Alternaty - Vietnam hotel market overview 2013

A boutique real estate firm, we partner
with hotel and resort developers to
deliver alternative real estate products.
Vietnam Hotel Market
28 June 2013
Presented by Mauro Gasparotti - Executive Director
Contact: mauro.gasparotti@alternaty.com - # +84 908 556 492
Prepared for :

28 June 2013 2
Presentation Outline
• Vietnam Real Estate Market
• Hotel Supply and Demand
• Hotel Players
• Hotel Investment
• Market Opportunities

28 June 2013 3
2000 - 2006: Real Estate/ Hospitality
• Relatively undeveloped country, limited infrastructure , roads or international airports.
• Very limited real estate products, 50 dollar five star rooms, few serviced apartments,
grade A offices and condominiums.
• Low interest from the international investment community.
• Vietnam perceived still as a backpacker destination, add-on to Thailand, only for
experienced travelers, perceived as low safety and no infrastructure.
• Only HCMC and Hanoi offering international flights.
• Six Senses, Furama, Nam Hai still the only “high end” resorts product available.
• Operators only Accor, Marriott, Starwood and Hilton and only for upscale products, in
the main cities.
• Domination of government owned service providers, Saigon Tourist and Hanoi Tourist.

28 June 2013 4
2007 - 2013: Vietnam Bumpy Ride
• 2006/2007 Vietnam opened to WTO, financing easily available worldwide, country
became the darling of speculators.
• Due to the new foreign investment laws and low restrictions on land development,
Vietnam become an attraction for international investors looking for a short term bite
into the upcoming bubble.
• Foreign Direct Investment skyrocketed
0
20
40
60
80
2007 2008 2009 2010 2011 2012 5M 2013
Foreign Direct Investment
(US$ Billion)
Committed Capital Implemented Capital
0
2
4
6
8
10
0
1000000
2000000
3000000
4000000
2007 2008 2009 2010 2011 2012 Q1
2013
RealGDPannualgrowthrate(%)
NominalGDP(VND)
Vietnam's Nominal GDP and
real GDP annual growth rate
Norminal GDP Real GDP annual growth rate (%)
Source: Foreign Investment Agency Source: General Statistics Office of Vietnam

28 June 2013 5
• The stock market was the first to react to the general optimism with stunning increases.
• Front page of the Economist: “The Next Asian Tiger”.
• Demographics of Vietnam, young population, stable and high GDP growth, illusion that
the economic bubble was supported by strong fundaments and thus sustainable.
VN Index – 10 years
Source: Ho Chi Minh Stock Exchange

28 June 2013 6
• Capital gains from stock market and bank financing went into real estate.
• Land prices increase 100% - 200% y-o-y (certain cases 500% increase).
• Office price doubles y-o-y from average of $15 - 20 per m2 to $40 - 45 per m2
• Prime retail space fully occupied.
• Industrial parks at full capacity with land rental 50% increase y-o-y.
• Very limited condominiums and villas. Majority of projects sold out in pre launch stage,
with the legendary night of the pre launch of the Vista in HCMC (CapitaLand) where
buyers were queuing outside the show room the night before the sales begun.
• Clear undersupply of hotel rooms, with mid to high scale running at 80% - 85%
occupancy and 35% - 40% yearly increase in ADR.

28 June 2013 7
• Hangover day? Starting in Q2 2008, inflation shooting up at 25% year end.
• In order to control inflation, Government set a stop lending policy, which, acting
together with the Global Financial Crisis, caused liquidity to dry up and market to
collapse.
0
5
10
15
20
25
30
2007 2008 2009 2010 2011 2012 2013
Y-o-YPriceIndex(%)
Consumer Price Index
CPI (Y-o-Y) Housing and Construction Materials
Source: General Statistics Office of Vietnam

• Second Half of 2008 and the whole 2009, a write off period for Vietnam.
• But still high confidence on the fundamentals of the country and belief on short term
crisis: inflation only to be blamed!
28 June 2013 8

