Dubbed as the smokeless industry, the hospitality industry has gradually proved its position in the structure of the economy as it continuously grows over the years and has provided plenty of opportunities for job seekers. In spite of high demand, it causes many obstacles for restaurants and hotels to find talented personnel because the supply is not enough to meet. Thus, how to make your restaurant and hotel impress the good candidates and make them dedicate their abilities to your unit? The following article will be helpful to you on this issue.
About Hospitality in Vietnam
In recent years, Vietnam's tourism is on the pace of growth with impressive growth figures. According to the latest statistics of the World Tourism Organization (UNWTO) in 2017, Vietnam ranked 6th among the 10 fastest-growing tourist destinations in the world and ranked first among Southeast Asian countries. Each year, the average tourism industry in Vietnam welcomes more than 14 million international visitors.
As a result, hospitality in Vietnam has also achieved remarkable performance. According to the 2018 Asia-Pacific (STR) hotel performance report, revenue per total number of rooms (RevPER) in Ho Chi Minh City increased by 5.1% to approximately USD 82.06.
Along with the rapid growth of the service industry, the hospitality and tourism system in Vietnam is increasingly receiving long-term investments from leading local and international corporations, which has demonstrated the strong potential of the hotel industry to prepare for leaps in the near future.
Unfortunately, the Vietnamese hospitality is on the edge of the shortage of workforce. This issue requires hotels’ owners to have specific strategies to attract and retain employees, ensuring the quality of hospitality service is as good as possible.
Essential strategies to attract and retain staffs in the hospitality industry
1. Building a professional working environment in your hospitality business
a. Recruitment and Training process
First and foremost, the professional work environment that leaders hope to show has to be shown in the recruitment process. Strict and apparent recruitment can boost the value of the hotel itself and make the candidates aware that they have to try their best with new roles. The total recruitment process is summarized in the following image:
Professionalism comes from well-training for new employees. Staff would feel like they're being cared for, seeing the high security of the job. Several tips are recommended for the purpose of training and development: developing a roadmap for career development or personal development and training; allowing training ideas from low to high as well as from the management level down; researching training methods, whether from business or outsourcing.
b. Hospitality management system
A smart hospitality management system is also a factor that shows professionalism. There is currently a variety of management software that can support you with a large number of jobs during the operation of a hotel. If staff can approach that software, they will find it more comfortable and put all of their passion to work.
2. Creating opportunities for personal growth
No employee likes to do a job and stay in the same positional these years. Everyone wants to be devoted and recognized with the ability to advance in their careers. As a result, managers in hotels should provide candidates with promotion opportunities so they determine the goals and positions they will achieve in the future if done well and endeavor to pursue them. In this way, everyone has a goal to strive to help the performance and quality of work become better. In order to obtain this purpose, hotels’ leaders should build a complete evaluation system to exactly assess the employees’ abilities. Since then, leaders can determine the appropriate development directions that satisfy their staff.
3. Strengthening the promotion of the hotel image when posting job vacancies
Not only restaurants, hotels, but most other businesses when posting job postings only focus on job descriptions and salaries but forget that candidates are attracted to many other factors. Meanwhile, most candidates tend to choose their ideal working environment as a specific reputation and position in the market. In addition, the attractive factors are the event activities at restaurants, hotels, culture in the working environment, bonuses, ... So when posting a job recruitment, you should wrap up the job description and spend a small part to promote the image as well as the operation of the hotel to show candidates that the environment here is really good for candidates to attract them.
4. Providing reasonable treatment
a. Regular recompense
Of course, if staff only work and receive monthly income, it certainly leads to the day they find the job so boring and the owner likely pays no attention to their contribution to the hotel’s operation. When employees strongly perceive that managers support them, they often express greater satisfaction with their job and exhibit a greater commitment to the organization. Thus, the owner should never ignore the value of recompense and encouragement. Do you know what employees often talk about their companies? These are salaries and perfect treatment that leaders give them. It can be denied that recompense is the core factor in the strategies of retaining staff.
b. Making a good relationship with staff
In any work environment, the relationship between leaders and their subordinates is absolutely important to the success of the whole team. No one can endure an atmosphere of intense pressure work or constant reprimand. Particularly, the characteristics of hospitality staff is to always show a friendly and polite attitude towards guests. Therefore, in order to ask employees to show a professional and caring working attitude, the leaders themselves also need to show fairness, create an enjoyable working atmosphere to avoid putting pressure on employees.
