Many resort real estate giants are struggling

The big guy is in trouble.

Data from the Hanoi Stock Exchange (HNX) shows that the business situation and financial health of many businesses with resorts in Vietnam are quite dire in the context of low economic demand and high financial costs.

Alma Resort Co., Ltd. has just reported a loss of nearly VND832 billion in 2022, higher than the loss of more than VND701 billion in 2021 - the period affected by the Covid-19 pandemic.

Paradise Bay's financial health is very bleak. By the end of 2022, this enterprise had a negative equity of VND1,575 billion, higher than the negative of more than VND663 billion in the previous year.

Thien Duong Bay is the company that builds and operates the Alma Resort in Cam Ranh, Khanh Hoa. Alma is a brand managed by Serenity Holding. Meanwhile, the American giant Warburg Pincus and VinaCapital fund (listed in the UK) own 100% of Serenity Holding's capital.

Alma Resort is famous for its vacation ownership model. This business has sold vacations worth hundreds of millions to billions of VND. Many customers can join in using the resort room in the form of an apartment or villa and have the right to use the said resort space for a certain period of time, on a recurring basis.

*Resort tourism shows signs of surplus.*

Not only are international resort real estate brands in Vietnam facing difficulties, many domestic owners of resorts in the country have also struggled in the past few years.

According to HNX, the owner of Flamingo Dai Lai Resort, Flamingo Holding Group JSC (Flamingo), reported a profit in the first 6 months of 2023 down 82% year-on-year to VND25 billion, while liabilities increased. The debt-to-equity ratio increased from 1.91 times to 1.99 times at the end of the second quarter of 2023, equivalent to liabilities of VND4,940 billion.

Flamingo Holding Group is the investor of a number of resort projects such as Flamingo Dai Lai (Vinh Phuc), Flamingo Cat Ba (Hai Phong), Flamingo Hai Tien (Thanh Hoa), Flamingo Linh Truong Khu B (Hoang Hoa, Thanh Hoa),...

Similarly, Ninh Van Bay Tourism Real Estate JSC (NVT), owner of the luxury resort Six Senses Ninh Van Bay, reported a loss in the first half of 2023. Profit reached more than 7 billion VND, very modest compared to the capital scale of more than 900 billion VND of this enterprise. In addition, NVT's undistributed profit after tax at the end of June 2023 was still negative more than 710 billion VND. NVT shares were put on warning list.

Meanwhile, Crystal Bay JSC continued to report a loss of nearly VND136 billion in the first half of the year, more tragic than the loss of over VND17 billion in the same period. Crystal Bay has many resorts in the Central provinces such as Ninh Chu Sailing Bay, unBay Park Hotel & Resort Phan Rang (Ninh Thuan), Crystal Marina Bay (Khanh Hoa).

Eurowindow Nha Trang Tourism Investment Joint Stock Company also suffered a loss after tax of nearly 124 billion VND in the first 6 months of 2023, in the same period this enterprise lost more than 290 billion VND. Eurowindow Nha Trang is the investor of the Radisson Blu Resort Cam Ranh, Movenpick Resort Cam Ranh (22.3 ha),...

Van Huong Investment and Tourism JSC and Sunbay Ninh Thuan JSC also reported losses in the first half of 2023. Van Huong Tourism is the investor of the Dragon Ocean Do Son International Tourist Area project in Hai Phong. Sunbay Ninh Thuan is the investor of the SunBay Park Hotel & Resort complex.

Resort real estate is difficult

The tourism and resort real estate segments have recorded gloom due to being heavily affected during the Covid-19 pandemic. In fact, in Southeast Asia, Singapore and Thailand have recorded a good recovery in the hotel industry. Meanwhile, this segment remains gloomy in Vietnam. Many areas have recorded a lack of visitors, with low room occupancy and reduced prices.

The lack of guests is evident in resorts across the country. In Phu Quoc, the lack of guests is quite serious. On the internet, there are Phu Quoc tour packages of 4 days 3 nights, round-trip airfare and 3-star hotels, totaling less than 3 million VND/person. In Sapa, many hotels still have many empty rooms even on Saturday or the occasion of the 120th anniversary of Sapa tourism with many activities, including a long-lasting high-altitude fireworks display.

Like the real estate market in general, many resort real estate projects in many places have been shelved for many years, not being developed further due to lack of buyers. Villas, shophouses… in large resort projects are deserted. In addition to low demand and declining incomes, there is also a decline in confidence in the resort real estate market and the legal status of many projects.

Mr. Mauro Gasparotti, Director of Savills Hotels, commented that in the short term, the absence of Chinese tourists, who accounted for 32% of total international visitors to Vietnam (in 2019), brings many challenges to the resort business.

In addition, the cost of long-haul flights has become more expensive, affecting the recovery of some markets, such as the European tourist market. Compared to the same period in 2019, the total number of European visitors to Vietnam is still about 38% lower than the pre-pandemic level.

Similarly, in the first eight months of 2023, the Asian tourist market was also 32% lower than pre-pandemic levels. South Korea is currently the largest international tourist market to Vietnam, but the total number of visitors is still lower than in 2019.

In addition to the slow recovery of demand, the oversupply situation contributes to increasing challenges for the hotel business.

Meanwhile, a series of large real estate corporations in Vietnam are mostly involved in the resort real estate sector. Recently, Chairman of the Board of Directors and General Director of Ton Hoa Sen Le Phuoc Vu sent a request to Lam Dong province to establish a resort on land planned for education in Da Huoai district.

Previously, investors knew that Mr. Nguyen Ngoc Thuy (Shark Thuy) was struggling after his famous time participating in the real estate sector, including resort real estate. Or the collapse of Novaland, chaired by Mr. Bui Thanh Nhon.

Despite the difficulties, the outlook for Vietnam’s tourism industry and domestic visitors remain the main drivers supporting resort businesses. However, domestic visitor spending is often low.

According to GSO, in the first 9 months of the year, international visitors to our country are estimated at 8.9 million, 4.7 times higher than the same period last year but still only 69% compared to the same period in 2019 - the year before the Covid-19 pandemic.

Also according to GSO, revenue from accommodation and catering services is estimated at VND500.1 trillion, up 16%; revenue from tourism is estimated at VND26.5 trillion, up 47.7%; revenue from other services is estimated at VND469.1 trillion, up 11.5%.

With a population of 100 million and an increasing demand for travel, this is considered a growth driver for the tourism industry in the medium and long term.

Resort villas: From big profit commitments to cutting losses and fleeing Many years ago, resort real estate was born en masse, experts warned about the risks but it seems investors still ignored them.

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