Hotel management still can bring fat profit, despite economic difficulties

The hotel management market remains bustling, despite the shadow of the global economic crisis. Hotels’ owners now have many more choices, because there are more service providers who have been lowering fees to become more competitive.
Gearing up
In the last few years, the number of international hotel management groups making debut in the Vietnamese market proves to be modest. However, the groups, which have been operational in Vietnam for many years, such as Starwood, Global Hyatt, Accor or IHG, are gearing up with their business plans in Vietnam, bringing more brands to the market.
Accor, believed to be the hotel management group which has the higher number of clients in Vietnam, has revealed that the group plans to increase the number of hotel rooms bearing Novotel brand in the next two years. There are about 500 hotel rooms bearing Novotel brand in Ha Long, ,Nha Trang and Phan Thiet, while more will appear in Da Nang, Phu Quoc Island and Hanoi.
The group has 11 hotels bearing well known brands such as Novotel, Mercure, MGallery and Sofitel with 2000 rooms in total.
Meanwhile, IHG (InterContinental Hotel Group) has created good fame with InterContinental, Crowne Plaza brands in Hanoi and HCM City. It has brought Crown Plaza to Da Nang City in the central region and developed Holiday Inn as well.
Starwood Hotels & Resort Worldwide, after having Sheraton brand hotels in HCM City, Nha Trang and Hanoi, has decided to bring Le Meridien and Westin to the market.
Other foreign groups such as BestWestern and Zinc Vision have also contacted hotel owners to discuss new business plans. Most recently, Furama Hotels & Resorts has revealed that it will manage one more resort with Furama brand in Ba Ria-Vung Tau province.
The market segment that the groups are most interested in are still 3-5-star hotels, which now account for 20 percent of the total hotel rooms which are believed to see high growth in the time to come.
According to the Hotel Department under the Vietnam National Administration of Tourism (VNAT), the number of accommodations for tourists has increased by four folds over the last 10 years. In 2000, there were 3200 accommodations with 72,000 rooms, while the figures rose to 12,500 and 230,000, respectively in 2010. Meanwhile, more and more accommodation projects are being implemented in the big tourism centers of the country.
“The market is still developing well which is really attractive to hotel management groups. The joining of more hotel management groups into the market will help improve the quality of Vietnamese accommodation system for tourists,” said Le Mai Khanh, Deputy Director of the Hotel Department.
Hotel investors get benefits
The presence of more foreign and domestic hotel management groups has made the market more bustling, while hotels’ owners have more choices.
Hotel management groups nowadays not only undertake the job of management, but also make capital contribution to develop hotel projects.
“We not only can manage hotels but can contribute capital to the projects,” said Kevin J Beauvais, CEO of Zinc Vision. The new comer in the market hopes he can develop three out of the 7 brands of the group in Vietnam.
Some hotel investors have noted that the appearance of more hotel management groups has made the management fee decrease.
KL, who is in charge of seeking foreign managers for her company’s 4-star hotel, which is now under the construction in Laos, said that it is now easier to negotiate and sign contracts with management groups. She has revealed that her company is going to sign a contract with a management company which accepts to pay a lot of types of expenses.
“The basic fees are okay. Previously, they always required very high fees, but now they accept lower fees. Of course foreign management groups do not offer the fees as low as that offered by domestic companies, and show less enthusiasm,” she said, adding that her company still has decided to choose a foreign group because it wants an experienced manager.