With more than three decades of experience leading hotels within the Asia-Pacific region, John Gardner, Former General Director of the Caravelle Hotel and CEO of Archipelago Indochina and Optimum Hospitality, gives us his insights into upcoming advancements and challenges in Vietnam’s Hospitality industry.
My career in Vietnam’s hospitality industry began nearly 20 years ago, when I was headhunted for the role of General Manager of the iconic Caravelle Hotel in Ho Chi Minh City, after leading many major hotels throughout Asia and Oceania. In 2016, I became the General Director of Chains Caravelle Hotel, a Joint Venture company, which oversaw the complete renovation of the historic property. In 2021, I started my own hotel asset management and consulting company, Optimum Hospitality, and finally, in late 2022, I set up a JV hotel management company called Archipelago Indochina.
During my time in Vietnam, I’ve witnessed massive changes in the hospitality industry. When I arrived, there were just a handful of international hotels throughout the country. Now, there are more than 64 regional and international hotel brands, 781 hotels, approximately 780 thousand travel accommodation rooms, and 123 more hotel projects in the development pipeline in the foreseeable future. I think it is safe to say that Vietnam has a robust and exciting tourism industry ahead.
For many years, we’ve looked at other countries in the region that have been able to rapidly grow their tourism industry, while Vietnam has lagged, largely due to the antiquated visa system. However, the good news is on the horizon. The government recently announced that it would be relaxing its overly restrictive visa regulations. This will be a game changer for our industry and provide the impetus for a significant financial capital injection from within Vietnam and elsewhere. Overseas tourists and business travelers will look at Vietnam in a more positive light as a holiday destination, which will significantly boost international travel to the country.
Now is an opportune time for the government to improve the arrival experience at international gateway airports. Doubling the number of on-duty “friendly” immigration officers and upgrading their hardware would be a good start. But implementing the latest automated immigration technology, using Singapore’s Changi Airport as an example, would be a massive step forward that would elevate the entire travel experience.
Unfortunately, not all destinations have been developed tastefully in terms of style and sustainability. Many developments are not in sync with the environment in Vietnam. After all, do we really need a new Venice or Paris clone in a Southeast Asian country? In many locations in Vietnam, local governments do little to alleviate a major litter problem, garbage often lies around in large piles on roadsides, seriously turning off international tourists and giving a very negative image of Vietnam as a country and a place to holiday. I was very pleasantly surprised when I recently returned to Hue for a short weekend trip, having not been there for many years. The city center and surrounds, including the Perfume River running through the city, were all so clean and garbage free. Developments along the riverbanks were well planned with walkways, museums, cafés, and large open spaces for people to gather. It was very impressive indeed!
Despite current real estate woes, which will temporarily hinder progress, I’m confident these setbacks will be overcome within the next 12 months or so, due to opportunities for new capital from domestic and international players, who are keen to take over projects currently in financial distress.
Even with the potential looming recession and some industry sectors suffering, the overall Vietnamese economy is doing better than most countries in the ASEAN block, and this, together with the upcoming relaxation of visa regulations and the availability of new hotel products, is attracting existing global hotel operators and developers. From Sapa in the north of the country to Phu Quoc in the south, these operators are rapidly expanding their footprint in the country, while new hotel operators see Vietnam as a destination with huge potential.
One such company is Archipelago International, an Indonesian-based hotel management company, that currently operates in several ASEAN countries plus Cuba and the Middle East. With nearly 200 properties in their portfolio under management, Vietnam was the obvious next target country to enter for continued to grow
Although there are significant challenges to entering a new market where none of the 10 brands are known, there are also significant advantages for owners and developers. One of which is the fact that the CEO and senior management (the key decision makers) are based in Saigon, and just a phone call away. In addition, the brand standards are more flexible than the larger operators and the management fee structure is simpler and more transparent. This greatly appeals to developers who want to build strong relationships with the people managing their properties.
Although Covid-19 hit the hospitality industry very hard-with the industry virtually closed for almost two years and the subsequent difficulties of recruiting staff-the tourism industry in Vietnam is still strong. One positive outcome is the rapid growth of domestic tourism. Citizens were forced to holiday in their own country with no overseas travel, and they enjoyed it. Domestic hotel travel grew to be the fourth-largest source of income in the sector up until just before Covid. I am confident this will continue to go from strength to strength in the future, especially as new hotels and resorts open up, and new destinations and experiences entice people to travel. [C]
Archipelago has over 25 years of experience managing hotels in the region. We also offer an e-commerce solution for independent hotels interested in managing their own properties and consulting with the hospitality industry. Contact John Gardner – john.g@archi.email or Alice Dang – alice.m@archi. email for further information on our services.
