SECTOR FORUM

SECTOR CHALLENGES TOMARKET DEVELOPMENTACCOMMODATION SECTOR

Vietnam International Travel Mart, Hanoi, 19 April 2013By Kai Schröter, General Director, HTM Management Consultancy ©

General DirectorHTM Management Consultancy Company Limited

INTRODUCTION

Vice ChairmanEuropean Chamber of Commerce in Vietnam

Tourism & Hospitality Sector Committee

SERVICES

HTM Management Consultancy

• 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

PROJECTS

• 4 Resort and Villas Halong• Master Planning• Hotel Operator Negotiation

2010

• 5 Star Resort and Villa Project Danang• Master Planning• Feasibility Study

• 4 Star Hotel Nha Trang• Feasibility Study

PROJECTS

• 4 and 5 Star Resorts Cat Ba• Feasibility Study• Investor Introduction

2011

• 4 Star Hotel Hanoi• Technical Assistance and Pre-Opening

• 4 Star Hotel Thanh Hoa• Technical Assistance and Pre-Opening

PROJECTS

• 3 Star Mixed Use Property Quang Ngai• Feasibility Study• Investor Introduction

2012

• 3 Star Hotel Hanoi• Technical Assistance and Pre-Opening

• 4 and 5 Star Resort Property Thanh Hoa• Feasibility Study

PROJECTS

• 5 Star Hotel Project Nha Trang• Feasibility Study• Investor Introduction• Hotel Operator Negotiation and Selection

2013

• 5 Star Resort and Villas Danang• Master Planning• Feasibility Study• Investor Introduction

Market Review 2011

LODGING SECTOR

Source: Vietnam Hotel Survey 2012, Grant Thornton

LODGING SECTOR

Source: Vietnam Hotel Survey 2012, Grant Thornton

Market Review 2011

LODGING SECTOR

Source: Vietnam Hotel Survey 2012, Grant Thornton

Market Review 2011

LODGING SECTOR

Source: Vietnam Hotel Survey 2012, Grant Thornton

Market Review 2011

LODGING SECTOR

Source: Savills Research & Consultancy

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)

Market Review 2011 - Hanoi

LODGING SECTOR

Source: Savills Research & Consultancy

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)

• RevPAR5- 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

Market Review 2011 - Hanoi

LODGING SECTOR

Source: Savills Research & Consultancy

Summary

• Despite the ongoing global financial crisis, 2012 saw stable growth.The hotel market recovered strongly in 2010-2011. The 5-starsegment 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)

Market Review 2011 - HCMC

LODGING SECTOR

Source: Savills Research & Consultancy

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)

• RevPAR5- star: 116 US$4- star: 68 US$3- star: 35 US$

Outlook

• 2012-13: estimated +1,300 rooms

Market Review 2011 - HCNC

SECTOR CHALLENGES

Tourism Planning and Development

Destination Branding,Marketing and

Promotion

Tourism Product Diversity and Development

Service Quality andCustomer Satisfaction

Human Resources Development,

Education and Training

Tourism Legislation and Governance

Tourism Access, Transport and Infrastructure

SECTOR CHALLENGES

Tourism Legislation and Governance

Tourism Legislation and Governance

Preparation and Consultation Phase

• 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

• In- and external communication channels• Consistent application and transparency• Simplified procedures• Stringent implementation, supervision and control

SECTOR CHALLENGES

Tourism Legislation and Governance

Critical Issues

• 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

SECTOR CHALLENGES

SECTOR CHALLENGES

“Vietnam Tango”

Three Steps Forward-Two Steps Back

SECTOR CHALLENGES

Tourism Planning and Development

Tourism Planning and Development

Planning Phase

• 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

• In- and external communication channels• Coordinated efforts • Sufficient funding• Management capacity• Stringent implementation, supervision and control

SECTOR CHALLENGES

Tourism Planning and Development

Critical Issues

• Coordinated tourism development(central, provincial and communallevel)

• Quality of tourism sites, hotel andresort developments

• Tourism management, supervisionand control

• Preventive measures, strictpunishment and corrective actions

• Over-stretching of natural,economical and human resources

• Loss of cultural identity, masstourism, degradation

SECTOR CHALLENGES

SECTOR CHALLENGES

Tourism Access and Infrastructure

Tourism Access, Transport and Infrastructure

Preparation and Consultation Phase

• 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

SECTOR CHALLENGES

Critical Issues

• 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)

SECTOR CHALLENGES

Tourism Access, Transport and Infrastructure

SECTOR CHALLENGES

Destination Branding,Marketing and

Promotion

Destination Branding, Marketing and Promotion

Preparation and Consultation Phase

• 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

• In- and external communication channels• Human resources capacity (brand and marketing management)• Stringent implementation, supervision and control• Coordination and consistent application

SECTOR CHALLENGES

Critical Issues

• 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

SECTOR CHALLENGES

Destination Branding, Marketing and Promotion

Country Brand Vietnam,

NOTTourism Logo

Vietnam

SECTOR CHALLENGES

Tourism Product Diversity and Development

Tourism Product Diversity and Development

Preparation and Consultation Phase

• 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

SECTOR CHALLENGES

Critical Issues

• 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

SECTOR CHALLENGES

Tourism Product Diversity and Development

SECTOR CHALLENGES

Human Resources Development,

Education and Training

Human Resources Development, Education and Training

Preparation and Consultation Phase

• 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

SECTOR CHALLENGES

Critical Issues

• 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.)

SECTOR CHALLENGES

Human Resources Development, Education and Training

SECTOR CHALLENGES

Service Quality andCustomer Satisfaction

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

SECTOR CHALLENGES

Critical Issues

• 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)

SECTOR CHALLENGES

Service Quality and Customer Satisfaction

THANK YOUHTM Management Consultancy Co., Ltd.

No. 2, Alley 236/ 7, Au Co StreetTay Ho District, Hanoi, Vietnam

E-mail: director@ht-management.comWebsite:www.ht-management.com

Mobile: +84-90-408 1820Telephone: +84-4-3719 1850/1

Facsimile: +84-4-3719 1849

SECTOR CHALLENGES