Critical success factors for hotel investments in Vietnam

The reform in Vietnam has gained encouragmg achievements. allowing Vietnam to advance to a new stage of development. making a new pa~e in industrialisation and modernisation. gradually integrating Vietnam in the international and regional economies. \Vith the lifting of the US trade embargo, the development of Vietnam towards a conducive environment for foreign investors will further accelerate. With the continuous flow of tourists and businessmen to Vietnam, the outlook for hotel development and refurbishment projects is very promising. This paper has been embarked upon with the objective to identify the Critical Success Factors for hotel investment. The shortage of good hotel accommodation in Vietnam is no big secret. The overwhelming shortage of international standard hotels in Vietnam is an ongoing issue in the local press, though there is actually no lack of mini-hotels in the country. ln response, the government has flung its door open to foreign hotel developers. More than $1.9 billion of the $9.5 billion invested in Vietnam since 1987 has been in the hotel and tourism sector. However, the Vietnamese government does not allow 100% foreign investment in hotels. The requirements have been quite stringent such that only big projects with minimum capital outlay of US$8 million and 150 rooms are approved by the SCCI. Hotel and tourism together make the one of the biggest sectors in Vietnam with investments amounting to $280 million in just the first six months of 1994. Ho\\ever. investment in the hotel trade in \'ietnam has its share of difficulties and obstacles such as infrastructure. leg:1l. environment. technology and capital. The licensing of a project is not a guarantee to success . Development of projects could be hindered by different problems. Because uncertainti~ abound. investors' confidence is shaken. Daily operation must be monitored. Identifying the Critical Success Factors for investments in hotels in Vietnam will allow potential investors to secure greater returns for their investments and also avoid the pitfalls.BUSINES