VietNamNet Bridge – Luxury real estate projects can be developed by either Vietnamese or foreign investors, but most of them are managed by international management groups.
The chair of a conglomerate which is building a resort in Ba Ria – Vung Tau province said that managing high-end hotels, especially resorts, is a ‘privilege’ given to foreign groups.
“Investors are always on the defensive when working with management companies,” he said. “You can sign contracts with them at any time, but you will have to pay a deposit as soon as the contract is signed.”
The amount of deposit depends on the negotiations between investors and the management service providers.
However, the average amount is $200,000. Investors will lose the money if they break the contracts.
A survey conducted in 2009-2014 by Jones Lang LaSalle, a company that provides real estate and finance management services, of the most of the 37 surveyed contracts on hotel management in SE Asia, investors had to bear many different kinds of fees.
Of these, the basic fee was about 1-1.9 percent of total annual revenue, which could be raised to 2-2.9 percent in the following years.
Meanwhile, the encouragement fee was calculated based on the percentage of total profits, which could be up to 10 percent.
|Luxury real estate projects can be developed by either Vietnamese or foreign investors, but most of them are managed by international management groups.|
Sales and marketing fees were based on the net or gross revenue after considering the number of rooms, about 2-4 percent of room revenue. The central reservation fee was calculated in three ways, but it was mostly is $7.5-9.9/night/room. Besides, investors also have to pay other types of fees, including royalties and technical services.
The businesses complained that the fees ate into their profits.
Self-management to reduce cost?
Chair of the HCMC Hotel Association Tao Van Nghe said that some large Vietnamese conglomerates do good business in resort tourism, but do not make appropriate investments in management to improve competitiveness. Only a few of them try to manage real estate projects themselves.
Vietnam: Manufacturing to remain the key driver of growth
We expect robust exports, led by strong global demand for electronics, to continue to underpin solid economic growth over the remainder of this year with GDP forecast to rise close to 8%.
GDP growth was unchanged at 4.5% y/y in Q1. Manufacturing activity surged, while the recovery in service sector activity and construction continued albeit at a more subdued pace as some localised social distancing measures were reinstated.(more…)
Subscribe via Email
TAT expects 850 billion baht ($25.7 bln) in tourism revenue after successful reopening
The Tourism Authority of Thailand (TAT) has set this year’s revenue target at 850 billion baht, 300 billion of which...
Download 1xBet mobile and play all over the world
Placing profitable bets or playing in a casino is now possible comfortably even without being tied to a computer. It...
3 ways Asia can recover from the COVID-19 pandemic faster
Countries in the East Asia and Pacific region will benefit from cooperation in three major areas: vaccine deployment, reviving sectors...
Thailand’s Vaccine Strategy: What went wrong?
Questions are being asked, and not answered, over the decision to rely almost entirely on Siam Bioscience, a local, palace-owned...
Exclusive interview with Richi Kukreja, HR Lead Director for Zoetis South East Asia
Zoetis is a global animal health industry leader, dedicated to supporting customers and their businesses in ever better ways. Building...