This document discusses challenges facing the accommodation sector in Vietnam. It summarizes the key challenges as: 1) tourism legislation and governance, including the need for clear and transparent laws developed through stakeholder consultation; 2) tourism planning and development, requiring coordinated efforts across levels of government; and 3) tourism access and infrastructure, with challenges around developing regional connections and international integration of transportation infrastructure.

1. SECTOR FORUM
SECTOR CHALLENGES TO
MARKET DEVELOPMENT
ACCOMMODATION SECTOR
Vietnam International Travel Mart, Hanoi, 19 April 2013
By Kai Schröter, General Director, HTM Management Consultancy ©

2. INTRODUCTION
General Director
HTM Management Consultancy Company Limited
Vice Chairman
European Chamber of Commerce in Vietnam
Tourism & Hospitality Sector Committee

3. SERVICES
HTM Management Consultancy
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Feasibility Studies
Tourism Master Planning
Market Research and Analysis
Concept Development and Branding
Project Consultancy and Management
Architectural Planning and Design Review
Technical and Vocational Education and Training
Responsible and Sustainable Tourism Development
Hotel Management and Operating Agreements
Hotel Technical Assistance and Pre-Opening
Hotel and Restaurant Operating Equipment
Human Resources and Capacity Building
Marketing, Sales and Public Relations
Executive Search and Recruitment
Standard Operating Procedures
Investor Introduction

4. PROJECTS
2010
• 4 Resort and Villas Halong
• Master Planning
• Hotel Operator Negotiation
• 5 Star Resort and Villa Project Danang
• Master Planning
• Feasibility Study
• 4 Star Hotel Nha Trang
• Feasibility Study

5. PROJECTS
2011
• 4 and 5 Star Resorts Cat Ba
• Feasibility Study
• Investor Introduction
• 4 Star Hotel Hanoi
• Technical Assistance and Pre-Opening
• 4 Star Hotel Thanh Hoa
• Technical Assistance and Pre-Opening

6. PROJECTS
2012
• 3 Star Mixed Use Property Quang Ngai
• Feasibility Study
• Investor Introduction
• 3 Star Hotel Hanoi
• Technical Assistance and Pre-Opening
• 4 and 5 Star Resort Property Thanh Hoa
• Feasibility Study

7. PROJECTS
2013
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5 Star Hotel Project Nha Trang
Feasibility Study
Investor Introduction
Hotel Operator Negotiation and Selection
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5 Star Resort and Villas Danang
Master Planning
Feasibility Study
Investor Introduction

8. LODGING SECTOR
Market Review 2011
Source: Vietnam Hotel Survey 2012, Grant Thornton

9. LODGING SECTOR
Market Review 2011
Source: Vietnam Hotel Survey 2012, Grant Thornton

10. LODGING SECTOR
Market Review 2011
Source: Vietnam Hotel Survey 2012, Grant Thornton

11. LODGING SECTOR
Market Review 2011
Source: Vietnam Hotel Survey 2012, Grant Thornton

12. LODGING SECTOR
Market Review 2011 - Hanoi
Summary
• Recent decline in market performance, even during high season
• Year-on-year, Average Occupancy (AO) of 4 and 5-star hotels
gradually decreased, whilst those of the 3-star properties increased
• Sharp decrease in Average Room Rates (ARR) and lower AO resulted
in the decrease of Revenue per Available Rooms (RevPAR)
Supply
• 5-star (11), 4-star (11), 3-star (26)
• 7,250 rooms (+4% y-o-y)
Source: Savills Research & Consultancy

13. LODGING SECTOR
Market Review 2011 - Hanoi
Market Performance
• Average Occupancy: 57% (-2% y-o-y)
• Average Room Rates
5- star: 101 US$/room/night (-7% q-o-q)
4- star: 65 US$/room/night (-5% q-o-q)
3- star: 40 US$/room/night (-6% q-o-q)
• RevPAR
5- star: 58 US$
4- star: 37 US$
3- star: 23 US$
Outlook
• 2012-13: estimated +1,000 rooms
• 2012-2015 onward: estimated +6,600 rooms
Source: Savills Research & Consultancy

