The difficulties facing Vietnam’s tourism sector stem mainly from the global economic crisis, which significantly impacted on long-haul travellers. There are, however, some positive signs of recovery and also indications that Asian economies may lead in the recovery over Europe and the US, which has recently had a positive effect on the number of foreign tourist arrivals in Vietnam.
The country welcomed some 315,000 foreign tourists in August, up 16 per cent over the previous month. Meanwhile, recent expansions of international-brand hotels such as Accor, Marriot, InterContinental and Starwood Hotels & Resorts also represent positives for the future of hospitality sector development in Vietnam.
Why now?
All of the hotels groups agree that their hotels have been affected by the global economic crisis, but say it will not prevent them from expanding their brands in Vietnam given the country’s potential for medium and long term development.
Nearly two years after opening the first luxurious InterContinental Hotel West Lake in Hanoi, the Intercontinental Hotels Group (IHG) celebrated the grand opening of the InterContinental Asiana Saigon in Ho Chi Minh City on September 30. “Obviously the past year has seen some trying times for the hospitality industry in Vietnam, following several years of record occupancy,” Mr Philip Riley, Regional General Manager for Vietnam, IHG, told VET. “However, we are starting to see some very positive signs for the future, beginning with August. Despite the downturn of the economy, I believe in the tremendous growth of Vietnam.
Moreover, we are not in Vietnam for one year; our contracts are 15 to 20 years. We believe in the strong growth of this market in the medium and long-term.” The newest luxury hotel to open for the last four years in Ho Chi Minh City is a part of the Kumho Asiana Plaza complex, offering the best business location, premium facilities and world recognised service levels.
Like IHG, the US’s Starwood Hotels & Resorts believes now is a great time for the group in Vietnam. Starwood is about to open its third hotel in Vietnam - Sheraton Nha Trang Hotel & Spa - in November 2009, following on from the Sheraton Saigon Hotel & Towers and Sheraton Hanoi. “It is an exciting time for the development of the Starwood footprint in this continually evolving nation,” said Mr Wayne Buckingham, Regional Vice President for Thailand, Vietnam and Cambodia at Starwood Hotels & Resorts. “We are able to offer a full service, with hotels in the north, central and south of Vietnam and we have a number of contracts for future hotels under negotiation.”
Starwood also has two hotels under development, including The Westin Resort Cam Ranh and a Starwood hotel in Hoi An and is also actively working on potential projects in Da Lat and Da Nang and on Phu Quoc Island.
Previously, Accor, the European leader and a major group in hotels, announced its largest expansion with three Pullman hotels to be developed in Vietnam - two in the country’s Lao Cai region and one in Vung Tau. The group has also decided to manage the Hanoi Horison Hotel and adopted Accor’s Pullman brand - well-recognised among business travellers - to the Horison. In a major push to support the development of tourism infrastructure in Vietnam, Accor also announced it would open two Mecure hotels in Hanoi to meet demand for quality mid-scale, non-standardised accommodation.
“Vietnam is a special destination that will continue to attract a variety of travellers from many origins,” said Mr Patrick Basset, Accor Vice President of Operations for Vietnam, the Philippines, Japan and South Korea. “To fulfil the needs of these diverse travellers, Accor continues to expand and develop hotels to provide accommodation across a variety of segments.”
The group was also the pioneering international hotel group on Phu Quoc Island after it launched the Grand Mecure La Veranda in 2007 and the Novotel Phu Quoc Resort. Other Novotels in Vietnam include Novotel Halong Bay, Novotel Nha Trang, Novotel Hoi An Imperial Resort (late 2009) and Novotel Hanoi on the Park (2010).
