VietNamNet Bridge – While the upscale segment of 5-star hotels is dominated by foreign investors, 3-star hotels are believed to be the “playing field” of domestic investors.

At a recent workshop on the HCM City real estate market, the director of a real estate trading floor reflected this reality as he spoke to the man sitting next to him:“If you know anyone who wants to sell 300-500 square meter land plots in District 1 or 3, please introduce him to me. It would be even better if the land plots were zoned for hotel development.”

The director said many investors, both individual and institutional, had recently asked for his help to find sites for private 3- or 4-star hotel development.

Analysts note that more and more 3-star hotels have been put into operation over the last two years. Meanwhile, the hotels that hit the market in the years before were mostly 5-star ones.

BenThanh Land in recent years tends to pay higher attention to the development of 3-star hotels and put them under professional management. Ibis Ben Thanh Palace, for example, is a hotel developed by Ben Thanh Land and Managed by Accor, an international brand. Under a memorandum of understanding (MOU) signed between Ben Thanh Group, the holding company of Ben Thanh Land, and Accor, Ben Thanh Group gets priority in building and developing the Ibis hotel chain in Vietnam.

In additional to the Ibis chain, Ben Thanh Land is now developing another 3-star hotel brand, Business Inn. With 12 floors and one basement, a Business Inn with 86 rooms is being built on a 300 square meter plot in District 1 in HCM City.

Thien Minh Group has also focused on developing its 3-star hotel chains. ÊMM Saigon in District 3, the first in the ÊMM brand hotel chain, was inaugurated in late 2013.

ÊMM Hotels & Resorts and Victoria Hotels & Resorts, both belonging to Thien Minh, are sister brands. However, ÊMM serves in the 3-star hotel market segment.

Tran Trong Kien, President and CEO of Thien Minh Group, said Thien Minh plans to develop 11 ÊMM hotels in the next five years, not only in HCM City, but in other tourist centers like Hanoi, Hue ancient citadel city, Hoi An ancient town or Cat Ba beach.

The group also plans to develop the hotel brand overseas, including Laos and Cambodia.

When asked why Thien Minh is making a heavy investment in 3-4 star hotel chains, Kien said that he is optimistic about future demand in the market segment. Vietnam receives 6 million foreign tourists a year, most of them staying at 3-4 star hotels. It also can serve the 32 million Vietnamese travelers every year.

According to Savills Vietnam, a real estate consultancy firm, recent surveys all showed that the occupancy rates of 3-4 star hotels are higher than 5-star hotels, 75 percent vs 70 percent in the first quarter of 2014.

Also according to Kien, the 5-star hotel market segment is overly combative, with stiff competition between developers. In general, this remains the playing field of multinational hotel development groups. Kien also predicted an oversupply of 5-star hotels in the future, in the major cities of Hanoi, HCM City and Da Nang.