14. LODGING SECTOR
Market Review 2011 - HCMC
Summary
• Despite the ongoing global financial crisis, 2012 saw stable growth.
The hotel market recovered strongly in 2010-2011. The 5-star
segment showed particularly good performance
• Several hotels used time for upgrades and renovation
Supply
• 5-star (11), 4-star (11), 3-star (26)
• 10,955 rooms (+8% y-o-y)
Source: Savills Research & Consultancy

15. LODGING SECTOR
Market Review 2011 - HCNC
Market Performance
• Average Occupancy: 77% (-4% y-o-y)
• Average Room Rates
5- star: 151 US$/room/night (+6% q-o-q)
4- star: 88 US$/room/night (+3% q-o-q)
3- star: 45 US$/room/night (-5% q-o-q)
• RevPAR
5- star: 116 US$
4- star: 68 US$
3- star: 35 US$
Outlook
• 2012-13: estimated +1,300 rooms
Source: Savills Research & Consultancy

16. SECTOR CHALLENGES
Service Quality and
Customer Satisfaction
Tourism Legislation and
Governance
Human Resources
Development,
Education and Training
Tourism Planning and
Development
Tourism Product
Diversity and
Development
Tourism Access,
Transport and
Infrastructure
Destination Branding,
Marketing and
Promotion

17. SECTOR CHALLENGES
Tourism Legislation and
Governance

18. SECTOR CHALLENGES
Tourism Legislation and Governance
Preparation and Consultation Phase
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Regulatory framework
International experience and expert consultation
Inter-ministerial coordination
Common interests and cooperation
Stakeholder consultation
Public-private sector dialogue
Clear and transparent legislation
Level playing field
Implementation and Application Phase
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In- and external communication channels
Consistent application and transparency
Simplified procedures
Stringent implementation, supervision and control

19. SECTOR CHALLENGES
Tourism Legislation and Governance
Critical Issues
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Tourism Master Planning, Management and Development
Sustainable and Responsible Tourism Practices
Protecting and Maintaining Cultural Heritage
Visa Waiver Revocation, Visa Exemptions and Visa-on-Arrival
Tourist Safety and Security,, Complaint Handling and Tourism Police
Tour Operator Registration and Fee Deposit
Local Tour Guide Qualifications and Assessment
Foreign Tour Guide Permission
Hotel Standardization, Assessment and Rating
Vocational education and training

20. SECTOR CHALLENGES
“Vietnam Tango”
Three Steps ForwardTwo Steps Back

21. SECTOR CHALLENGES
Tourism Planning and
Development

22. SECTOR CHALLENGES
Tourism Planning and Development
Planning Phase
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Understanding tourism’ significance (spearhead industry)
Inter-ministerial coordination and cooperation
International experience and expert consultation (learning from mistakes)
Stakeholder consultation and public-private sector dialogue (working groups)
Professional, detailed and achievable objectives
Sustainable and responsible tourism planning
Protecting, maintaining and developing cultural heritage and natural resources
Development Phase
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In- and external communication channels
Coordinated efforts
Sufficient funding
Management capacity
Stringent implementation, supervision and control

23. SECTOR CHALLENGES
Tourism Planning and Development
Critical Issues
• Coordinated tourism development
(central, provincial and communal
level)
• Quality of tourism sites, hotel and
resort developments
• Tourism management, supervision
and control
• Preventive
measures,
strict
punishment and corrective actions
• Over-stretching
of
natural,
economical and human resources
• Loss of cultural identity, mass
tourism, degradation

24. SECTOR CHALLENGES
Tourism Access and
Infrastructure

25. SECTOR CHALLENGES
Tourism Access, Transport and Infrastructure
Preparation and Consultation Phase
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Master planning (cluster priority vs. provincial priorities)
Expert consultation
Local, regional connections and international integration
Public-Private Partnerships
Open Tender Bidding
Quality, experienced contractors
Implementation and Application Phase
• Inter-ministerial coordination
• Stringent implementation, supervision and control
• Quality management

