Executive summary

Hotel Survey 2019

Vietnam Upscale Lodging Industry
Introduction
“Grant Thornton Vietnam’s Hotel Survey 2019 presents financial,
operational and marketing information for the 2018 financial year from a
range of Vietnamese upscale hotels and resorts.”
Kenneth Atkinson
Founder & Senior Board Adviser
Grant Thornton Vietnam
For simplicity, “Hotel” ref ers to both hotels and
resorts, with our survey covering 4 and 5-Star
rated hotels. Statistics are presented by Star
Category (hotel rankings) and Hotel Region
(location).
Hotel regions are separated into the three main
areas of Vietnam; the North, the Centre and
Highlands and the South. In the North, the hotel
participants are located in the capital Hanoi,
Sapa and Quang Ninh City. In the Centre and
Highlands region, the hotels are located in
cities such as Danang, Hoi An, Hue, Nha
Trang, Quang Binh, Phan Thiet, Daklak and Da
Lat. Hotel participants f rom the South are
mainly located in Ho Chi Minh City, Phu Quoc,
Vung Tau and Mekong Delta.
This report is prepared to provide readers with
a general, as well as specif ic, view on hotel
operations in Vietnam by presenting data
covering dif ferent criteria f or analysis such as
hotel f acilities, staf fing, perf ormance KPI’s such
as average room rate, occupancy rate and
RevPAR, f inancial statements and market data.
For f inancial analysis, the data is shown up to
net prof it bef ore interest, tax, depreciation and
amortisation (“EBITDA”) f or the purpose of
relevant comparability. The unit of currency is
the United States Dollar.
As can be seen later in this report, most data is
presented in percentage terms or as averages.
For instance, with f inancial statements, Dollar
f igures are shown as a percentage of total
revenues. In the market data analysis and other
sections, statistics are in the f orm of averages
of the respective items.
For ease of comparison, the report presents the
survey results of each specif ic category
alongside key f indings. In the Appendices,
readers can also f ind tables showing the
minimum, maximum and mean values of
market data f or the f inancial year 2018. This
report, however, does not attempt to set
operating results f or the Vietnam hotel industry.
The f igures and ratios in this report should not
be considered as standards f or any type of
property.
The report users also need to note that not all
changes f rom one year’s results to another are
due to actual year-to-year dif f erences.
Sometimes, they may be a result of a dif f erent
mix of survey participants. Readers should note
that due to limits on analysing data based on
specif ic sample sizes, the results should be
regarded as indicative only.
Grant Thornton Vietnam - Hotel Survey 2019 2
Newborns Vietnam

Newborns Vietnam (NBV) is a United Kingdom

(UK) registered charity licensed to operate as a
non-governmental organisation (NGO) in
Vietnam dedicated to reducing neonatal
mortality in South East Asia, with a specif ic
f ocus on Vietnam.
Inf ant mortality in Vietnam has declined very
signif icantly, but newborn deaths in the f irst
month of lif e now account f or 70% of all inf ant
deaths. In Vietnam, the healthcare system and
standards of care f or preterm and sick babies Contact detail:
trail those of more developed markets resulting
in limited progress in reducing neonatal deaths. UK Address:
In f our years our work with Da Nang Hospital Newborns Vietnam,
f or Women and Children achieved a 50% 75 Maygrove Road,
reduction in deaths in the f irst month of lif e London NW6 2EG
T: 01392 770108
This year, Newborns signed a f ive year
agreement with the Ministry of Health, Hanoi
Vietnam Address:
Department of Health to develop the capacity of
Newborns Vietnam Project Of f ices
public hospitals in Hanoi and the northern
C/o 402 Le Van Hien, Khue My Ward,
provinces to improve the survival of newborn
Ngu Hanh Son District, Da Nang,
inf ants and their long-term health outcomes.
Vietnam
Central to this is the continuation of our UK
specialist post graduate training f or doctors and
Vietnam National Children’s Hospital
nurses, and the development of a managed
18/879 La Thanh Road, Dong Da
network system, a saf e transport system and
District, Hanoi, Vietnam
the establishment of a Vietnam National
Resuscitation Council.
E inf o@newbornsvietnam.org
Our vision is a world where there are no T +84 90 506 2500
preventable deaths of newborn inf ants, where
every birth is celebrated, and mothers and www.newbornsvietnam.org -
babies survive and realise their f ull potential. www.cycle-a-difference.com
We are determined to do more to stop babies
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Grant Thornton Vietnam - Hotel Survey 2019 3

