• 10 December 2018
Slow But Steady Progress In Vietnam

Slow But Steady Progress In Vietnam

If you want to talk about the progress of Vietnam, “everything must be relative to what it was – you have to look at the positives,” stated Nevius Glussi of the Rosewood Hotel Group speaking during a panel discussion at the Singapore HICAP Update. The alternative, of course, would be to assess Vietnam’s progress relative to other countries in the region or relative to where it probably ought to be. The unspoken implication is that from such comparisons the positives might be harder to come by.

China’s Role

From the tourism data, Vietnam’s arrivals have roughly doubled over the last seven years, with just over a quarter of all visitors at present coming from China. The next most significant source countries are Korea (10%), Japan (8%) and the United States (7%). Notably, neither Korean nor Japanese visitors require visas to enter Vietnam, while China, too, has enjoyed straightforward access. However, Vietnam’s policy governing Chinese entry is changing and visas will now be necessary. While that might seem likely to put the brakes on Vietnam’s biggest tourism market, the reality is that Chinese visitors rank outside the top ten for total tourist spending despite their numbers – the Americans, Australians and Koreans spend most in Vietnam. In short, they might not currently represent a market around which a successful tourist industry can be built.

Occupancy rates have recently hovered steadily at around 60%, with RevPAR much stronger for international brands than for domestic operators as a consequence of higher room rates. International brands tend to dominate the high-end of the market while domestic hoteliers supply a cheaper product. Consistency rather than dramatic growth has been the major trend, so what, therefore, are the issues hoteliers feel are holding Vietnam back at present?

The repercussions of the 2014 tensions between Vietnam and China in the South China Sea – or the East Sea as Vietnam would have it – have been one obstacle. This affair caused a brief spate of flight and room cancellations, halting the expansion in arrivals numbers from China. However, in view of Chinese spending levels, this is a blow from which Vietnam is likely to recover quickly.

Local Talent

The bigger issue appears to be the difficulty of finding local staff with the soft skills and welcoming manner to meet international hospitality industry standards. Colin Pine, Director of the Ho Tram Project Company, claimed that the relevant vocational schools in Vietnam “have a basic rote curriculum that doesn’t lend itself to international standards,” while Venessa Koo of Accor Asia Pacific confessed her belief that in management positions, “guests still expect to see a western face.” Both were in agreement, however, that Vietnam is not lacking in raw talent. Vanessa added that “local operators are recognizing their limitations in terms of the 4 and 5-star sectors,” which provides openings for foreign managed projects, while another notable change is that “the younger generation are having a bigger role.”

One weakness was perceived to be the local level of English language skills, with the panel suggesting that Vietnam was lagging behind its neighbors. Staff members who display English fluency are frequently poached by other service sector employers such as the banks, creating an additional cost to staff training.

The Vietnamese government retains its vital role in supporting the wider industry, and has already implemented certain initial measures which may begin to bear fruit. Foreign investment in Vietnamese airports is now welcome, while provincial level administrations wield considerable power to formulate policies on issues such as gambling. In addition, new land development obligations show signs of being actively enforced, which may further stimulate growth.

Indeed, if things are compared with what they used to be, Vietnam is looking up, but patience may be the watchword.

Brought to you by Hotelintel.co