26. SECTOR CHALLENGES
Tourism Access, Transport and Infrastructure
Critical Issues
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Aviation market and airport developments
Regional and international flight connections
Operating airlines and code sharing (market opening)
Seaports and railway development
Road network development and road safety
Development of auxiliary infrastructure, facilities and services (cruise terminal)
Land access, compensation and clearance
Development and land use costs
System management and maintenance (example old railway vs. fast speed train)

27. SECTOR CHALLENGES
Destination Branding,
Marketing and
Promotion

28. SECTOR CHALLENGES
Destination Branding, Marketing and Promotion
Preparation and Consultation Phase
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Understanding regional competition and country branding
Systematic planning and holistic view
Market research (customer driven approach)
Expert consultation
Step-by-step branding process (research, identify core values)
Stakeholder consultation
Integrated marketing and promotion plan
Sufficient funding
Open Tender Bidding and experienced contractors (international)
Implementation and Application Phase
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In- and external communication channels
Human resources capacity (brand and marketing management)
Stringent implementation, supervision and control
Coordination and consistent application

29. SECTOR CHALLENGES
Destination Branding, Marketing and Promotion
Critical Issues
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Branding and marketing experience
Management capacity
Budget
Public-private sector dialogue
Transparent decision making process
Communication and marketing materials’ quality
Coordination and consistent application
National vs. provincial marketing
Packaging, programming, partnerships
Cross-marketing
Country Brand
Vietnam,
NOT
Tourism Logo
Vietnam

30. SECTOR CHALLENGES
Tourism Product
Diversity and
Development

31. SECTOR CHALLENGES
Tourism Product Diversity and Development
Preparation and Consultation Phase
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Understanding tourism product development
Market research (customer driven approach)
Public-private sector dialogue
Innovative culture
Sustainable and responsible development
Protecting and maintaining cultural heritage and natural resources
Implementation and Application Phase
• Stringent implementation, supervision and control
• Coordination and quality management

32. SECTOR CHALLENGES
Tourism Product Diversity and Development
Critical Issues
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Innovative culture
Product variety and quality
Customer experience and satisfaction
Public-private sector dialogue and cooperation
Management capacity
Decision making process
Integration and coordination (central vs. provincial efforts)
Partnerships

33. SECTOR CHALLENGES
Human Resources
Development,
Education and Training

34. SECTOR CHALLENGES
Human Resources Development, Education and Training
Preparation and Consultation Phase
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Understanding differences of tourism and hospitality
Tourism and hospitality training needs’ assessment
Public-private sector dialogue and partnerships
Foreign investment, curricula and teaching
International accreditation
Dual education system (combine academic with practical work experience)
Implementation and Application Phase
• Consistent application and transparency
• Simplified procedures
• Stringent implementation, supervision and control

35. SECTOR CHALLENGES
Human Resources Development, Education and Training
Critical Issues
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Education and training system
Management capacity
Curriculum and teachers
Practical training facilities (mock up rooms, receptions, kitchens, bars etc.)
Technical and vocational training
Foreign language training
Soft skills training (communication, attitude, customer service, team work etc.)

36. SECTOR CHALLENGES
Service Quality and
Customer Satisfaction

37. SECTOR CHALLENGES
Service Quality and Customer Satisfaction
Preparation and Consultation Phase
• Understanding service quality and customer satisfaction
• Market research and customer travelers feedback
• Education of stakeholders and local population
Implementation and Application Phase
• Stringent implementation, supervision and control

38. SECTOR CHALLENGES
Service Quality and Customer Satisfaction
Critical Issues
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Equal and fair treatment of tourists
Double pricing policies
Harassment and over charging
Pollution and hygiene
Consumer protection and complaint handling (locally vs. internet: German
tourists)

39. SECTOR CHALLENGES
THANK YOU
HTM Management Consultancy Co., Ltd.
No. 2, Alley 236/ 7, Au Co Street
Tay Ho District, Hanoi, Vietnam
E-mail: director@ht-management.com
Website:www.ht-management.com
Mobile: +84-90-408 1820
Telephone: +84-4-3719 1850/1
Facsimile: +84-4-3719 1849