28 June 2013 9
• 2010, inflation under control, real estate confidence back but no longer FDI, local
developers to be the dominant players.
• Bitexco to build the HCMC flagship building, Vincom to expand into commercial, retail,
residential, HAGL, SSG, Thu Duc House, Vinaconex to penetrate the local condo market.
• State Owned Enterprises, Private Family and Banks, all ready to play the property game.
• Countless new smaller developers and SOEs, with limited resources, could not afford to
develop commercial or residential in HCMC and Hanoi. Second home and coastal
projects became the preferred investment with accessible land price and no limitation
on pre-sale policy.
• Branded residences, Mixed-use with rental pool and timesharing products.
• International operators signing MOUs.
• Timesharing companies looking for deals.
• Condotels start to shape up.

28 June 2013 10
• First half 2011, two main factors affect the market: inflation
rises up again and oversupply starts to hit prices and
occupancies.
• Interest rates for banking loans skyrocket at 20% annual rate
as a result of Government policy to control inflation.
• Buyers lost completely interest in second home and coastal
projects. Price of villas collapse.
• Higher vacancy in commercial buildings and strong decrease in rental rates.
• Price for residential market started to curve down and developers reducing prices.
• Collections of buyer installments slow and difficult.
• As a result: Raising Non Performing Loans, collapse of credit and banking system,
liquidity problems and low consumer and investors confidence.
• 2014 ….. ?

28 June 2013
Hotel market - Demand
• International tourist arrivals in Vietnam 2012
have reached 6.84 million, with an
increased of 60.98% from 2008.
• In May, 2013 the international tourist arrivals
is 0.56 million indicating a decrease of 9%
compared to that of April, 2013.
From Jan to May, 2013, the international
tourist arrivals is 2.97 million, with a
decrease of 1.4% compared to the same
period of 2012.
• The local travelers count still for the vast
majority of the market, with a total of 32.5
million in 2012, equal to 82.6% of the total
travelers inside the country.
0
1
2
3
4
5
6
7
2005 2006 2007 2008 2009 2010 2011 2012
Tourist Arrivals to Vietnam (million)
17.4%
82.6%
International
arrivals 2012
Domestic
travelers 2012
Source: Vietnam National Administration of Tourism
Source: Vietnam National Administration of Tourism
11

28 June 2013
Hotel market demand
by origin
6120
12
7
Segmentation of International
travel in Vietnam - 2012
Tourism
Business
Visiting relatives
Others
65
13
15
7
Geographic origin of travelers
to Vietnam - 2012
Asia
America
Europe
Others
170
93
60
51
9.87
0
20
40
60
80
100
120
140
160
180
China South
Korea
Japan Taiwan USA
Growth by geographic origin
2009 – 2012 (% growth)
Source: Hotel Investment Conference
Asia Pacific (HICAP) 2012 - QUO
• In the first 5 months of 2013, Russian tourist arrivals is 136,801
indicating a sharp increase of 57.8% compared to the same
period of 2012.
• Repeat clients less than 15%
12

Hotel supply in Vietnam - 2012
28 June 2013
Hotel Inventory
No. of hotels
632 hotels
39.48%
590 hotels
36.85%
43 hotels 2.69%
116 hotels 7.25%
219 hotels 13.68%
Source: Alternaty
13

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28 June 2013 14
Hanoi
Nhatrang
Dalat
Phuquoc
Vietnam Hotel Supply
Haiphong
Danang
Muine
HCMC
0
10
20
30
40
50
60
0
1000
2000
3000
4000
5000
6000
3 star 4 star 5 star
No. of rooms
No. of hotels
0
10
20
30
40
0
500
1000
1500
2000
2500
0
20
40
60
0
1000
2000
3000
4000
0
5
10
15
0
500
1000
1500
0
5
10
15
20
0
200
400
600
800
0
5
10
15
0
500
1000
1500
0
10
20
30
40
0
500
1000
1500
2000
2500
0
10
20
30
40
0
1000
2000
3000
4000
Source: Alternaty

