Vietnam has been becoming a potential market for developing resorts in recent years in Asia. The advantage of over 2000 kilometers long beach together with a diverse culture and political stability and security, sea travel has always been the strength of Vietnamese tourism. The increase of foreign tourists to Vietnam together with the high demand of recreational resorts from domestic market have encouraged the development of many types of sea business, especially the birth of many coastal beach resorts in some of cities and places like: Phan Thiet city, Hoi An city, Ha Long Bay, Phu Quoc Island, Nha Trang city, etc.
Therefore, for a company doing business in hotels and resorts like XXX, Vietnam should be a big, new and potential market in Asia for investing. However, there are also so many factors that need to be concerned about by XXX when investing in Vietnamese market like: culture, social, government policies, competitors, etc. A successful in managing and dealing with these factors will help XXX achieve the goal and success in investing a potential market of resorts like Vietnam. As one of consultants of XXX Company, I would like to make some researches on market of Vietnamese resorts, and also point out some factors which can be considered as consultancies of how XXX should manage its international market.
Current Stage of Vietnamese resorts
In 1997, the first resort named Coco Beach resort was built and went in operation in Mui Ne beach of Binh Thuan city. It was invested by a couple from Europe. Since then, it has opened a movement of developing resort business in Vietnam. According to a research and statistics to March of 2010, Vietnam has registered 98 resorts operated with 8150 rooms, including 60 resorts which have been classified with: 6 resorts of five-star, 27 of four star, 20 of three-star, 3 of two-star, and 4 of one-star. Most of them generate in Mui Ne beach of Binh Thuan city with 68 resorts currently in operation.
And now dozens of other projects of resort business have been implemented. Many famous brands such as: Raffles, Four Seasons and Banyan Tree are all planned to open the resorts in Da Nang city. Singapore's Banyan Tree Company is planning to build a large entertainment center with 7 continuous resorts in an area of 300 hectares with investment of 270 million dollars in just north of Da Nang. This project will be called Laguna Vietnam, a hint to remind Laguna Resort Phuket in Thailand.
Besides that, there are also some of famous resorts in Vietnam like: Furama, Vinpearl Land, Evason Hideaway, Victoria, Coco Beach, Terracotta, Sea Horse, Palmira, Pandanus, etc. Each of them has own characteristics, strengths and weaknesses of resort design, services, the way of marketing, etc. But they also have a common point of diversity entertainments and services.
Current advantages and disadvantages of some resorts in Vietnam
For the forms of business organization, most of resorts were built mainly in the form of joint ventures or foreign companies with 100% foreign capital investment. Thus, professional corporations in resort business have brought the experiences in running and managing resort business in order to create conditions for improving the quality of the resort operation.
For the technical facilities, the resorts often were built close to the seas or other places with strong tourism resources. Therefore, the design of the resorts always close to nature environment and the average square is usually from 1 hectare to 40 hectares and even could be expanded to 300ha. Each of resort often has extensive natural space, while the construction area usually takes a small proportion.
The management organization of resort in Vietnam is usually applied by standards of foreign corporations. In fact, some resorts have adopted the division of environmental management work.
Most of resorts in Vietnam are quite high standard (level of 3 to 4 star), so the quality of labor will be concerned. Most of employees should be selected carefully based on high standard of working skill. This factor could help the company remain and develop a good service and good business performance.
The resorts are located near the natural resources for tourism like seas and mountains. Therefore, they are often far from the city center and this also causes the limited access to clean water sources as well as the ability to provide quality foods. The transportation costs of food and drinks are also very high.
The capacity operation of some resorts is not high, because it is influenced by the seasonal nature of business. Not like the South of Vietnam where generated most of famous resorts and with hot weather all time, the North of Vietnam has four seasons, so some resorts from this part just can attract a big number of travelers in summer or some special occasions.
The people live in the area far from center often express the weaknesses in working skills and experiences and they may not be educated properly. In some resorts, the percentage of local employees is high, so there is a difficulty in training as well as improving their foreign language.
There is a tendency from most of resorts is that, they do not concern enough about investing and implementing environmental protection such as wastewater treatment systems, waste treatment systems. Therefore, the pollution in some of sea areas is increasing more and more.
Because of a long distance from center of the city, so it's will be difficult for a new resort in transporting building materials and choosing professional builders. This will affect the quality and professionalism in facilities of the resorts, especially the ones of private ownership
Gross Domestic Product (GDP)
VIETNAM_GDP in current US Dollars
Vietnam now become one of the fastest developing country in the world, with the averaging around 8% annual Gross Domestic Product (GDP) growth from 1990 to 1997 and 6.5% from 1998-2003. From 2004 to 2008, it grew over 8% annually with 90.7 billion USD at the end of 2008. In 2009, although be influenced by economic crisis, Vietnam also remained the GDP growing with 6.2%, it was the highest rate compare with countries in Southeast Asia like Thailand, Malaysia, Laos, etc.
In 2009, Vietnamese tourism has developed strongly and its revenue accounted for a significant portion with 13.1% of total income of Vietnam. This also contributed to increase the Vietnamese GDP in 2009.
