Many 3-, 4-star hotels in HCM City on distress sale
Many hotels and motels in the bustling central districts of HCM City are being sold off as the COVID-19 epidemic has caused their business to collapse.
Many hotels and motels in the bustling central districts of HCM City are being sold off as the COVID-19 epidemic has caused their business to collapse.
During the first wave of the epidemic, when the country was under social distancing in April, there was some selling or long-term lease.
But since the end of July, when a second wave came, the lack of business and continuing pressure from bank loans are forcing many to sell out.
Many are unable to continue operations, experts said.
In Districts 1 and 3, boards announcing sales can be seen every dozen metres.
On Ly Tu Trong Street in District 1, many three- and four- star hotels are on offer at VND200-1,200 billion (US$8.66-52 million). A four-star property at the intersection with Chu Manh Trinh Street has 18 floors and 150 rooms, and the owner is looking to sell it for VND1.2 trillion, according to Tran Trung Hieu, its manager.
That price is 15 per cent lower than before the outbreak, but it is still hard to find a buyer.
A three-star hotel with 110 rooms near the Phu Dong intersection in District 1 is asking for VND 230 billion or VND 800 million a month if leased, 10 per cent and 20 per cent down from pre-pandemic days, according to Nguyen Trong Tien, its owner.
On nearby streets like Thu Khoa Huan, Le Thanh Ton and Bui Thi Xuan, many hotels are being offered for sale at VND250-400 billion. These are mostly mid-range hotels with more than 50 rooms targeted at middle-class and foreign tourists.
Several hotel chains have had to sell one or more properties to raise money to repay debts.
Prices are much lower than before the outbreak.
A four-star hotel with 80 rooms in HCM City that cost over VND 600 billion before the outbreak can now be bought for VND 400 billion.
Many guesthouses with 10-15 rooms on Bui Vien Street in District 1 are also available to buy or lease.
Nguyen Trong Hoang, the owner of a 11-room property, said: “I invested more than VND 3 billion ($130,000) over a year ago but now want to sell it for VND2 billion ($86,600) or rent it out at VND 35 million ($1,500) a month for five years.
“Before the epidemic the monthly profit was VND 70-90 million ($3,000-3,900).”
Five-star hotels are not doing any better as the number of foreign visitors coming to the city has dropped by 70-90 per cent since the pandemic began in March.
Many have to offer discounts of 70-80 per cent on room rents to attract guests, most of whom are experts coming to the city for work.
Thus, famous five-star hotels like Sofitel, Majestic, Nikko, Oakwood, New World, and Lotte have to rent their rooms at VND1.7-2.5 million ($74-107) per night.
According to surveys, the number of hotels on sale increased by 63 per cent in the second quarter.
Experts said more hotel owners could be selling out because the hospitality market has been down for too long and it would take at least a year to recover. — VNS