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..
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. .
.
.
.
.
.
.
28 June 2013 15
Hanoi
Nhatrang
Dalat
Phuquoc
Vietnam Indicative Hotel Land Price
• Haiphong
• Danang
• Muine
• HCMC
(USD/sqm)
Central Non-central
Hanoi 11,000 – 22,000 2,000 – 5,000
HCMC 7,000-16,000 2,000-4,000
Dalat 800 – 2,500 60 - 400
Beach-front In-land
Haiphong NA 100-300
Danang 50 – 130(hoi an) Depend on city
location
Nhatrang 30 – 60 (Cam Ranh
Bay)
400 – 800 (Nha
Trang city)
Muine 500 – 900 (small
size)
30 - 80
Phuquoc 150 – 200 20 – 50
Source: Alternaty
Note : the land price indicated
is only as reference. The price
could vary considerably based
on size, location , legal
ownership and development
permitted on the land.

28 June 2013
HCMC supply
New Entry in 2012-13 (3 – 5 star) :
Nikko Saigon 334 rooms
Novotel Saigon 247 rooms
Tan Son Nhat Saigon 208 rooms
Ibis Saigon 140 rooms
Expected new entry 2013-14 (5 star only):
Pullman Saigon 306 rooms
Timesquare 315 rooms
Le Meridien 350 rooms
Vincom (new name) 300 rooms
0
2000
4000
6000
8000
10000
12000
2000 2010 2013 2014F
Number of hotel rooms
3 – 5 star Five star
0%
20%
40%
60%
80%
100%
Hotel ownership by grade, Q2,
2013
State Owned Entps Joint Venture Family
Source: Alternaty
Source: Alternaty
16

0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
2000 2010 2013 2014F
Number of hotel rooms in Hanoi
3 – 5 star
28 June 2013
Hanoi supply
New Entry in 2012-13 (3 – 5 star):
Pullman Hanoi 242 rooms
Hanoi Club Hotel & Lake Palais 128 rooms
Expected new entry 2013-14 (5 star only) :
JW Marriot 394 rooms 56
Intercontinental Landmark 72 359 rooms
Five star
Source: Alternaty
17

28 June 2013
Vietnamese hoteliers
The future of the Vietnamese hospitality?
18

28 June 2013
Confidential Sale
Hotel + Additional
commercial land
Buyer – Lotte Group
Legend Hotel InterContinental Hanoi West Lake
$ 370,000/rooms
Seller - Vietnamese
Buyer - Berjaya Land
Sold under construction
Hotel Investment - noteworthy hotel transactions
19
$ 325,000/room
Seller – Vietnamese
Buyer - Berjaya Land
Indicative yield: approx.
8.5%
Sheraton Hanoi
$ 45,000,000 for
5 resorts total of 417
keys
Seller – Victoria Group
Buyer – Thien Minh Jsc
Victoria Hotel Group 5 resorts
Note : While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy
or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or
omission

28 June 2013
$ 260,000/room
Seller – Vinacapital
Buyer – N/A
Indicative yield: approx.
11.5%
Hilton Hanoi Opera
$ 16,000,000
96 + 63 keys
Seller - Life Resort
Buyer - Minor
International
Yield analysis: NA
Life Resort Hoi An and Quy Nhon
Hotel Investment - noteworthy hotel transactions
20
$ 470,000,000
Hotel + Retail
Seller - Vingroup
Buyer - Infrastructure and
Property Development
Group (VIPD)
$ 145,000/room
Seller – Vinacapital
Buyer – Minority
Shareholder
Sheraton Nhatrang
Vincom A
Note : While reasonable care has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy
or completeness of such information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or
omission

International tourist arrival
2011 3.5 mil, y-o-y increase of 11.7%
2012 3.8 mil, y-o-y increase of 10.5%
5M, 2013 1.6 mil
Investment opportunities
• Mid Scale , Budget and Limited Service category.
Ideally international management.
• Serviced Apartments (Mid and high level)
• Mixed use complex Retail/Hotel
• City Resort (gate away)
Challenges
• Land price
• Five star room supply in 2014
HCMC hotel market
Source: The Ho Chi Minh City Department of Culture, Sports and Tourism
28 June 2013 21

