing standalone projects. The company doesn’t approach tourism real estate development with the mindset of building a standalone venture. Instead, it aims to develop tourist landmarks for each locality.

In particular, Five Star Odyssey and Five Star Poseidon in Vung Tau and Ho Chi Minh City are positioned as luxury 5-star hotel and apartment complexes in line with international standards. It features an integrated model of accommodation, shopping, entertainment, healthcare, and the nighttime economy.

Five Star Eco City, spanning 669 hectares at the southwestern gateway of Ho Chi Minh City, demonstrates a long-term vision for the development of an ecological urban area and sustainable residential community.

VIR