Vietnam’s Coastal Resort Locations: Competitive Advantages and Disadvantages (3/5)

Vietnam’s Coastal Resort Locations: Competitive Advantages and Disadvantages (3/5)

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Mark Gwyther, Managing Director
Vietnam

This is a guest post by Mark Gwyther of MGT Management covered in 5 separate posts – Introduction (1/5), The South Coast (2/5), The Central Coast (3/5), The South Central Coast (4/5) and When to Invest & Conclusion (5/5). It’s a must read if you’re new to coastal Vietnam.

“Vietnam’s Coastal Resort Locations: Competitive Advantages and Disadvantages” is just Part II of  a three-part series entitled “Vietnam’s Coastal Tourism Growth is Inevitable: Why, Where and When to Enter the Market”. The entire series looks at the future of Vietnam’s coastal tourism market for investors outside of Vietnam.

The other two parts are:

Part I : Why Is Vietnam’s Tourism Growth Inevitable: Look to Mexico

Part III : Why the Cost of Debt is Creating a Buying Opportunity in Vietnam’s Coastal Tourism Industry

 

The Central Coast

Vietnam’s central coast is being hailed as the next great Asian resort destination . Does it have the competitive advantages that will allow it to grow into a destination like Phuket and Bali?

What was once known by American soldiers and featured in the popular 1980’s TV drama, China Beach, has now become the resort destination capital of Vietnam. The 20 kilometers of beaches south of the Son Tra Peninsula are located in the middle of Vietnam’s third most modern city and between its two most historic places. The combination of the most progressive provincial government, three nearby UNESCO World Heritage Sites, a beautiful beach, and a modern airport have brought modern coastal tourism to Vietnam. It is also the nearest Vietnamese coastal destination to Japan, Korea, and China. In 2011, the number of international travelers coming to Danang grew by 44%.

Danang

Danang China Beach
China Beach on the right and Danang to the left. The airport is in the lower left corner.

Located halfway between Hanoi and HCMC, Danang is Vietnam’s third largest city. It has ranked at the top or near the top of the Vietnam Chamber of Commerce Provincial Competitive Index for the last five years . The government has consistently helped resort developers quickly clear land and provided infrastructure needed for a world-class resort destination. A new international terminal with a capacity of 4 million passengers opened in December, 2011 , giving investors the confidence to build. The resorts and hotels that have already opened include Crown Plaza, The Hyatt Regency, Mercure, and Novotel. The Intercontinental, Melia, Hilton, and more Mercures and Novotels are opening soon. Two golf courses designed by Colin Montgomery and Greg Norman are integrated with huge residential projects and accompanying beach resorts.

Hoi An

Hoi An River Front
Hoi An River Front

Hoi An town is located 30 km south of Danang, but under the jurisdiction of a different government. A UNESCO World Heritage Site, the city is considered a must-visit location for western tourists who can walk the streets that are lined with old French-colonial buildings. The local government identified early that it was the historical architecture and atmosphere that attracted tourists. Unlike Danang, there are no new high-rise hotels or modern shopping centers. Instead, traditional tailor shops and handcrafted items made locally are sold in small shops.

Hoi An does have beach resort developments, but the beach is a continuation of the Son Tra strip that crosses into Quang Nam Province. All the resorts on this strip of beach are within a 30 minute drive of old Hoi An.

Hue

Hue is the ancient capital of Vietnam, and also a UNESCO World Heritage Site. It is located about 80 km up the coast from the Danang airport, but the road is terrible and it takes nearly two hours to drive by car. They do have a small local airport, but the majority of people get there by car/bus. Unlike Hoi An, Hue’s historic sites were heavily damaged during the war and until recently, there has not been much of an effort to restore.

Beach resorts are beginning to fill up the coast between Hue and Danang. Banyan Tree, and Ana Mandara open in 2012 and Vinpearl (a large Vietnamese resort developer) has just begun work on one of the largest integrated resort projects in Vietnam, estimated to cost US$5 billion. The Banyon Tree includes a Nick Faldo designed golf course and Vinpearl will build another course.

There is an interesting weather phenomenon along the central coast. Despite being within a hundred kilometers from each other, Hue gets significantly more rainfall. Average precipitation in Hue is 2,980 mm while Danang gets 1,980 mm.

Conclusion

The central coast of Vietnam is the tourism center of the country now. These three cities are three of the four most visited coastal cities in the country by foreign tourists. Danang is becoming a modern beach resort city with beautiful beaches and a government that understands what it needs to do to help foreign businesses invest. Hue and Hoi An provide excellent sight-seeing opportunities for those staying at the resorts. Lastly, world-class golf resorts offer activities across the street from the beach.

Compared to Phuket, Bali, and even Nha Trang, the central coast does have a winter season that is too wet and cool for year-round enjoyment of the beaches. Danang averages 25 days a year with a high temperature below 18 degrees. Hue is cooler and has much more rain. The area will not attract beach tourists during the winter, although plenty of cultural sites in the area do.

The beaches near the airport will be completely developed in the next two years, consequently those trying to enter this market will need to do so by acquisition. One cause for concern is that over-development of the UNESCO sites will reduce their appeal to foreigners. The stretch of Highway 1A that connects Hue with Danang also needs to be improved before the region can really take advantage of Hue and the beaches north of Danang. But based on its location, our conclusion is that it is very possible the Vietnam central coast is going to experience the greatest impact from the growing Chinese middle class of any tourist destination in the world outside of China.

continue to . . . 

Section 4 of 5:  The South Central Coast – Nha Trang south to Ninh Chu Bay which is centered on the Cam Ranh International Airport

 

 

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