[Vnbiz] Vietnam Aims for Image as Luxury Destination

[Dyung Le]

Vietnam Aims for Image as Luxury Destination
By The Wall Street Journal
Last Update: 12:06 AM ET May 30, 2007

CHINA BEACH, Vietnam -- Paul Chong was searching for paradise on a beach in 
Vietnam.
Mr. Chong, the head of business development at Singapore's Banyan Tree 
Hotels & Resorts, came here on a weeklong mission last August to scout sites 
for a luxury resort. He had journeyed by car and plane up the coast from Ho 
Chi Minh City before arriving at a tiny fishing village near the central 
city of Da Nang. In a remote cove reachable only by rowboat, he and three 
colleagues explored a two-mile stretch of beachfront.

"We fell so much in love with the site that we didn't leave until it was 
pitch black," Mr. Chong recalls. In March, Banyan Tree won a license to 
begin building the Laguna Vietnam, a $270 million complex of hotels, villas 
and spas.

The complex is the latest in a small but growing number of exclusive resorts 
planned or already open in Vietnam -- a country many Americans still 
associate more with farmers' huts and a war that ended decades ago than with 
a luxurious vacation.

Investors from the U.S., Canada, Singapore and Dubai are among those 
developing posh getaways here. Many of these new resorts are sprouting along 
the central coast, on or near China Beach, 20 miles of white sand where U.S. 
troops body-surfed and swigged warm beer on R 'n' R breaks during the 
Vietnam War.

With its powdery beaches, mountains, rare wildlife, French-inspired cuisine 
and world-class cultural sites, Vietnam could be the next top-drawer 
destination in Asia, on a par with Phuket, Thailand, or the Indonesian 
resort island of Bali, some international tourism industry officials say.
"It's so diverse. In one destination, you can do so much," says John 
Koldowski of the Pacific Asia Travel Association, a regional travel-industry 
trade group.

A number of the world's hoteliers seem to agree. For example, China Beach is 
home to the five-star Furama Resort Da Nang, where guests have included 
European royalty and Asian heads of state. Among its diversions: scuba 
diving, cooking classes and slot machines. "I think it matches any resort 
anyplace in the world," says Furama guest Fred Williams , a globe-trotting 
security consultant from Davie, Fla.

Mr. Williams, who says he was twice wounded in Vietnam as a U.S. Marine, was 
making his first trip back to China Beach -- Vietnamese call it My Khe or 
Non Nuoc -- since a day's respite after the 1968 Tet Offensive. "I remember 
playing volleyball and eating steak and baked beans on that very spot, over 
by that stand of pine trees, 40 years ago," he says, wagging a finger 
southward from his poolside lounge chair.

Then there is the nearby Nam Hai Resort & Villas, which set a new standard 
for resort opulence in central Vietnam when London-listed investment fund 
Indochina Capital opened it in December. The Nam Hai is managed by Global 
Hotel Management Ltd., whose founder Adrian Zecha has made his name 
operating luxury hotels from Malaysia to Miami. Each of the Nam Hai's 40 
residential villas has a butler, a private pool and an ocean view; prices 
for the seven units still available start at $1 million. Daily room rates 
for the resort's 60 hotel villas begin at $550.

Four Seasons Hotels & Resorts of Toronto is completing a full-size model of 
one of the 80 rental villas it plans to manage on secluded Cham Island, a 
25-minute boat ride from Da Nang, beginning in 2009. Dubai's Kingdom Hotel 
Investments plans a 150-room, $65 million luxury resort called the Raffles 
Da Nang, to open in 2011. Foreigners' ability to own 100% of a project and 
to lease property for 50 years were important factors in Kingdom's decision 
to invest here, says the company's chief executive officer, Sarmad Zok.

The resorts are catering to a swelling tide of foreigners, numbering 3.6 
million last year, two-thirds more than in 2000, according to the Vietnam 
National Administration of Tourism. Americans were the third-largest 
nationality among last year's visitors, after Chinese and South Koreans. The 
Pacific Asia Travel Association forecasts a robust 7.6% average annual 
growth rate in foreign arrivals through 2009.

