Vietnam Investors Counting on Tourism Boom : Southeast Asia: Hong Kong-based Regent International is building the country’s first five-star hotel in Ho Chi Minh City.
After decades as one of the world’s poorest countries, Vietnam is finally getting one of the emblems of capitalist achievement: a grand hotel.
Convinced that business travel to Vietnam is about to take off, luxury hotel chain Regent International has signed a memorandum of understanding to build the communist nation’s first five-star hotel.
The Hong Kong-based Regent group, which operates 12 luxury hotels in Asia and is majority owner of the Regent Beverly Wilshire in Beverly Hills, is taking a 75% equity share in the new hotel in partnership with Milcon Gulf Group, a Philippine-based investment company. Saigon Tourist, a Vietnamese government agency, is providing land for the hotel and will retain a 25% equity holding.
“There’s a lot of assumption around here that the American embargo will be lifted soon,” said Michael Matthews, Regent’s vice president for marketing. “That will totally open up Vietnam. We feel this is a tremendous opportunity.”
The U.S. government imposed a trade embargo on Vietnam after the end of the war in 1975 and has refused to lift the sanctions until there is progress toward a political settlement of the conflict in neighboring Cambodia. As a Hong Kong-registered company, Regent is not required to observe the embargo.
Regent is building the 10-story hotel, expected to have more than 300 rooms, in the former banking district of Ho Chi Minh City, formerly called Saigon. The site is across the street from the Japanese Consulate. Target date for the hotel opening is not until 1994.
Until now, the market for so-called luxury hotel space in Vietnam has been limited. The Saigon Floating Hotel, a ship once anchored off Australia’s Great Barrier Reef, is struggling to survive with less than 50% occupancy at room rates of $150 a night. (In most Asian cities, Regent hotels are considerably more expensive.) Ho Chi Minh City tourism officials said that, to turn a profit, the floating hotel was lowering its rates to around $90 a night.
Last year, there were 100,000 visitors to southern Vietnam, but most were businessmen from other Asian countries who usually shun expensive, first-class hotels. They included 8,000 businessmen of Vietnamese origin who live overseas.
The Vietnamese government nationalized the hotels of Ho Chi Minh City after the war and has carried out renovations on a number of them, including the Continental, made famous in Graham Greene’s Vietnam War novel, “The Quiet American.”
Ho Chi Minh City tourism spokesman Nguyen Khac Thin said the government is talking with another Hong Kong-based firm, Mandarin Oriental, as well as India’s Oberoi Hotels Group, about a possible management contract to run the 70-room Continental and the 80-room Cuu Long, once called the Majestic.
Tourism officials recently signed an agreement with Hong Kong’s New World Group to build a three-star, 590-room hotel near Ho Chi Minh City’s Central Market. Another firm in the British colony, Twinkle Co., is building a three-star hotel in Ho Chi Minh City that will have 350 rooms.
France’s Meridien chain and Hilton International are also holding talks with the Vietnamese about building properties in the south, which is expected to develop a tourism trade faster than the poorer north.
Western trading firms rank hotels as one of the few safe investments in Vietnam because the clientele is exclusively foreign and pays in hard currency. A number of overseas companies have come to grief here because of payment problems relating to the shortage of foreign exchange and the lack of coherent laws governing foreign investment.
