Vietnam's hotel sector sees strong post-crisis growth: CBRE

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The hotel sector in Hanoi and Ho Chi Minh City has seen a strong income increase even though the real estate market is going through a slowdown in general, consulting firm CB Richard Ellis said.

There is an overall increase of 5-10 percent in occupancy rates this year, leading to an increase of at least 15 percent in revenue per available room compared to the low revenue levels recorded in 2009, according to the company.

Revenue per available room, or RevPar, is calculated by multiplying the room rate by the occupancy and is the measurement all hotels use to determine relative incomes.

The potential for hotel investment in the Asia Pacific region and in Vietnam is high, especially for investors looking at long term growth, said Robert McIntosh, Executive Director of CBRE Hotels Asia Pacific

"The sector has made a very strong recovery post financial crisis with the majority of the Asian cities increasing the RevPar by at least 20 percent as compared to the pre-crisis period," he said at a recent seminar regarding hotel investment strategy held by CBRE Vietnam.

McIntosh said that the budget and economy hotels are still among the best performing in the sector, in terms of RevPar growth. He also said typically hotel yields are 2-3 percent higher than office or retail.

"With high lending rates now prevailing in Vietnam, the three star market offers a valid opportunity for developers looking at higher returns and easier entrance to the hotel sector," said Mauro Gasparotti, Senior Manager of Hospitality Consultancy at CBRE Vietnam.

However, he said economy hotels need an elevated efficiency in both building design and operation.

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