Along with the Government’s tourism development strategy, the number of foreign tourists visiting Vietnam is increasing to 18.1 million international visitors ,spurring Vietnam’s tourism industry to boom, leading to the development of tourism infrastructure and especially resort hotels. A series of famous names in the international hotel industry are present in Vietnam, such as Marriott International, InterContinental Hotels Group or Hilton Hotels & Resorts. This article will provide general conditions for foreign investors to do business in hotel services in Vietnam.
1. Market access conditions
According to WTO commitments, Vietnam does not limit the capital contribution of foreign investors when providing hotel and restaurant services, including hotel accommodation (CPC 64110). This is similarly committed in the Free Trade Agreement between the European Union and Vietnam (EVFTA).
With this commitment of Vietnam, investors can:
- Establish an enterprise with 100% foreign capital; or
- Acquire a 100% capital contribution/share in Vietnamese enterprises.
2. Scope of operation and regulations of Law On Enterprises 2020
According to tourism laws, a tourist accommodation establishment means an establishment that provides accommodation services for tourists.
2.1 Hotel is a type of tourist accommodation establishment
It is classified as follows:
- Resort hotels: Built-in blocks or into a complex of villas, low-rise buildings, and apartments, in areaswith beautiful natural landscapes;
- Roadside hotels: Hotels near roads with parking lots to serve accommodation needs of guests using road transport (motorcycles, cars) traveling or resting between long distances;
- Floating Hotels: The hotel is anchored on water and can be moved when necessary;
- City hotels: Built in urban areas to serve tourists.
2.2 Business in accommodation services (hotels) is regulated as a conditional business sector
According to which:
- Having business registration as prescribed by Law;
- Meeting the conditions for security, order, and safety in terms of fire prevention, environmental protection, and food safety as prescribed by Law;
- Meeting the minimum requirements for technical facilities and services to serve tourists, including:
- Having at least 10 bedrooms a reception desk, and a shared restroom;
- Having a parking space for guests at resort hotels and roadside hotels;
- Having a kitchen, dining room, and catering services for resort hotels, floating hotels, and roadside hotels;
- Having beds, mattresses, blankets, pillows, face towels, bath towels; changing mattress covers, blanket covers, pillow covers, face towels, bath towels when there are new guests.
- Having staff on duty 24 hours a day.
2.3 Hotels are voluntarily registered to rank
According to the following national standards:
- The 1-star, 2-star, and 3-star hotels are appraised and recognized by the specialized tourism agency of the province;
- The 4-star and 5-star hotels are appraised and recognized by the Vietnam National Administration of Tourism.
3. Steps to set up a company
Operating in the field of hotel service business in Vietnam is usually done through the following options:
- Option 1: Acquisitions shares and capital contributions from available hotels and projects.
- Option 2: Receiving existing hotels for management and business (hotel management service).
- Option 3: Establishing a new project/company.
In fact, foreign investors often choose “Option 1” to own hotels, because of restrictions on renting and using land for foreign investors, investors may face many difficulties in the process of obtaining permits for projects in “Option 3”. Additionally, “Option 2” is often used by major hotel management service providers in the world when entering the high-end hotel market in Vietnam to expand its network without having to spend a lot of money on property ownership, and land and avoid complicated licensing procedures.
4. Points to note
- Publicly post the selling prices of goods and services and the rules of tourist accommodation establishments.
- Notify in writing the specialized tourism agency of the province where the tourist accommodation establishment is located when there is a change in the establishment’s name, size, address, or legal representative.
- Only use the word “star” or star image to advertise the tourist accommodation establishment class after it has been recognized by the competent state agency.
- Implement reporting, statistical and accounting regimes in accordance with laws.