But while Vietnam remains popular with backpackers, it is now attracting a 
more affluent class of traveler. It had the second-fastest GDP growth rate 
in Asia in 2005 (only China's was faster) according to Thomson Financial. 
People are coming to Vietnam to do business and returning to take vacations. 
In addition to the natural and cultural attractions, Vietnam has a deserved 
reputation for safety and political stability.

There are some inconveniences for the traveler. Getting a visa to Vietnam 
takes time, and international flights, particularly to Da Nang, are limited.

And some environmentalists worry that uncontrolled beachfront development 
could degrade Vietnam's environment. Resorts need lots of water for showers 
and laundry and to sprinkle on lawns and golf greens. If they pump too much 
fresh water from natural aquifers, seawater can seep in and damage 
surrounding croplands. Overdevelopment of Vietnam's idyllic beaches poses an 
additional risk: Discouraging the very guests that a luxury resort is trying 
to attract.

Banyan Tree was already thinking of building boutique hotels in the former 
imperial capital Hue, 60 miles north of Da Nang, when it decided that 
Vietnam was "ripe" for upscale tourism and warranted a larger investment, 
says Mr. Chong, the head of business development. Now Banyan Tree is drawing 
up a master plan for what it believes will be Vietnam's first big integrated 
luxury resort.

Mr. Chong crawled over boulders and waded though mud to find the right site 
-- a beach called Lang Co, between Hue and Da Nang. The 516-acre property 
will include a golf course and more than 1,000 hotel rooms and villas.

Banyan Tree is watching closely to see how business fares at the nearby $56 
million Nam Hai Resort & Villas. The centerpiece of the Nam Hai is a 
reflecting pool and three swimming pools that cascade gently toward an 
875-yard beachfront. The resort's hotel villas boast sinks with a 
cracked-eggshell lacquerware finish and fully loaded iPods.

Frenchman Hugues Lamotte, a London fund manager, bought a three-bedroom 
villa here with his wife in 2005 when the Nam Hai had just broken ground. He 
wanted to be close to Hong Kong; Bali was too far and Thailand too hot.

"A lot of our friends who do not know Vietnam think we are very courageous. 
They think of Vietnam as being totally undeveloped," he says, gazing at the 
vast, empty beach beneath his seawall. The villa "has exceeded my best 
expectations," he says. He even bought a neighboring villa as an investment 
and persuaded three of his friends to do the same.

A remote location like China Beach doesn't make a developer's life easy. 
Building the Nam Hai proved a challenge in part because local craftsmen had 
limited experience performing up to the required standards, Indochina 
Capital Chief Executive Officer Peter Ryder says. Electricians occasionally 
installed sockets upside down. Finding enough staff who could speak English 
was also a problem. The Nam Hai continues to run English classes for people 
from nearby communities to ensure it has a pool of potential employees with 
a minimal competence in the language.

Still, the hurdles to building a luxury resort in Vietnam haven't deterred 
Indochina Capital from planning additional projects. One is a villa compound 
on Con Dao island, a protected marine reserve notorious for the "tiger cage" 
prisons that the former South Vietnamese government once operated there. 
(The cages are no longer used to hold people, but some have been preserved 
as historical artifacts.) Elsewhere in the South, near the city of Nha 
Trang, the Evason Hideaway & Spa at Ana Mandara pampers guests, but in a 
rustic, Robinson Crusoe-like setting, where they are encouraged to go 
barefoot.

Some developers, meanwhile, are trying to lessen their environmental impact 
by recycling bathwater to spray on grass and using renewable construction 
materials, among other efforts. And local Vietnamese officials say they are 
controlling the proliferation of hotels on China Beach. Da Nang, for 
example, has a comprehensive plan for sharing its seafront between resort 
projects and public beaches, says Le Tran Nguyen Han , the city's head of 
environmental management.

But Anneke Schenk , a guest-relations manager at the Furama Resort, 
questions whether any such plan can withstand pressure from developers and 
authorities eager to cash in on Vietnam's beachfront bonanza. She fears for 
the distinctive scenery of puttering fishing boats and Vietnamese doing tai 
chi exercises on the sand.

"Now is the best time to visit China Beach," she says. "In five years, it'll 
be just like any beach in Thailand."

Write to Bruce Stanley at bruce.stanley at wsj.com

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