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Asian tycoons conquer Vietnamese high end hotel market
In the past, the luxury 5-star hotel market was believed to be the “domain” for western investors, including the big names like Marriott International Hotel, Accor, Starwood Hotels & Resorts. However, things are quite different now: more and more South Korean and Japanese have turned up in the market.
After the unsuccessful efforts to buy Daewoo hotel, the South Korean group Lotte has bought Legend Hotel, a high end hotel in the sea city of Da Nang in the central region, while it is building a 65-storey hotel – Hanoi City Complex, capitalized at $400 million, just next to Daewoo hotel.
If Lotte had succeeded with the deal of buying Daewoo Hotel in 2012, it would have had two adjacent hotels in the golden land area in Ba Dinh district in the capital city.
At that time, when a lot of foreign investors had to narrow their portfolio investments in Vietnam, Lotte stated it was ready to spend more than $100 million to buy stakes from Daewoo group, which was double the sum of money Hanel, the Vietnamese partner in the Daewoo hotel joint venture, paid initially.
This, in the eyes of analysts, showed the powerful financial capability of Lotte and its strong determination to conquer the high-end hotel market in Vietnam.
The failure in the Daewoo hotel case could not make Lotte give up its determination. Local newspapers have recently reported that Legend Hotel on Ton Duc Thang Street in district 1 of HCM City has changed hands, turning into Lotte Hotel.
The 5-star hotel, licensed in December 1993, has been developed by Hai Thanh Kotobuki, a joint name of Vietnamese and Japanese partners. The hotel has the investment capital of $80 million, 17 stories, 238 rooms, swimming pool and restaurant.
However, no official statement has been made by the involved parties. Prior to that, in the fourth quarter of 2012, VOF, an investment fund of VinaCapital Group, announced its capital withdrawal form Legend Hotel.
VOF’s investment in Legend in March 2012 was valued at $27 million. Meanwhile, in December 2012, when it left, the IRR was reportedly at minus 5 percent.
VinaCapital has declined to make comment about the partners in the affair and talk about why VOF accepted to sell at a loss.
It also has not confirmed if it sold to Lotte. Meanwhile, sources said that Lotte Hotels & Resorts, belonging to Lotte Group, has had 70 percent of Legend’s stakes in hands which it has purchased mostly from the Japanese partner.
South Korean newspapers on March 6, 2013 reported that Lottel Hotel Saigon is the second 5-star hotel that Lotte Hotels & Resorts has invested and has been managing, after Lotte Hotel Moscow.
Lotte, one of the biggest South Korean conglomerates, is considering buying the remaining 30 percent of stakes from the Vietnamese partner – Hai Thanh Company – to be able to fully own Legend Hotel.
According to Korea Herald, the three hotels in Vietnam would serve as the spring board for Lotte’s plan to expand its business in ASEAN countries.
Asiana Airlines, a subsidiary of Kumho Group, also a South Korean investor, has bought back 50 percent of the office – shopping mall – hotel complex in district 1, HCM City from Kumho E&C.
The project has been developed by Kumho E&C, Saigontourist and HDSC. Of the three partners, Kumho E&C holds 65 percent of stakes. The complex, with the 5-star InterContinental hotel, has always been the “aiming point” of foreign investors.