Key Trends

Average room rate (USD) by Star Ranking Average Occupancy Rate and RevPAR
by Star Ranking

100 80.0%
120 107.6 112.0 83.4
79.1
100 91.8 93.3 80 71.8 75.0%
75.2 73.4
80 54.0 52.0
60 50.2 70.0%

USD
USD

60
40 65.0%
40
20 60.0%
20

0 0 55.0%
4-Star 5-Star Overall 2016 2017 2018
RevPAR 4-Star RevPAR 5-Star
2017 2018 Occupancy Rate 4-Star Occupancy Rate 5-Star

in average 0.1% in occupancy rate

1.6% room rates
1.5% in RevPAR

Expenses and Profit as Percentage of Revenue 2018 International Guests vs. Domestic Guests

100%
G
90% O
35.7% 34.8% P Other
80% 3
7.3%
7 Oceania
70% GOP
% of total sales

37.7%
GOP . 6.2%
37.2% 2
60% 28.0% %
26.6% North Vietnam
50%
2.1% America 17.5%
40% 1.9%
7.7%
30% 35.8% 35.2%
20%
10% Asia
Europe (excluding
0% 20.4%
2017 2018 Vietnam)
41.0%

EBITDA
Other income and expenses
Undistributed Expenses
Departmental Expenses

37.2% GOP of revenue for upscale Asia is still the primary source of
hotels in 2018
guests, with the dominant of Korean
0.5% compared to 2017 and Chinese guests

Grant Thornton Vietnam - Hotel Survey 2019 4

Executive Summary

Room Rates by Selected Category Occupancy rate of 5-Star slightly increased by

0.5% while 4-Star’s dropped by 1.0%. From the
Average Room Rate by Star Ranking regional view, while the Northern and Central
(2016- 2018) region observed a drop in occupancy rate of
2.6% and 1.4% respectively, the Southern
2018
112.0 region’s occupancy rate, in contrast, continued to
73.4 increase even though at a lower rate of 1.7%.
107.6
2017
75.2
103.2 RevPAR by Selected Category
2016
74.6
0 50 USD 100 150 Movement in hotel room RevPAR by Star
Ranking (2017 – 2018)
5-Star 4-Star

90 83.4
In 2018, average room rate saw an increase of 79.1
80
1.6%, f rom USD91.8 in 2017 to USD93.3.
70
While 5-Star ranking continued to see their room 54.0
60 52.0
rates increased 4.1%, 4-Star’s room rates
50
USD

dropped by 2.3%.
40
30
By region, both Northern and Southern regions
20
saw an improvement in room rates, though at a
10
slower growth than last year, with the Southern
0
region achieving the highest growth of 2.7% and 2017 2018
Northern at 1.7%. Central region, in contrast,
4-Star RevPAR 5-Star RevPAR
observed a marginal drop of 1.0%.

Occupancy rates by Selected Category RevPAR of 5-Star increased more signif icantly
as the result of the rise in average room rate. 4-
Average hotel room occupancy rate by Star Star’s RevPAR, in contrast, showed a decrease
Ranking (2016 – 2018) of 3.6% compared to the previous year.

2018 75.6% Southern region, this year, achieved the highest

71.2%
growth of 5.5%, mostly thanks to the rise in
75.2% average room rate. Northern region dropped
2017 72.2% slightly, f rom USD77.7 in 2017 to USD77.3 in
2018. Central region came last with a f all of
2016 69.2%
67.4% 2.7%.

60% 65% 70% 75% 80%

Overall, KPIs of revenue
5-Star Occupancy Rate 4-Star Occupancy rate generation slightly improved
f rom last year.

Grant Thornton Vietnam - Hotel Survey 2019 5

Executive Summary

Revenue and Expenses

Annual revenue breakdown (2017 - 2018)

Room F&B Other Miscellaneous

Sales Sales Operating Income
Sales

2017
61.5% 31.7% 5.6% 1.1%

2018
59.3% 31.7% 6.1% 2.9%

Similar to the previous year, room sales continued to account f or the highest portion of total revenue
at 59.3% and showed a slight drop of 2.3% f rom 2017 to 2018. While F&B Sales showed roughly no
change between the two years, Other Sales started to increase in proportion of Total sales, showing
the shif t in customers’ demand to other services rather than just only room service.