Hanoi hotel market
Total tourist arrival
2011 13.5 mil(11.6 mil domestic & 1.9 mil foreign), y-o-y increase of 9.8%
2012 14.4 mil (12.3 mil domestic & 2.1 mil foreign), y-o-y increase of 6.67%
Q1, 2013 5.1 mil (4.5 mil domestic & 0.6 mil foreign)
• Mid Scale , Budget and Limited Service category.
Ideally international management.
• Serviced Apartments (Mid and high level)
• Mixed use complex Retail/Hotel
Challenges
• Land price
• City future development direction
Source: The Hanoi Department of Culture, Sports and Tourism
28 June 2013 22

2011 2.35 mil (1.85 mil domestic & 0.5 mil foreign), y-o-y increase of 33%
2012 2.65 mil (2.02 mil domestic & 0.63 mil foreign), y-o-y increase of 12%
4M, 2013 0.9 mil (0.62 mil domestic & 0.28 foreign)
• International four/three star resorts
• Destination resort (Spa)
• Mid Scale Family (Club Med)
• Beach Club, entertainments
• Fractional Sale/timesharing
Challenges
• High risk of oversupply
• Seasonality
Danang hotel market
Source: The Da Nang Department of Culture, Sports and Tourism
28 June 2013 23

Lam Dong tourist arrival
2011 2.23 mil (2.14 mil domestic & 0.09 mil foreign)
y-o-y increase of 8.7%
9M, 2012 2.73 mil (2.5 mil domestic & 0.23 mil foreign), increased 17%
compared to same period of 2011
Q1, 2013 1.09 mil (1.03 mil domestic & 0.06 mil foreign), increased 4.86%
compared to same period of 2012
• Spa Destination
• Retirement villages.
Challenges
• Oversupply
• Limited infrastructure
• Limited tourist attraction
Dalat hotel market
Source: The Lam Dong Department of Culture, Sports and Tourism
28 June 2013 24

Khanh Hoa Tourist arrival
2011 2.30 mil (1.86 mil domestic, 0.44 mil foreign), y-o-y increase of 25.02%
2012 2.31 mil (1.78 mil domestic, 0.53 mil foreign), y-o-y increase of 0.42%
5M, 2013 1.17 mil (0.9 mil domestic & 0.27 mil foreign)
• Resorts
• Mixed use Residential/Resorts
• Branded residences
• Beach Clubs
• Retails
• Boutique high end resorts
Challenges
• Risk of oversupply
• Limited international flights
• Midscale destination
Nha Trang hotel market
Source: The Khanh Hoa Department of Culture, Sports and Tourism
28 June 2013 25

5M, 2013 0.26 mil (0.19 mil domestic & 0.07 mil foreign), increased 29.6%
compared to first 5M of 2012
• Resorts
• Mixed use Residential/Resorts
• Branded residences
• Beach Clubs
• Boutique high end resorts
Challenges
• Construction costs
• Operation Costs
• Limited international flights
• Development Approvals
Phuquoc hotel market
Source: The Kien Giang Department of Culture, Sports and Tourism
28 June 2013 26

A boutique real estate firm, we partner
with hotel and resort developers to
deliver alternative real estate products.
About Alternaty
28 June 2013

28 June 2013
Alternaty is a boutique real estate firm providing
a suite of consulting services throughout the
development lifecycle. Headquarter in HCMC
Vietnam, with associates in Thailand, Myanmar
Indonesia and the Maldives.
Our team has 17 years of combined experience in
the real estate industry with an extensive track
record in hotel and resort advisory in Indochina
Region
More than 40 hotel and resort valuations in
Vietnam, Lao and Cambodia.
More than 35 feasibility and market studies.
12 Operator selection advisory assignments.
Vast experience in mixed used residential
resorts, rental pool structure and fractional
ownership.
Alternaty
Alternative Real Estate
28

