Tourism developer CloudGate has been focused on 10 real estate projects in south-central province of Phu Yen, a location with high tourism potential. Le Hoang Vu, vice chairman of CloudGate Group, said it intends to grow the travel brand with international operators such as Sailing Club.

Vu stated that the sudden spike in tourist arrivals to Phu Yen is “an essential element” for investors in tourism real estate. In 2022, Phu Yen greeted 2.2 million visitors, deemed a modest figure but 20 per cent greater than in 2019.

Xuan Hai Fishing Wharf, Xuan Hai Commune, Song Cau Town, Phu Yen. Photo: Chau Dao Cuong/VNA

During Q1 of this year, the number of visitors to Phu Yen increased by approximately 4.5 times compared to the same period last year. “Phu Yen’s potential is reflected by a limited supply of hotels, consisting of approximately 400 small-scale accommodations, 3-5-star hotels with approximately 700 rooms, and the absence of significant domestic and international investors,” Vu said.

An increasing number of other investors are considering investing in leisure real estate in the province, including Accor and Indochina Capital. The latter’s Wink Hotel brand is preparing to open a hotel in Tuy Hoa city by the end of this year.

Last month, Phu Yen hosted a tourism promotion week, demonstrating the local government’s commitment to tourism development. “The province has potential, but becoming a hot destination relies on many factors,” said senior vice president of JLL Hotels, Nguyen Quy Tuan. “It would take at least 10 years to reach the current size of Nha Trang in terms of tourism numbers.”

The development of tourism-related real estate is contingent on many factors. Many investors are interested in existing commodities with stable cash flow, whereas real estate developers are primarily concerned infrastructure, transport, and airports.

Meanwhile, industrial park (IP) development is flourishing many Vietnamese provinces. In a number of communities, there is a dearth of hotels to accommodate professionals who work in IPs.

Clients of Lodgis Hospitality claim that some professionals “can’t find a hotel to stay in,” while others are far from their workplace, sometimes more than an hour commute.

“Hotels near manufacturing areas can be a solid option for investors,” said Nguyen Gia Duc, senior vice president at Lodgis Hospitality. “After constructing two hotels in the southern province of Binh Duong, we are developing a model for 3- and 4-star hotels near IPs in the provinces of Bac Ninh, Thai Nguyen, Hai Duong, and Haiphong.”

Elsewhere, Mitsubishi Estate is currently seeking a new investment trajectory, with complex projects such as commercial houses, serviced apartments, offices for rent, and commercial centres as potential targets. “These segments create complementary value for the whole complex,” according to Nguyen Quang, investment director of Mitsubishi Estate Vietnam. The market is anticipating new hotel options for the tourism segment in the near future. Vu Viet Anh, development director of Accor Vietnam, agreed that most investors continue to concentrate on major cities and international tourists. Nonetheless, the central region remains “a priority” for many investors, despite visitor numbers currently being lower than anticipated.

“Currently, the provinces of Son La, Tuyen Quang, and Ha Giang are highly regarded for their picturesque landscapes and atmosphere. However many investors are still concerned about transport,” Anh said.

He said that later-developed markets would inherit advantages from earlier-developed markets. “Phu Yen is lagging in tourism development but benefits from aviation infrastructure as well as government-built highways,” Anh added.

When contemplating a tourism undertaking, investors must perform numerous tasks. Le Viet Thu, CEO of Nova Hotels & Resorts, said the company must examine local planning and construction strategy; consider the project’s location and connectivity, and understand the engagement with local infrastructure development.

“When putting money into building hotels near IPs, investors must account for the area’s economic planning, the possibility for hotel growth in IPs, the extent of local government assistance, and the growth potential of this field,” Thu said.