In addition, you can understand about the hospitality in Vietnam by reading through this article.
To sum up, facing the challenges of the shortage of workforce in hospitality, the hotels’ leaders may consider these strategies above and build up your own strategies to attract and retain talented employees. For Vietnam with abundant human resources, this is actually a potential market creating an opportunity for hospitality leaders to develop a strong workforce.
Vietnam is endowed with abundant natural resources, long beautiful coastal line, and crystal-clear beaches, hence tourism and hospitality are the two most growing sectors bringing 6% for the country’s GDP in 2019. Thanks to a large number of domestic and international tourists, the demand for accommodation also increases, which creates opportunities for investors to invest in this sector. The article will guide you on how to open a hotel or hostel in Vietnam.
Why should you choose Vietnam to open a hotel?
Four main reasons should be pointed out to persuade investors to pour capital in the Vietnamese accommodation sector. First of all, impressive demand growth for hotels. Outbound travelers come from a variety of countries in Asian and European countries, in which Chinese tourists account for more than 5.2 million. Second, Vietnam is a good place for MICE and event organization. Hanoi was chosen as a destination to support the Trump-Kim summit 2019. Hotel demand at that time accelerated considerably. Third, Vietnam has favorable geography and low-cost air tickets. Last but not least, government support is another advantage of investing in Vietnamese hospitality.
You can find key information about hospitality outlook in Vietnam at Vietonkin’s blog.
Which requirements should you meet to open a hotel or hostel in Vietnam?
The minimum capital requirement in Vietnam
In fact, there is no official minimum capital requirement in Vietnam for business to enter the Vietnamese market. Merely businesses opened on a large scale, for instance, factories need to meet the compulsory minimum capital. In spite of having no requirement for minimum capital, investors should bear in mind that the procedure of running a hotel should cover all expenses, then you should prepare for that. For example, to open a hotel or hostel in Vietnam, investors should account in advance operation and miscellaneous costs.
Besides, it is suggested that the paid-up capital for foreign companies is $10,000. This number can be varied, but the average minimum capital is suggested at around $10,000.
The approval of foreign-owned hospitality businesses in Vietnam
Vietnamese law allows investors to set up 100% foreign-owned hotels, guesthouses or any types of businesses related to offering accommodation service.
Nevertheless, in case you would like to integrate other tourism services, you need the involvement of a local company. Therefore, the allowed foreign ownership of tourism companies is 99, 99%.
If you have the intention of establishing hotels and tourism-related service, you had better open two different legal entities which are a 100% foreign-owned hotel and a tourism company.
Open a hotel or hostel in Vietnam
According to the Law of Tourism 2017, certain conditions to open lodging service that investors should keep in mind are:
- Hotels that will be opened in Vietnam must have the local representative firm (it means that investors have to choose a representative law firm that has Vietnamese nationality). The first condition is important because only a resident of that country can represent the company in most business lines.
- Certificate of fire prevention and fighting
- Security and order guarantee plan
- Suitable infrastructure
The two last requirements will be inspected by the latest relevant authority.
Huge potential when opening a hotel in Vietnam.
Providing accommodation service in Vietnam
You have to obtain an international travel license if you would like to offer any tourism service to customers. To get this license, you must enter into a joint-venture with a 100% Vietnamese-owned company.
Additionally, the owner of the company has to make a deposit at least VND 250,000,000 (around USD 11,000) to the bank account of the tourism company. This number, frankly, is a handful compared to the total investment capital. One point you should keep in mind that the mentioned deposit does not belong to the operating expenses of the company.
Another requirement for tourism companies is that the person in charge of travel service should have a higher degree majoring in tourism. In case his or her major is not related to tourism, a certificate of training in domestic tourism operation is accepted.