28 June 2013 29
How Can We Help You?
About Alternaty
• We are a real estate consulting firm providing specialist advice for real estate developers and investors.
• Our approach is to forge partnerships with developers to provide a suite of consulting services including market
research, development advisory, feasibly study and highest and best use analysis.
• We specialise in the early stages of planning and development when accurate and detailed advisory adds significant
value for the whole development and maximises the returns for developers, investors or any players involved
throughout the development process.
Alternative
Real Estate
Boutique
Consulting
Investment
Services
Villa
Management
Hotel Operator
Selection & Hotel
Operations Review

28 June 2013 30
Our Scope of Services
About Alternaty
• A boutique real estate firm providing a suite of consulting services throughout the development lifecycle.
Alternative
Real Estate
Vacation ownership
Fractional ownership
Private Residence &
Destination Club
Condo Hotel
Hotel Investment
Boutique
Consulting
Market research
Feasibility study
Financial projections
Cash flow modelling
Highest and best
use analysis
Development
recommendations
Due diligence
Valuation
Investment
Services
Joint venture
partners
Private equity and
family offices
Opportunistic,
special situations
funds
Absolute beachfront
land for sale
Distressed assets
Exit strategy
execution
Villa
Management
Resort style
management of
second home
projects
Website bookings
and reservation
engine
Villa Brand
Standards
Standard Operating
Procedures
Butler Services
Hotel Operator
Selection & Hotel
Operations Review
Hotel Operator
Selection:
Management
agreement
negotiations
Sale & leaseback,
long term lease,
guaranteed returns,
franchise
Hotel Operations
Review:
Inspection &
operational analysis
Departmental
recommendations

28 June 2013
Alternaty in the Press
Annex
Rudolf Hever, interviewed on HTV9, speaking
at the Vietnam Hospitality Management
Conference on “Fractional Models:
Opportunities and Risks”, November 2012.
“Vietnam’s island paradise: but where
are the residential products?”, Rudolf
Hever, The Property Report, Dec 12 –
Jan 13
“Vietnam’s island paradise: but where
are the residential products?”, Rudolf
Hever, The Property Report, Dec 12 –
Jan 13
Mauro Gasparotti, interviewed on HTV9
(Nhip Cau Doanh Nhan - Businessman
Bridge) on Fractional Sale and
Timesharing Models, December 2012.
32

28 June 2013
Conferences & Events
Annex
Left-Right:
Mauro Gasparotti (L) and Rudolf Hever (R)
presenting the award for Best Condo
Vietnam (Hyatt Regency Danang to Mr Rick
Mayo-Smith, Managing Director, Indochina
Capital (C) at the South East Asia Property
Awards 2012 in Singapore.
Mauro Gasparotti (second from left)
speaking at a panel discussion on “Vietnam –
Finding the way forward” at the HICAP
Update held in Singapore in March 2013.
Left-Right:
Mauro Gasparotti (third from left) speaking
at a panel discussion on “Navigating into the
future: Vietnam” at the the Asia Pacific Hotel
Investment Conference hled in Bangkok in
May 2013.
Rudolf Hever (R) chairing a panel discussion
on “Condo Hotel, Villas and Branded
Residences – How Best to Accelerate Return
of Capital?” at the Asia Pacific Hotel
Investment Conference hled in Bangkok in
May 2013.
33

28 June 2013
Connect with Us!
Alternaty Social Media Channels
Annex
Twitter Facebook LinkedIn
og
Blog SlideShare YouTube
34

Online Direct Booking Website
Alternaty Villas
28 June 2013 35

Thank You
Disclaimer: This document has been prepared in good faith and for general informational purposes only. Nothing herein contains investment, legal,
tax and/or other advice and investors should seek independent professional advice before making any investment decision. While reasonable care
has been taken to ensure that the sources of information herein are reliable, no guarantee is provided to the accuracy or completeness of such
information (and the same may not be independently verified or audited) and no liability is accepted for any inaccuracy or omission.

Alternaty - Vietnam hotel market overview 2013

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