Thursday, April 17, 2008

Vietnam nips at the heels of Thai tourism

Vietnam is poised to become the most challenging rival to the Thai hospitality business in the near future due to the country's ability to attract investment and develop well-trained staff, according to the property consulting firm Colliers International. Keith Humphreys, a director for hotels at Colliers International (Hong Kong) Ltd, said Vietnam was geographically similar to Thailand with many beautiful beaches and a growing number of resorts with good service and well-trained staff.
Vietnam's entry into the World Trade Organisation has raised confidence among foreign investors as the investment climate has attracted increasing amounts of foreign direct investment.
Although Vietnam still lags behind Thailand in terms of infrastructure development, the country is expected to catch up soon.
Beside Vietnam, Mr Humphreys said that the resurgence of Bali in Indonesia after the slowdown following the Bali bombings was another destination competing to attract tourists from Thailand.
Thailand at the moment is at the forefront in the hospitality industry in this region, especially in medical tourism and spas as the country has high quality services with attractive prices. Thailand is also leading in terms of international arrivals with 14.5 million arrivals last year.
''There are a lot of challenges for Thailand this year so we hope that Thailand may have something new and attractive to excite visitors,'' he said.
India may become another significant rival in next four to five years as now there are many developments to serve the leisure business in the country, especially the strong demand for high-end spas.
International arrivals to India are still low at about 4.5 million compared to Thailand's 14.5 million but the growth has been significant.
''Currently, there are only few resorts in India, but there are more developments under construction that focus on this segment,'' said Mr Humphreys who gives advice hospitality businesses throughout the region.
Colliers Internation Hotels Division provides investment advisory, ownership and operation management to investors wanting to invest in the hospitality business around the group. In its study, the return on investment in this industry in Asia would vary from 15% to more than 30%.
In mature markets such as Hong Kong and Singapore, the expected returns range between 15% and 20% and rising to 20-25% in Thailand and Malaysia while new markets and countries with high risk such as Vietnam and the Philippines would require more than 30% of return.
Mr Humphreys said that more than 70% of Colliers' clients, who asked the company to conduct feasibility studies for investment, would go ahead with their plans.
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