Vietnam Tourism: Second to None

3:26:40 PM | 7/8/2005

Mr. Pham Tu, deputy director of the Vietnam National Administration of Tourism, said that the Vietnamese tourism sector is in need of luxury four-star and five-star hotels. Currently, the number of tourists is beyond estimation. More and more tourist or business groups arrive in Vietnam to stay and spend money. For many months now, the demand for hotel rooms in Ho Chi Minh City has been very high while in Hanoi such luxury hotels as Melia, Daewoo and Sofitel Plaza have to turn away 50 per cent of potential reservations. This is both good news and bad news for Vietnamese tourism.

Local investors hesitate

Currently, more and more local investors exerted local capital and human resources to design, construct and manage hotels to attract tourists. Knowing that many foreigners don’t like to live in luxury high-rise hotels, they built gastronomy villages standing out with Vietnamese typical bamboo and sedge cottages. Services and souvenir shops are mushrooming here. Golf courses have been set up to meet the demand of the well-to-do tourists. Mr. Tu said that in order to attract tourists to countryside regions to avoid overloaded in major cities, many luxury hotels need to be built in the countryside.

Presently, Vietnamese investors feel hesitant in building these hotels because they lack capital, design and especially experienced managers to run them. According to Tu’s saying, we lack starred hotels and more seriously our own star hotels.

Mr Le Khac Hiep, president of membership committee and investor representative of Vinpearl Hotel - Hon Tre Tourism and Trade Co. Ltd., said that in fact Vietnamese investors are weak and lack management experience. They have to hire foreign managers with very high salaries. So it is not surprising to know that almost all luxury hotels in Hanoi and Ho Chi Minh City are run by foreign managers. Their strong points are our weak ones. Therefore, Vietnamese investors have to accept the domination of the sector by foreigners.

Vision of foreign investors

Previously, foreign investors were only engaged in projects sponsored by financial organisations. Recently, they began to take part in projects by local investors. In some cases, they are ready to accept lower payment to gain a foothold in the Vietnamese market. This is a challenge to local investors who have to fuel more efforts to vie for a wider market. In the meantime, foreign investors have a wider vision, more thorough strategy and deeper experience in this field.

Mr. Patrick Basset, present of Accor Asia Group, a world-leading group in managing and consulting solutions who provide services for luxury hotels, said that he highly valued the Vietnamese tourism market. Vietnam is the fourth country in Asia in which Accor has grasped investment opportunities. The magnetisation of the Vietnamese market can be compared with that of the US and Australia but its business effectiveness is overwhelmed. Accor’s profit in Vietnam so far this year increased four per cent compared with the same period last year. Mr. Basset said that in 2002 Accor invested total VND450 billion (US$28.125 million) in building the five-star Vinpearl Resort, the largest in Vietnam. Until now, his hotel has welcomed 30,000 visitors from the US, Japan, South Korea, France and Russia among others. In addition, Accor has recently officially renamed the Sofitel Vinpearl Resort & Spa. Sofitel is the highest-ranking trademark for Accor’s five-star hotels worldwide. In Vietnam, there are now five hotels named with Sofitel namely Sofitel Metropole, Sofitel Plaza, Sofitel Saigon Plaza and Sofitel Dalat. These successes have resulted in Accor’s decision to build an additional four or five 4-5-star hotels in Vietnam in 2006.

When asked about business secrets in running new luxury hotels in Vietnam, Mr. Basset said that trademark is one of our top concerns. The building of a hotel must go line with the establishment of the trademark for that hotel. In fact, Vietnamese investors are not very good at this. Therefore, we are ready to join hands to share experience and risks. Mr. Basset’s idea, however, contradicts with others’ ideas that the transference of the management authority from Vietnamese enterprises to foreign investors means they sell out their trademarks to foreign investors. However, at the moment, this is most likely a good route for Vietnamese enterprises while their capital and forces are limited.