In late July, the US-based hotel giant Marriot International signed a management agreement with the Binh Minh Export Production and Trade Company to open the first JW Marriot luxury branded hotel in Hanoi in 2012. According to Mr Ed Fuller, President & Managing Director of International Lodging at Marriot International, the giant has been operating in Asia for the past two decades and over the years has established a firm presence especially in China and Thailand, have a robust pipeline of hotels opening in India over the next several years and has had a presence in Ho Chi Minh City since 1997 as a result of acquiring the Renaissance Hotel Group. “Vietnam is a natural next step for us,” he said. “We see potential for several of our brands in the country.”
Traditionally, when Marriot enters a country it focuses initially on establishing a presence in primary gateway cities and, where appropriate, establishing resort destinations. They do this with their full-service, luxury and upscale brands such as JW Marriott, Marriott and Renaissance. “Once we achieve these goals, we then work to expand our reach into secondary cities with our more moderately priced hotel brands such as Courtyard,” Mr Fuller explained. “All it will take to make this long-term strategy a reality in Vietnam is improved, modernised infrastructure.”
Bright future
Fundamentally, the global economy will rebound and Vietnam’s hospitality sector will continue developing. According to the Foreign Investment Agency under the Ministry of Planning and Investment, Vietnam licensed 504 FDI projects totalling over $5.6 billion in the first eight months of this year, of which 20 are in the hotels and tourism sector with total capital of $755 million. There are a number of hotels developments now underway, not only luxury but also mid-scale and economy. It will be unavoidable for existing hotels to prepare themselves for both direct and indirect competition, which will become more intense in the future.
“Existing hotels obviously have the advantage of their established names and experience in their markets but it is important that they keep updating themselves and continue to improve their products and services, and offer great value packages for the consumers in order to maintain their status in the more competitive environment,” according to Mr Basset.
Mr Knuth Kiefer, General Manager of Mövenpick Hotel Hanoi, is of the same mind. “Naturally, additional supply of hotel rooms will result in stronger competition,” he said. “However, more availability of hotel rooms and especially banquet space also creates more interest in the destination as a whole.” He added that the hotel will build on its unique position as a boutique hotel with excellent location and a more residential feel than many other hotels. “We believe our facilities and personalised service, combined with our renowned brand name, will help us succeed even when faced with more competition,” he said.
Competition is a factor in development, but the development of the tourism industry in Vietnam needs support from all stakeholders, including relevant government agencies, hotels, airlines, travel agencies. Vietnam certainly has significant potential in the hospitality sector. There still need to be improvements in various areas in terms of infrastructure, and the long-term sustainability of the industry is also very crucial.
“While dramatic improvements have already been made, more needs to be done,” said Mr Fuller. “In order to truly flourish, Vietnam needs modern, streamlined infrastructure that will enable visitors and residents alike to easily move between its iconic historical sites, spectacular beaches and robust cities.”
"The global economic crisis has had a strong effect on the luxury hotel segment, including Sheraton Hanoi Hotel. Starwood Hotels & Resorts, however, continue to see growth opportunities and potential during this time. We are planning ahead for economic recovery so we can come out of the gate fast, ahead of the competition."
Mr Matthew Everson, General Manager, Sheraton Hanoi Hotel
"Support from relevant authorities would certainly help boost the hospitality industry. In the short term, some measures such as visa exemptions would certainly help. However, long-term sustainability of the industry is also very crucial. Improvements in tourism infrastructure such transportation and tourist information services would help facilitate the travels of visitors."
Mr Patrick Basset, Accor’s Vice President of Operations for Vietnam, the Philippines, Japan and South Korea
"We view Vietnam as a sensational opportunity, not a challenge. With its phenomenal beaches, extraordinary settings and vibrant cities, Vietnam has tremendous potential as a major tourism destination for business, incentive and leisure travel."
Mr Ed Fuller, President & Managing Director, International Lodging for Marriot International
"I believe that business will improve significantly over the next few months. We have seen a steady increase in demand and are optimistic for the future. To succeed in this business, in any economic situation, providing superior service is key."
Mr Knuth Kiefer, General Manager of Mövenpick Hotel Hanoi