Departmental Expenses and Gross Profit as Percentage of Departmental Revenue (2018)

100% Year 2018 continued to show minor change

% of departmental revenue

90% in the cost structure compared to the

80% 33.2% 37.1%
previous year. While gross prof it margin of
70%
9.7% room and other operating department did
60% 78.2%
13.6% not show any major changes, F&B
50%
40% 31.7% department’s dropped, mostly due to an
21.3%
30% increase in payroll expenses.
20%
12.1% 25.4% 28.0%
10%
9.7%
0%
Room F&B Other
Operating %Payroll expenses/Total
Department sales increased f rom 23.7%
Payroll expenses to 25.2%
Cost of sales
Other expenses
Gross departmental profit

Grant Thornton Vietnam - Hotel Survey 2019 6

 Executive Summary
Undistributed Operating Expenses GOP and EBITDA as Percentage of Revenue
Breakdown (2017 – 2018) (2018)
100%
100%
80% 36.2% 39.9%
80% 34.8%
60% 60%
20.3% 18.6% 100.0% 28.0%
40% 1.4% 0.3% 2.0%
40% 1.2%
7.5% 7.1%
10.7% 11.0% 20% 37.2% 35.2%
20% 2.9% 2.6% 0%

Fixed Charges
Financial expenses
22.3%

Non - operating Income

Departmental Expenses

FF&E Reserves
Revenue
20.8%

EBITDA
GOP
Undistributed Operating
0%
2017 2018

Expenses
Administrative and General
Information and Telecommunication Systems
Sales and Marketing
Property Operation and Maintenance
Utilities
Payroll Expenses

The three biggest components of undistributed

expenses (Payroll, administrative and general
expenses and Utilities) together accounted f or
78.9% in 2017 and 79.3% in 2018. Payroll
expenses saw the greatest increase in proportion
of c.4%. This trend was in line with the increase
in average expenses per employee.
Expenses and Profit as Percentage of
Revenue (2017 – 2018)
100%
35.8%
80%
% of Revenue
GOP and EBITDA of the upscale hotel sector in
2018 showed a slight drop, of 0.5% and 0.6%
respectively. This was mainly caused by higher
undistributed expenses, which rose by 1.4% in
2018.
By Star rankings, while 4-Star continued to show
an increase in GOP of 1.1% to 37.8%, 5-Star, in
contrast, dropped by 1.8% to 36.9%. Changes f or
both Star rankings were because of higher
undistributed expenses. However, 4-Star
reduced Departmental expenses which led to a
small increase in GOP.
35.2%
1.9%

1.8%
60% 1.2% 1.2%

26.6% 28.0%
Prof itability expressed in terms of
40%
GOP and EBITDA drop slightly.
By Star ranking, 4-Star’s GOP
20% 35.7% 34.8% slightly increased while 5-Star’s
0%
dropped.
2017 2018

Departmental Expenses
Undistributed Operating Expenses
FF&E Reserves
Non - operating Income
Financial expenses
Fixed Charges
EBITDA

Grant Thornton Vietnam - Hotel Survey 2019 7

Executive Summary
Employees by Selected Category

Average Revenue and Average payroll expenses per employee (2017 - 2018)

35,000 Both average revenue and payroll

28,702 29,648
30,000 expenses per employee continued to
25,000
increase in 2018, but payroll expense
per employee saw a higher growth, at
20,000 6.4% compared to 5.7% growth in 2017,
USD

15,000 while revenue per employee only grew

10,000
at 3.3% compared to 6.7% in 2017.
6,605 7,029
5,000
-
2017 2018
Payroll expense per employee
Average Revenue per employee
saw a higher growth.
Average payroll expenses per employee The proportion of Domestic guest
started shrinking again and it
continued in 2018.

Source of Guests by Selected Category

Source of guests (2016 - 2018)

Af ter an increase of Domestic guests staying at upscale hotels f or 3 years f rom 2014 – 2016, the proportion
of Domestic guest started shrinking again and it continued in 2018.

By star ranking, 4-Star hotels observed a higher contribution in International arrivals of 4.9% while 5-Star’s
remained roughly the same as last year.