Through the research above, we can see that Vietnam is really a new and potential market for developing resort business. So it will be a good destination for investing abroad of XXX Company. Besides developing plans to go international market, XXX Company should be aware of some factors that could influence strongly to its plans such as: factor of culture, social factor, government policies, etc. Understanding these factors also help the company go on the right track in order to come out the best strategy for investing abroad.
Vietnam is always known as a country with a long history and lots of manners of customs. There are more and more people coming to Viet Nam for travelling and doing business. So, understanding the Vietnamese business culture and Vietnamese people is an important factor for any foreign organization which is planning to invest in Vietnam market.
Vietnamese business culture may be a barrier for the companies like: different language, different behaviors and thinking, the way of doing business, etc. So, before entering Vietnamese market XXX Company should make a research on the culture of Vietnam in order to find out Vietnamese people's desires and their behavior. A resort with services close to Vietnamese culture can create the intimacy to the local people. The relationship will be built, this the factor can help XXX remain the loyalty and profits as well as attract more local customers.
The rules and frameworks are created by governments, and they will be changed from time to time. All kind of businesses are forced to follow these rules and policies. Sometimes, it affects to the company operation or makes the company change the way they operate.
Economic policies which including taxation policy, interest rates, spending policy will also influence the business performance, business costs. Therefore, when XXX Company would like to invest abroad, it needs concern about the government policies as well as economic policies. Because, when there are some changes from these, it will lead to some different things that may affect positive or negative to the business performance.
XXX Company should understand that, success is not just financially but also socially and environmentally. Sustainable development as a socially responsible business is a core value that needs to be achieved by the organization.
XXX should create an enchantingly memorable experience for the guests and customers through the services and products. Providing its associates with fair and dignified employment which enhances each associate's ability in the long term to contribute to the company's growth as well as elevate their job prospects with XXX Company. Enabling long term societal prosperity for the communities in which the company operates. Besides that, the company also should exercise caution with respect to the environmental impacts of its operations, and taking an active role in the protection and remediation of its global ecosystem. Conducting business with suppliers and vendors in a dignified, fair and transparent manner, while working in partnership to enhance societal benefits and reduce environmental impacts.
Identify who will be the company's competitor when is enters global market is very important. A good research on competitors will help the company understand what their strengths, weaknesses and their competitive advantages are, in order to develop the best business strategy for the company.
There are so many resorts that entered Vietnamese market before XXX Company. So they should have the certain competitive advantages like get used to the Vietnamese culture, more experiences, and they also have their existing customers.
To be success in taking the advantages over the competitors, it also will take time for XXX Company. The Company should analyze its strengths, weaknesses, threat and opportunities. Besides that, making a comparison with its competitors, this will help the company have an overview of the standard in Vietnamese resort market. From this analyze, XXX Company can develop strategies and plans to remain and develop the services that may attract the customers.
XXX Company is running a business in spas, hotels and resorts. A Strategic marketing will help the company to deliver its image to public, and also increase the competitive advantages over its competitor, especially the local companies.
To cross-promote the company's spas, hotels, and resorts to a wider, global audience, The XXX Company should identify and form relationships with strategic marketing partner during the year. Among pre-and post-opening sales, and marketing activities should be introductory offers for in-house guests at the hotels or resorts, e-direct mailer campaigns targeting the local database, commissionable rates through tour operators, special rates for nearby businesses, and direct tie-ups with the hotels to create visibility.
Given the fierce competition in most location, revenue, growth should be highly dependent on increasing capture rate from in-house guests, regulars and members. In order to differentiate the company itself from the competition, XXX should emphasized its service consistency.
Attractive discounts and promotion in some special occasions will help to maintain and secure the business prior. At the same time, XXX should develop a department which is in charge of creating rewards programmes to attract customers and build loyalty.
Strategic Market Development
It's always a big challenge for a company to enter a new international market. Besides a lot of factors that need to be concerned like: culture, government policies, competitors, social responsible, the company also should develop a clearly strategic development for the beginning as well as for the further future of the business.
When entering the Vietnamese market, based on the requirements, taste, behavior of customers, and culture, XXX Company should create clearly vision and mission that could cover and show its development tendency and the company's goal. A vision should be presented as a picture of the business in next few years. A mission will indicate the purpose and activities of the company's business. These should meet the expectation of Vietnamese customers.
A good strategic development will help XXX company catch up with its local competitors. Based on these strategies, the company should build the customer database, target the potential customers in the market area, communicate with the customers in a cost-effective manner, and enhance the brand by differentiating XXX Company from its competitors.
On the others hand, XXX Company also should improve the operation system as well as services perfectly in order to fulfill the various requirements from customers.
All of these factors should help the XXX to go on the right track with its strategic plans. A successful business of a new market will come when XXX Company can achieve its goal.
Through the discussion above, as one of the consultants of XXX Company, I strongly believe, Vietnam will be a new potential market for investing and developing resorts despite of there are also some of challenges from the culture, competitors, government policies, etc. A successful investment in Vietnam market should be an objective of the company in delivering its image to global. The demand from local people and also from foreign travelers in Vietnam market is very high, so XXX Company should be one of the suppliers for this potential market.
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