Hospitality division of Savills, a global real estate services provider, has a wide remit. Whether dealing with a single asset or a large portfolio, Savills’ hotel experts advise clients on all types of hotel property around the world.
Mauro Gasparotti, Director - Savills Hotels APAC, is in charge of business development in the region, as well as specializing in hotel investment and consultancy, feasibility studies, cash flow analysis, market analysis, projects consultancy and operator selection.
We catch up with him in the wake of the “Meet the Expert” conference recently hosted by Savills Hotels APAC to get a measure of the industry’s pulse and to learn about the major trends shaping the industry.
Can you share about the role Savills Hotels APAC plays in facilitating the growth of the hospitality industry in Vietnam and your personal involvement?
Savills Hotels is a part of Savills Group, specializing in hospitality consultancy and brokerage. Savills Hotels in Vietnam started operation almost four years ago, following Savills Hong Kong’s acquisition of the company that I founded, Alternaty, a well-established hospitality consulting firm.
The aim was to create a Vietnam-based regional hotel consulting hub overseeing neighboring countries and working hand in hand with the Savills Singapore hotel team, specializing in hotel brokerages.
The team in Saigon has been extremely busy of late, as Vietnam has one of the largest hotel pipelines in Asia.
During the early stage, we offer project planning support and guidance when it comes to optimal land use, development options, expected investment costs, hotel positioning and branded residences inclusion. For developers new to the field of hospitality, we offer a complete package of industry insights: market overview, future trends, opportunities in Vietnam, planning tips and mistakes to avoid.
Usually this kind of consulting work begins before architects, master planners and hotel operators get on board. At later stages, we assist with hotel operator and brand selection. Recently, we have started offering operational phase support by helping owners review operating budgets and manage communication with international management companies.
To get a taste of the kind of services Savills offers, I recommend signing up for one of our networking events, either online or offline: “Oscar Night” - our monthly networking event; “Espresso Shot” - online interviews with industry specialists; and of course our “Meet The Experts” event - the largest hotel conference in Vietnam and one of the largest in Southeast Asia.
What take-aways from the latest “Meet the Expert” event would you highlight?
“Meet The Experts” is a well-established hotel conference series with a networking element where specialised topics are covered by leading industry experts. At our latest conference held at the InterContinental Saigon Hotel we had more than 20 speakers, 500 in-person attendees and over 2000 online viewers.
Here are some of the findings from the “Vietnam 2021” edition that we hope will arm owners, developers and industry professionals with tools they need to successfully navigate the market in the next two years.
- Global hospitality market has started to recover, but countries will remain highly dependent on local demand as international travel volume is expected to take 3-4 years to get back to pre-covid levels.
- Vietnam’s recovery prospects are bright thanks to a number of factors: its proximity to the countries where the pandemic is under control and whose residents are expected to resume travel soon; robust domestic travel market accounting for almost 82.5% of total trips taken in 2019; and revenues generated by outbound travel with 8.6 million trips taken by the Vietnamese in 2018.
- Vietnam is now seen as a safe destination thanks to the government’s competent handling of the pandemic, meaning foreign tourists are more likely to travel here than to other countries.
- China, with current occupancy levels of over 60%, has become a benchmark for successfully tapping local demand as a way to break even.
- Cost-savings are inevitable as hotels try to stay afloat, but this should be done in a controlled way, as every hotel has a different business model, positioning, location and source market.
- City hotels dependent on foreign travelers are more vulnerable than Ho Tram, Ha Long, Dalat and other destinations that are within driving distance from major cities and popular with domestic tourists.
- Overall, industry experts remain optimistic, pointing out that now is the time for hotels to train their staff in multi-tasking skills to prepare them for the future when teams are more compact.
- Design process, often overlooked during the planning stage, is key to success. Heritage and green concepts are becoming more popular, which helps add value to the overall guest experience.
As we are heading into 2021, what roadblocks do you anticipate on the road to recovery?
The industry will remember 2020 as the year of “hard truths”. After several years of strong growth, tourism saw a drop of 70% in international travel volume. The dramatic reduction in labour resources that followed will affect the speed of recovery, as some sectors of the industry will have to be rebuilt.
We are confident that Vietnam stands a good chance of reopening in 2021 to China, Singapore, Korea and Taiwan – countries that make up more than 60% of total international arrivals in Vietnam.
But travel might become more expensive with prices of international flights fluctuating based on availability and pre-bookings. Additionally, existing hotels and resorts in Vietnam will feel the pressure from a large number of new properties expected to open in 2021 (many of them delayed openings from 2020).
Full recovery will only be possible when travellers feel safe. Business travel might take even longer as companies tighten their budgets, while some are opting for virtual meetings over face-to-face ones.
What industry trends shared by the experts stood out for you?
The industry has experienced robust growth thanks to the megatrends I explained in the presentation. We moved away from classifying properties by “stars” and instead group them by type: wellness resorts, design-oriented, poshtels, select-service, senior living, branded residences, etc. In Vietnam particularly, the concept of luxury travel is being redefined, as explained by Sonu Shivdasani in this presentation:
This ties in with an emerging trend of “experiences seeking” that has opened up great opportunities for value creations from in-house F&B outlets, spa, design elements and sustainability features.
And we have seen a tremendous change in how properties approach marketing, such as encouraging guests to share about their stay experience on social media. Moreover, with hotels increasingly embracing technology in managing all aspects of operations, guests get a more personalized experience as properties are able to better anticipate and meet their needs.
Another trend worth mentioning is the rise of limited service hotels, as they can quickly pivot to servicing the local market when international travel slows down, and boutique and lifestyle hotels, as noted by IHG group:
Where should brands and developers look for growth opportunities in 2021 and beyond?
There are still several development opportunities in Vietnam to be exploited. Saigon and Hanoi have always had a shortage of luxury, select service (4 star) and limited service (3+) properties due to high land prices and complexity of hotel development compared to other commercials. Another opportunity lies in developing design-oriented hotels with a “wow” factor, asd well as properties that are centers of community life, such as “The Standard” development which was presented at our event.
We are also big fans of wellness resorts. Wellness is not only about spa but also about nutrition, eco activities and sustainability. Today, wellness resorts in Vietnam supplement yoga and mindfulness activities with detox and holistic programs, as well as in-house activities under the guidance of specialized practitioners.
Branded residences, especially in tier one cities, offer another opportunity for Vietnamese developers looking to introduce more diversity and offer luxury services.
For hospitality companies, what brands are most likely to gain prominence with consumers moving forward?
There are lots of branding options, but developers should be careful not to rush when making a decision. Giving it proper consideration and taking the time to negotiate is important to avoid misalignment with project vision and/or budget.
In the past few years the market has completely changed, and defining hotels by their star rating no longer makes sense. Market leaders have their finger on the pulse of changing consumer sentiment and are quick to launch new brands to capture a specific market segment, hence a surge in lifestyle products, boutique brands, ultra-luxury offerings, socially-orientated brands, and brands built around the F&B and/or wellness component.
In Vietnam, there are lifestyle brands that are very adept at capturing the millennial market with a mix of sophisticated technology, gastronomy, wellness and personalized guest experiences. Stay tuned to hear more about them.