Providing food and beverage service in a hotel in Vietnam
It is essential for a hotel to provide restaurants or bars for customers because it will improve the customer experience when tourists come to your hotel. There is no requirement about minimum capital for investors to open a hotel or a bar in lodging facilities.
Besides, you can also offer more services such as spa and transportation and you can earn a share of profit.
Requirements of land acquisition in Vietnam
According to Vietnamese regulations, foreign businesses with foreign direct investment have no right to purchase land in Vietnam. Nevertheless, they can lease the land up to 50 years and even extend the lease after the period mentioned in the contract. In fact, it is a likelihood that you can buy land through a lease agreement.
Foreign-own companies can hold the lease agreements in Vietnam until the end of the license. The Department of Planning and Investment grants the agreement for 10 years and the license can be renewable. The most significant thing is to keep your company legal and report your tax in Vietnam on time.
Register a hotel in Vietnam
The procedure for registering a hotel or hostel in Vietnam may take place around 3 - 4 months with three stages: investment registration certificate, business registration certificate, and additional licenses for tourism.
1. Investment registration certificate
The very first step of any foreign organization which wants to enter the Vietnamese market is the approval of an investment registration certificate issued by the Department of Planning and Investment. This certificate allows you to conduct business in Vietnam and it takes one month to get the certificate.
2. Business registration certificate
The second license for all foreign companies is the business registration certificate which may take one week. Furthermore, you should notice that after the grant from the Department of Planning and Investment, you have 90 days to make the initial capital contribution.
3. Additional licenses
After obtaining successfully two compulsory certificates, hospitality enterprises need additional licenses to provide lodging services for a variety of travelers. In case you would like to combine other services like a restaurant, a bar, or a spa, you also need sub-license. These licenses are pieces of evidence that show your hotel qualified and legal.
To sum up, investing in the hotel sector in Vietnam promises you a lot of profits thanks to the higher demand for traveling and a large number of tourists. There is no requirement for minimum investment capital but investors should prepare in advance to cover all the operation costs including costs to get licenses. We hope that this article is helpful for investors who are willing to investing in Vietnam. Let’s contact us in case you need help.
Thanks to the diverse culture, splendid landscape, up-and-coming cities, and lovely beaches, Vietnam becomes an attractive tourist destination in Southeast Asia. Tourism and hospitality develop parallelly, hence when tourism thrives, hospitality grows, especially accommodation. This article will provide you a brief outlook about Vietnamese high-end hotels and reasons why you should invest in hotel real estate.
Vietnam hotel industry outlook for 2020
The hotel sector has boomed for the last three years. Vietnam has been an affordable tourism destination in foreign visitors’ eyes, hence the number of travelers coming to our country reached 8.5 million in the first six months of 2019. Thanks to a large number of domestic and foreign visitors, the hotel market in Vietnam is also extending. Hotel performance is much more diversified within Vietnam from Ho Chi Minh City to Cam Ranh in the South to Da Nang and up to Hanoi in the North.
By the end of the third quarter of 2019, it is estimated that more than 442 four-star and five-star hotels were opened in Vietnam, increasing 21% annually each year since 2015 (called a compound annual growth rate - CAGR). Da Nang and Khanh Hoa - the two most favourite destinations - led the supply of upscale hotels with a growth rate of 19% in each city, followed by Ho Chi Minh City and Hanoi.
In addition, revenues for high-end hotels rise dramatically in 2019. According to the newly-released Hotel Survey 2019 by Grant Thornton, the revenue per room grew by 5.4% from 2017 to $83.4 in 2019. Kenneth Atkinson, the senior board adviser of Grant Thornton Vietnam, confirmed that the average occupancy rate at 5-star hotels remained at a high proportion of 75.6%.
The chart shows the average occupancy room rates at 4-star and 5-star hotels in Vietnam.
The revenues from luxurious hotels increase gradually year by year, which may indicate the higher number of tourists staying at high-end hotels then there is a potential for opulent accommodation.
It is predicted that the earnings from the hotel sector in 2022 can be double the revenues in 2017, to more than US 890 million.
Reasons why you should invest in the hotel sector
Impressive demand growth for hotel
Obviously, the higher number of tourists will boost the higher demand for accommodation, especially luxurious hotels and resorts.
