Resort real estate is difficult to recover quickly in 2022

Resort real estate was blocked from recovering by the third and fourth Covid-19 epidemics, and in 2022 it is expected to be less difficult but difficult to break through.

This year, the resort real estate extended the crisis when the recovery momentum was stopped twice due to the third and fourth epidemics taking place in the first quarter of the year and the second two quarters of the year. Liquidity of resort assets: condotels, beach villas, beach shophouses has declined over the past 12 months, in which the condotel market has had a long hibernation period when there have been no transactions for many months, according to DKRA Vietnam.

In the first quarter of 2021, the Ho Chi Minh City hotel market faced many bleak developments due to the impact of the third Covid-19 epidemic that took place at the end of January. The average room rate in Saigon decreased by 20% year-on-year. The hotel room occupancy of the whole market in the last quarter was only 17%, down 31 percentage points year-on-year. The 5-star segment was the most affected, with room rates down 30% and occupancy down 35 ppts YoY due to its heavy reliance on corporate and international visitors.

The tourism industry in the first 3 months of the year was also in trouble after a year of facing the impacts of Covid-19. At the end of the first quarter, revenue from tourism decreased by 60% year-on-year, with more than 80% of the remaining tourism businesses still closed, according to the Ho Chi Minh City Department of Tourism.

Many hotel chains have cut back on room availability and services to reduce costs and focus demand on key locations. Difficulties in the first quarter of the year added to challenges for this business, pushing hotel tourism into one of the industries hardest hit by the pandemic, especially in big cities like Ho Chi Minh City.

By the end of April and beginning of May, the resort real estate market continued to be beaten by the fourth outbreak of the epidemic. Destinations reduced guests by 40%, cancellations skyrocketed by 50-80% when infections were announced during this outbreak. Tourist destinations that need to be reached by air such as Da Nang and Nha Trang recorded many requests to cancel rooms just before the holidays when the first cases of infection appeared.

Coastal real estate market on Tran Phu street, Nha Trang. Photo: Vuong Manh Cuong

According to a report by the Danang Department of Tourism, during the holidays of April 30 and May 1, the total number of visitors and tourists here is estimated at 74,000, down 42% compared to the pre-holiday estimate. Major events and festivals in Da Nang were also stopped due to the complicated developments of the epidemic. The number of guests staying at tourist accommodation establishments in Da Nang during the holiday also reached only 40,000, down 30% compared to the pre-holiday estimate.

According to Savills Hotels Asia Pacific, hotels and resorts have received many requests to cancel rooms or change dates of stay due to the impact of the fourth outbreak. MICE (conference tourism) activities of hotels in the Ho Chi Minh City and Hanoi areas were also affected, when conferences were forced to be postponed or canceled according to epidemic prevention requirements.

The business activities of the resorts also suffered the same impact when recording more than 50%, some resorts even up to nearly 80% of the number of bookings that were requested to be canceled, mainly from groups of tourists and corporate guests. . Some hotels have even decided to temporarily close until the epidemic situation is stabilized. During this outbreak, some hotels have announced that guests need to present a certificate of negative for Covid-19 to be able to use the service. This is unprecedented in order to ensure the safety factor as well as reduce the risk of blockade and isolation.

During the third quarter, at the most stressful period of the fourth epidemic, the resort real estate market “stagnated” due to the heavy impact of the blockade. Some hotels try to overcome difficulties with isolation services, but they are not widely available. Resort real estate assets lack demand due to blockades in many big cities, causing liquidity to drop to a record low.

By the fourth quarter, the resort real estate market is expected to change positively when many southern provinces and cities lift the blockade, travel between provinces and the North, Central and South regions is reconnected. However, regulations on Covid-19 testing remain a barrier to recovery.

International flights are expected to gradually open to many Asian countries and the US in January 2022 with a recognized vaccine passport, which also promises to open up the source of international tourists for the resort tourism market. Some tourist capitals have begun to welcome international visitors again, but the performance has not been high due to barriers to health control.

These advances are said to be necessary but not sufficient conditions for resort real estate to make a rapid breakthrough next year. In the last months of 2021, condotels still have zero liquidity, townhouses, beach villas, and beach shophouses recorded only modest transactions.

Dr. Su Ngoc Khuong, Senior Director of Savills Vietnam forecast, that the Government is currently planning to open international flights from January 2022, which will stimulate international tourism in the near future to the extent that it helps the real estate industry. Resort real estate is less difficult than in 2021, but it is difficult to break through quickly.

Mr. Khuong analyzed that, currently, the hardware of resort real estate, which is tourism products in the Vietnamese market, is still monotonous and not diverse enough to attract returning tourists. Meanwhile, the software of the resort real estate market including accompanying services, which is the trump card for success, is still quite thin.

The software of the tourism and resort market is the chain of services, the ecosystem of accompanying entertainment activities to promote the creation of added value for this industry in Vietnam. For visitors checking in for the second and third time. The rate of tourists returning to Vietnam is a measure of the resort real estate market should look to in the future to make a stronger breakthrough. In addition, according to Mr. Khuong, the digital transformation for this industry also needs to be promoted to adapt.

The current value of Vietnam’s tourism real estate lies in the natural advantages that give it a long and beautiful coastline, but for many years, only condotels, resorts, and hotels have been developed, which have not created significant added value. tell.

“Therefore, it will be a challenge for the resort real estate industry to want to recover and break through after the pandemic in 2022 and the coming years,” Mr. Khuong forecast.

Trung Tin


Leave a Reply

Your email address will not be published. Required fields are marked *