Betting on tourism

Betting on tourism

Accessible only by boat and surrounded by majestic mountains and cobalt seas, Hoa Van village used to be a refuge for the unfortunates who had contracted leprosy.

The area was their only escape from the social prejudice inflicted on them in the cities and towns of the country.

That was then, and this is now. And now dictates that the thatched huts will likely be torn down to make way for luxury hotels and the whirr of the roulette table.

A number of developers are eyeing the long stretch of powdery beaches and rolling hills as the next tourism hot spot, complete with luxury hotels, brand name stores, golf courses and casinos.

Realising the economic windfall on the horizon, Danang’s authorities are planning to evict the lepers to pave the way for the building of the resorts, some 10 kilometers from the city’s CBD.

Oaktree Capital Management is the latest company to come up with a plan to pour $4-$5 billion into Hoa Van with a resort boasting 5,000 rooms, a golf course and casinos. A few kilometres away toward Thua Thien Hue province, Banyan Tree last year received an investment certificate for a $276 million integrated resort. Those plans have since changed as the Singapore-based company said it would raise enough capital to roll out a larger and more expensive $1 billion complex.

While Oaktree talks with Danang’s decision-makers for Hoa Van, other American investors are scouting a beach front site a few kilometres away in Quang Nam province. Global C&D and Tano Capital are hoping the government will give the thumbs-up for a $10 billion resort on 460 hectares on one of the world’s most luxurious beaches. The blueprint foresees nine 2,000 room casino hotels being built.

“We are asking the government for permission to establish the project before seeking an official investment licence,” said Tong Ich Pham, general director of Global C&D. Developers are also looking beyond central Vietnam, planning multi-billion dollar resorts in Ba Ria Vung Tau province and Phu Quoc island.

With its location next to Ho Chi Minh City - a large tourist feeder market - and a future international airport in Dong Nai province, Ba Ria Vung Tau has also been on the hunt for tourism developers as local authorities dished out certificates to three resort complexes worth nearly $6 billion.

The list goes on and on. Asian Coast Development LLC has received permission for a $4.2 billion, 9,000 room property and Greg Norman designed golf course on the Ho Tram strip in Xuyen Moc district.

California-based Good Choice has plans for a $1.3 billion theme park on 155 hectares, featuring a “Wonders of the World” site, 6,500 four and five-star hotel rooms and shopping malls and restaurants.

Winvest Investment LLC is clearing a 300-hectare site for its $4 billion project in Chi Linh-Cua Lap.

On the sleepy fishing village of Phu Quoc island, hundreds of investors are queuing up for permission to build giant resorts, including Trustee Swiss Group with a $2 billion plan and Rockingham Asset Management with a $1 billion proposal.

However, Starbay Holdings became the first to obtain a licence a fortnight ago to build a larger complex on the island, which has beautiful pristine beaches but is currently home to just a few small resorts.

As Starbay Holdings CEO Martin Kaye is confident Phu Quoc will be turned “into Asia’s number one resort destination”, it has laid out an ambitious blueprint for 2,400 rooms, 650 villas and 1,300 condominium units.

These developers are looking to cash in on Vietnam’s rising hospitality industry which has recently seen a serious lack of hotel rooms and room rates increasing 30-50 per cent year-on-year.

The country last year attracted 4.2 million foreign visitors and it expects to draw in five million this year. The figure is expected to go up to six million in 2010. Tourism revenue is estimated to reach $6-$7 billion in 2010.

“Tourists have long been familiar with Thailand and Malaysia and they want to look for new destination like Vietnam,” said Michael Bischof, vice president of Swiss-belhotel International.

Growing tourism has enticed great investment in hotels, particularly mega resorts. Ho Chi Minh City has recently proposed 23 sites for luxury hotels while Hanoi is in need of around 13,000 additional rooms in the next few years.

A new generation of hotels has begun to take shape. New World is currently the biggest hotel in Ho Chi Minh City with 550 rooms, Vin Pearl in Nha Trang with 500 rooms and Daewoo in Hanoi with 410 rooms.

However, many others under construction have more than 500 rooms such as the 770-room Lotus Hotel, 560-room Keangnam Landmark Tower in Hanoi and 500-room Crowne Plaza in Danang.

Room numbers at the proposed integrated resorts of Ho Tram Strip and Vung Tau Wonderful World Theme Park are from 2,000 to 9,000. Yet, mega resort developers like Oaktree, Global C&D, and Asian Coast Development will not only look to cash in on room sales revenue but want a share of the gaming industry. All of them want to add casinos to their hotel projects.

Asian Coast Development said on its website that in the first phase it will build two luxurious five-star hotels with a combined 2,300 rooms and Vietnam’s first Las Vegas-style casinos - featuring approximately 180 tables and 2,000 electronic games.

Casino construction is on a roll in Asia with Macau being the gambling hub that recently launched the 3,000-suite Venetian while Singapore has given the green light for two mega casino resorts.

Vietnam is still exploring the lucrative gambling industry and so far the government has been cautious about licensing casino projects. Gambling is illegal, Do Son is the only casino while a number of hotels are allowed to provide “electronic gaming services with bonuses” to foreign and Viet Kieu passport holders.

Royal International Corporation, which is operating a “club” in Halong Bay with 17 gaming tables and 70 slot machines, said 66 per cent, or $6.57 million, of its revenue last year come from gaming services.

Royal is more than doubling its gambling space to 7,200 square metres and expects to reach $20 million in revenues this year.

However, as the government is still considering legal framework for casino operation in Vietnam, it remains unclear whether proposals for casino hotels in Danang, Quang Nam and else where will be approved.

Global C&D’s Tong acknowledged that it would take time for the government to consider gaming and it would also take more time to bring American casino operators to Vietnam that does not have legal frameworks in place - a prerequisite for US authorities to allow operators to go overseas.

Mega resort developers will also face chronic problems of the tourism industry, such as poor aviation infrastructure, poor transportation systems and a lack of qualified staff. New terminal airports are planned for Danang and Phu Quoc but construction has been slow at best and a lack of flights is a bottleneck to tourism development in these areas.

Huynh Tan Vinh, deputy general director of Furama Resort, said a lack of qualified staff was one of the biggest weaknesses facing the tourism industry in central Vietnam. “There will be a serious shortage of hospitality staff in the central region as thousands of rooms will be opened in the areas in the next three to five years,” said Vinh.

With roadblocks foreseen on the way to mega resorts, Hoa Van’s colony of lepers have a respite from the affects of the all mighty dollar. For the time being at least.


Australia's James Packer is going to try his luck in the Philippines, after recently writing of a loss of some 42 million dollars in Macau. James Packer, the travel and tourism industry is risky enough without betting the house on a casino, when the market is flooded, and the best games are found online. Horses for courses. Packer, your throw of the dice - Greg Tingle





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