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Big bosses sell hotels at a loss to get money back   2012-07-16 - DTCK

The current economic difficulties and the sharp fall in the number of guests have forced a lot of big bosses to sell hotels to gather strength on their important projects.

 

After seven years of developing Holiday View Hotel, in April, Vinaconex ITC offered to sell the hotel at the starting price of 70 billion dong only. This is the only 3-star hotel in the well-known Cat Ba tourist site with the total area of 8500 square meters, 120 bedrooms and convention rooms.



The documents provided by the hotel developer to potential investors show that Holiday View has been operating well with the average occupancy rate of over 75 percent.



General Director of Vinaconex ITC Tran Ngoc Quang declined to say about the reason behind the decision to sell Holiday View. However, investors seemed to be keep indifferent to the investment opportunity.



Until June, Vinaconex ITC still had not wrapped up the deal because of the lack of interest of investors. Meanwhile, Quang said Vinaconex ITC would change the hotel sale plan.



Opinions from well informed circle said that Vinaconex ITC sells Holiday View in order to get money for the Cat Ba Amatina project in its ambitious plan to turn Cat Ba Amatina into a trade and ecotourism of international stature.



To date, the plan remains unimplemented because primary and secondary investors both have not made promises to inject money in Cat Ba Amatina.



In 2011, Dai Duong Hotel and Service Joint Stock Company OCH made a series of big transactions, including the one on buying 68.75 percent of stakes of THT (which runs Rose Garden Ngoc Khanh Hotel), Starcity Suoi Mo Quang Ninh and 49.5 percent of stakes of Phuong Dong tourism (which is the owner of Starcity Phuong Dong in Nghe An province), 51.42 percent of stakes of Tan Viet (Sunrise Hotel in Nha Trang City).



The hotels targeted by OCH all are located on advantageous positions and they have been operating well. OCH’s board of directors has affirmed that it would continue to join into merger and acquisition deals in the hotel sector in 2012.



The biggest merger and acquisition deals wrapped up recently are the ones in the high end hotel market segment. A lot of Vietnamese businessmen have become the owners of five star hotels.



Sovico, for example, has become the owner of Furama Resort Da Nang after it bought all the stakes held by the Bac My An Tourism Company, a joint venture of the Da Nang Tourism and Hong Kong’s Lai Sun Group.



BRG has bought all the stakes from German and Austrian owners to become the owner of Hilton Hanoi. Most recently, Hanel has become the only owner of Daewoo Hotel after it bought 70 percent of the capital contribution from Daewoo.



However, it’s very difficult now to find the buyers for the hotels with high values.



The reports by market survey firms all showed that the majority of hotel buyers were domestic investors. According to Gregory Crovo, a lawyer from Kelvin Chia Partnership, involved parties in the deals always have to follow complicated and sometimes unclear procedures.



Any transactions with the presence of foreign companies or individuals must be approved by state management agencies. As such, the success of the deals still much depends on whether the deals are approved.



Domestic analysts have also said that hotel transfer deals always relate to the regulations on land use right. Therefore, it is always a very hard work to follow all necessary procedures to terminate business deals.



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