OPERATIONS REVIEW 3 Source: Vietnam National Authority of Tourism (2024) 4 Source: Risk in Asia (2023) 5 Source: STR (2024) 6 Excluding Somerset Central TD Hai Phong City which was acquired in November 2022. GROSS RENTAL INCOME (VND’MILLION) FY 2023 FY 2022 Somerset Central TD Hai Phong Cityi 52,030 4,626 Somerset Chancellor Court Ho Chi Minh City 136,153 114,995 Somerset Grand Hanoi 232,507 177,696 Somerset Ho Chi Minh City 130,547 108,524 Somerset Hoa Binh Hanoi 61,490 41,328 REVENUE PER AVAILABLE UNIT (VND'000) FY 2023 FY 2022 Somerset Central TD Hai Phong Cityi 1,023 1,072 Somerset Chancellor Court Ho Chi Minh City 1,487 1,239 Somerset Grand Hanoi 1,826 1,179 Somerset Ho Chi Minh City 1,706 1,421 Somerset Hoa Binh Hanoi 658 436 i The acquisition of the property was completed on 30 November 2022; hence the gross rental income and RevPAU stated for FY 2022 are for December 2022. In August 2023, Vietnam extended its visa exemption period from 15 to 45 days, for 13 countries which comprised key European markets, South Korea and Japan, as well as the extension of e-visa duration from 30 to 90 days with multiple entries permitted3. Another factor which slowed down international corporate demand into Vietnam was the difficulty in obtaining and renewing of work permits for foreign employees since COVID-19. In September 2023, a decree for improvements was executed, with changes that improved the efficiency of work permit issuance4. As a market, the RevPAR of Vietnam hotels in 2023 was around 77% of 2019 levels5. For CLAS’ properties, RevPAU rose 33% YoY in VND terms, on a same-store basis6. As of 4Q 2023, RevPAU had recovered to 88% of 4Q 2019 same-store7 levels. CLAS’ properties in Vietnam primarily serve the corporate long-stay and project group segments, which continued to provide resilience to the portfolio. The properties reflected steady recovery in 2023, and demand for short stays from both leisure and corporate travellers progressively returned as flight frequencies to and from Vietnam increased. In particular, there was an increase in MICE events and tradeshows which contributed to the improvement during certain periods of 2023. The year-end holiday season also saw a rise in the number of short-stay leisure bookings by small groups and families. 2024 OUTLOOK The Vietnam economy is expected to grow 6% in 2024, a higher growth compared to 2023, driven by the expectation of export recovery8. FDI in 2024 is expected to be robust, which will contribute to Vietnam remaining as one of the strongest growth environments in Southeast Asia1. As of early 2024, visitors from key markets such as China, the United States, Taiwan, Australia and India are still required to apply for e-visas3. In terms of facilitating better accessibility of visitors from China, Vietnam’s largest pre-pandemic source market, Vietnam has fallen behind its neighbouring countries which have entered into mutual visa exemption arrangements9. Government officials are exploring the introduction of short-term visa waivers for major markets like China and India so that recovery can be sped up further9. With this, Vietnam is expected to welcome around 18 million foreign visitors in 2024, recovering to pre-pandemic levels1. International passenger numbers into Vietnam are also projected to increase 31% YoY8. CLAS’ Vietnam properties are well-positioned to continue riding the recovery in inbound travel, and their long-stay base offers resilience, despite the return of Chinese travellers to Vietnam being slower than expected. Demand for mid and long stay bookings by international corporate guests remains healthy moving forward. The retail and commercial spaces at CLAS’ properties are also expected to remain well-leased, offering diversification and a resilient income stream. 7 Excluding Somerset West Lake Hanoi which was divested in October 2019. 8 Source: Vietnam News (2024) 9 Source: VN Express (2023) 44 CAPITALAND ASCOTT TRUST
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