International tourists arriving in Vietnam has accelerated considerably, reached a remarkable growth of 21% within 11 months of 2018. In addition, the growth rate of foreign visitors arrivals also increases in the decades, which is two times higher than the Asia Pacific annual growth rate.
Furthermore, outbound travelers come to Vietnam from a variety of countries. Visitors from Asia accounted for the large proportion of foreign tourists in 2019 with over 81%, of which Chinese visitors reached more than 5.2 million and Korean tourists reached more than 3.2 million. Tourists from Europe, America, Oceania, and Africa also increased by 13.4%, 10.2%, 0.4%, and 19.8%%, respectively, annually.
Vietnam is a good place for MICE and event organization
Sofitel Metropole Hanoi - a place holding Trump-Kim meeting.
Vietnam has been chosen as a host for a lot of business conferences, meetings, and summits. When important events are organized in Vietnam, it definitely motivates entrepreneurs, visitors, and delegates to come to the destination. For example, the Trump-Kim summit in Vietnam in February 2019 had positive impacts on Vietnamese tourism. At that time, five-star hotels in Hanoi run out of rooms to rent. Just a week before the summit took place, a lot of high-end hotels such as Grand Plaza, Hilton, Intercontinental, Sofitel Metropole, Sheraton, and JW Marriott announced that no more rooms were available from Feb 25 to the end of the month. In the near future, Vietnam will be the host of SEA games 31 in 2021. This event will attract many news reporters, Asian people to come here to encourage sports teams and it is forecasted that hotel owners will earn huge revenues and gain more profits.
Favourable geography and low-cost air ticket
Vietnam’s rich geographic, topographic diversity and local climate are advantages that Mother Nature endows us. Favourable climate conditions support a variety of tourism appeals. Where tourism develops, there are a lot of hotels and resorts. Popular tourism destinations in Vietnam are Da Nang, Hoi An, Nha Trang, Phu Quoc, Hanoi, Ho Chi Minh, Ha Long and so on. Coastal cities like Da Nang, Nha Trang, and Phu Quoc island impress foreign visitors with crystal-clear water, stunning beaches, beautiful landscapes, and friendly people. In these cities, a lot of luxurious hotels and resorts of prestigious brands namely Silk Path, InterCon, JW Mariott, FLC group… are built and invested to provide spaces for entertainment such as golf courses. It is predicted that real estate for hospitality at these places continues to attract many foreign investors.
Government support
The Vietnamese government has provided infrastructure improvements with new international routes to encourage tourism as well as enable Vietnam to transform from Experience Destination to Holiday Destination with repeated guests. Besides, the government also approves gambling in the casino under certain conditions. This new regulation supports hospitality growth and widens the regional competition.
Technology application boosts Vietnam hotel tourism and hospitality
The Vietnamese government plans to target USD 45 billion in tourism revenue in 2025. In order to achieve the target, technology application is one of the priorities.
Industry 4.0 with its advanced information technology has paved the way for Vietnam tourism and hospitality. Traditional tourism will transfer to smart tourism. Technology allows travelers to book flight tickets, accommodation online while searching for places to enjoy the local cuisine without depending on travel agents.
Technology application is being indeed developed but it is now available in major cities. The application in hotels in remote areas is still somehow limited, therefore the investment required to develop smart applications can be huge.
Moreover, artificial intelligence in hospitality can be a fertile ground to improve the competitiveness among luxurious hotels within Vietnam as well as in the region. The wow factor of AI application in hospitality is obvious. AI, in particular Face ID, allows visitors to check out in 3 seconds or paying supplement services quickly and high personal information security. In Vietnam, Vinpearl is the first hospitality company to apply facial recognition technology.
In addition, you can look FDI guide in Vietnam at Viettonkin's blog.
To sum up, hospitality in Vietnam has a huge potential for foreign investors. Vietnam tourism and hospitality are on the way of fast-speed development with a lot of advantageous factors regarding demand growth, endowed geographic, an ideal place for big event organization and government support. Thanks to the technological application, hospitality in Vietnam is predicted to develop further in the near future.
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