Vietnam’s New Position in Affordable Hospitality

accommodation - Vietnam: Sept. 19, 2016

Vietnam really is an astonishing country, its people are resilient, cheerful and welcoming. When you consider that they have spent a millennium defending themselves from various incursions, it is remarkable that they are so accepting of foreigners. The giant neighbour is something of an elephant in the room, but that apart, they welcome strangers here more so than most countries. They remain industrious, peace-loving and one of the most driven people we have met. They are also quick to forgive and forget as the many American’s living happily here will bear testimony.

Growth and More Growth

A 2006 study by Agence France-Presse, the third largest news agency in the world, placed them as the happiest race on the planet. By 2016 they have become even more satisfied as the country enjoys a growth of GDP in excess of 6.5%. Their excellent work ethic coupled with good planning has them performing better than any of their Southeast Asian neighbours, who are achieving about 4.4% growth. The future looks good as well, with the World Bank, last year, saying that these factors have meant a developing confidence which will hold them in good stead for the mid term.

Photo by: Bear Beer Photography

Country Director for Vietnam for the Global Bank recently said, “This is a good time to solidify macroeconomic stability and rebuild policy buffers, including through decisive efforts to rein in fiscal imbalances and tackle remaining vulnerabilities in the banking sector.” The amount of foreign direct investment (FDI) has also been improved by a raft of recent trade deals, adding further to the improvement of Vietnam’s standing among ASEAN countries. Turnover in total exports was up 9.2% over this period due mainly to a large increase in mobile phones, electronic equipment and computers.

TPP and Lifted Bans

Further good news comes in the form of the Trans Pacific Trade Agreement: analysts are stating that Vietnam will be the biggest beneficiary of the 13 nations involved. The signatories of the TPP account for 40% of global GDP and Vietnam could see theirs increase by as much as 8%. At the same time it is expected to add 17% to real exports and 12% to its capital stock. The ASEAN group is looking healthy from Vietnam’s point of view as the association is now the country’s third largest export market following USA and Europe.

Photo by: UN ISDR

There have been significant changes in foreign ownership and share trading recently. This will stimulate growth and investment, and reduce sectors where foreign investment was banned from 51 to only 6. This, in addition to the abolition of the 49% cap on foreign ownership of shares on the stock exchange, will now allow foreign investors to fully acquire listed companies, excluding, of course, the banking sector.

A New Class of Travellers

Vietnam’s affordable hospitality sector is set to take off with news that low cost carrier, Vietjet has just added two new routes. They now have connected Ho Chi Minh City with the Malaysian capital Kuala Lumpur and Tainan City in Taiwan. More routes are planned as well.

Photo by: DAIHYUN JI

Millennials are being seen as a new class of traveller. The Vietnamese are prudent by nature, meaning that the cheaper hotel accommodation sector is likely to find a new home in the country. The new brand of cheap hotels offer good Wi-Fi connectivity, meaning that young business people are taking advantage of a good deal as well as the more expected backpacker crowd. The Malaysian experience bears this out with the mid-priced hotel brand “Vivid”, set to open in Georgetown by 2018. Penang is predicted to enjoy something of a renaissance in the M.I.C.E. business with the addition of two new convention centres.

Photo by: Ronald Tagra

Malaysia’s MM2H visa is valid initially for a period of ten years, depending on the validity of the applicant’s passport, and is also renewable. Penang is now seen as an exciting potential growth area for Vanguard Hotels. Together with other on-going projects in Kuala Lumpur, this adds up to US$40 million worth of investment in Malaysia for the Vanguard Group. The Pacific Asia Travel Association (PATA) recently released a new consumer research report which they called “Stepping Out of the Crowd: Where the Next Generation of Young Asian Travellers is Heading, and How to Win a Place on Their Travel Itinerary”. This examines travel trends of young Asians and explains how secondary destinations and further attractions will benefit from the rise in outbound travel from Asia.

It looks highly likely that the $60-80 hotels will be seen as sensible choices for travellers in Asia. Vietnam looks to be a prominent player in the new market of affordable hospitality in Asia.