2018 2017 2016

17.5% 19.2% 20.8%

82.5% 80.8% 79.2%

International guests Domestic guests

Grant Thornton Vietnam - Hotel Survey 2019 8

 Executive Summary

Purpose of Stay by Selected Category Channel of Reservation by Selected

Category
Purpose of Stay (2018)
Channels of Reservation (2018)

Other
guests 7.3%
17.3%
18.2%
FiT/
Leisure 16.4%
traveller
37.1%
Tour
groups
23.5%
23.4%
Corporate
& MICE 27.6%
Business
Travellers
6.8% 7.1%
15.3%

Direct booking with hotel

Online Travel Agencies (OTA)
Wholesalers/ GDS
Tour operator/ Travel Agency
Purpose of Stay by Star rankings (2018)
Corporate
Sales via other channels

5-Star 40.2% 6.6%16.2% 18.3% 18.7% Reservations through Travel agencies and Tour
operators (TA/TO), though they continued to be
the biggest channel, f ell a sharp 5.1% in 2018 (4-
4-Star 34.2% 7.1%14.5% 28.3% 15.9% Star had a heavy f all of 7.1% while 5-Star f ell by
2.8%) and were replaced by the increase in
0% 20% 40% 60% 80% 100% Online Travel Agencies (OTA’s) and other
FiT/ Leisure traveller channels.
MICE
Corporate, Business Travellers By Star rankings, the highest change in
Tour groups
Other guests reservation channels was 2.3% in wholesalers/
GDS f or 5-Star and 2.8% in OTA’s f or 4-Stars.
FIT/leisure travelers, tour groups and The corporate channel’s portion slightly increased
corporate/business travelers continued to be the f rom 16.1% in 2017 to 16.4% in 2018, mostly
three biggest components, together accounting contributed by the rise in this channel of 4-Star
f or 78% in 2017 and 76% in 2018 of total guests. hotels.

MICE (Meetings, Incentives, Conf erence and

Third consecutive year that MICE
Exhibits) decreased f rom 7.6% last year to 6.8%
section dropped.
this year. This is the third consecutive year that
Increase in Online Travel Agencies
this section dropped, indicating either lack of
(OTA’s) booking channel.
ef f orts or inef ficiency in the country’s attempt to
attract MICE tourists.

Grant Thornton Vietnam - Hotel Survey 2019 9

Executive Summary
Application of Digital Technologies
Data mining and analysis
95.5%
77.8%
Online checkin/ checkout
49.2%
28.6%
5 -Star
4-Star
Technology is no longer a stranger to Vietnamese
hotels, as internet access and smart devices
become more widespread. Managing their digital
image is now a crucial part of hotels’ operation.
Overall, 5-Star hotels are shown to be embracing
more digital advances than 4-Star did in all 4
questions asked.
Digital marketing via social channels such as
Facebook, Twitter and the like continues to be the
priority, which results f rom the increase in guests’
usage of numerous social networks.
Guests Personalization Mobile application
54.5%
34.6%
Digital marketing (via social media such
as Facebook, Instagram, Twitter..)
100.0%
96.3%
Nearly 100% of participants shared that they used
this ef f ective channel to gain more awareness
f rom social network users.
Online check in/check out and guest
personalisation via mobile application, however,
received less attention, with less than 50% of
hotels using them.
Analysis using data obtained f rom operation is
widely used by both Star rankings to assist their
marketing strategies and decision making process.
Overall, 5-Star hotels
embraced more digital
advances than 4-Star did in all
4 questions asked.
Grant Thornton Vietnam - Hotel Survey 2019 10
Further Information
Grant Thornton provides a wide range of services to the Hospitality sector, including:

• Audit and Assurance • Feasibility studies

• Tax advice • Valuations
• Transaction advice (buying and selling • Internal audits and control reviews
properties) • Business Process Solutions
• Diagnostic and perf ormance reviews

Nguyen Chi Trung
CEO & Managing Partner
T +84 24 3850 1686
E chitrung.nguyen@vn.gt.com
Nguy Quoc Tuan
Managing Partner of
Ho Chi Minh Office
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Nguyen Thi Vinh Ha
National Head of
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Audit and Assurance Services
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Grant Thornton Vietnam - Hotel Survey 2019 11