Surging Expenses Burden Hotel Sector with Financial Strain

The Battle for Efficiency in Vietnam's Hotel Industry

Surging Expenses Burden Hotel Sector with Financial Strain

Hey there! Let's dive into the vibrant world of Vietnam's hotel industry, where the fight for efficiency is no laughing matter. With a surge in international tourists, the hospitality sector is on the rise, but it's not all sunshine and rainbows. Behind the scenes, there's a constant struggle with cost management.

Đõ Hòng Xoan, Vice President of our Tourism Association and the President of our Hotel Association, paints a vivid picture of the challenges. Hotels and resorts across the country grapple with soaring costs of raw materials, equipment, food, and an unstable labor market, all while customer expectations soar. Balancing cost reductions, service quality improvement, human resource management, income distribution, and revenue gains is like juggling flaming swords.

Trần Huy Đức from the National Economics University sheds some light on the importance of strategic financial management. Hotels often have fragmented operating costs and poor tracking, leading to inefficiencies. To tackle this, operators must understand their expenditures, segment them wisely, and recognize that high-revenue areas often come with high expenses. Despite this, cost control shouldn't mean reckless cuts. Instead, focus on analyzing, classifying, and optimizing costs through comparisons with projections, negotiations with suppliers, energy efficiency measures, waste minimization, and automation technologies.

Marketing and labor, typically accounting for 30-40% of total costs, need special attention. Rather than slashing staff, operators should enhance productivity and devise effective incentive schemes. Lê Minh Thái, a representative of the Pullman Hai Phong Hotel, echoes these views, stressing the need for digital transformation, efficient use of technology, and sustainable business models.

Hotels seen in the central province of Ninh Thuận. - VNA/VNS Photo

However, cost optimization must be done carefully to avoid compromising service quality. It's not about being ruthless, but rather optimizing resources to ensure the hotel operates efficiently, competes sustainably, and maintains long-term profitability.

Starting at the Design Stage

Cost optimization isn't an afterthought; it must begin at the project development stage for new hotels. Lê Bá Hải Sieư, an expert in the 4-star hotel sector, warns against hasty decision-making during this critical phase. Poor planning can lead to inflated fixed costs, design flaws, and expensive corrections later, severely impacting long-term profitability.

To avoid these pitfalls, Sieư advocates for a structured approach with well-defined responsibilities for each department and individual. Goals should be set based on industry benchmarks and the hotel's specific circumstances, with regular reviews to identify and eliminate inefficiencies.

A hotel in HCM City. VNA/VNS Photo

Embedding cost-consciousness within the company culture is crucial. This means making it part of every employee's daily routine, supporting it with a transparent system of rewards, accountability, and open communication.

Beyond cost-cutting, innovation and strategic thinking are the keys to sustainable hotel development. Successful hotels distinguish themselves through creativity, adaptability, and a commitment to continuous improvement. Staying responsive to market changes and embracing technology are essential for long-term growth.

In conclusion, strategic cost management is vital to surviving in Vietnam's burgeoning hotel industry. By adopting best practices and practical solutions, hotels can maintain efficiency, keep service quality high, and move towards sustainable growth while weathering the storms of cost pressures.

AI technology can play a significant role in optimizing costs and enhancing efficiency in Vietnam's hotel industry, offering solutions for energy management, automation, and data analysis.
The environment is a critical factor in the profitability of hotels in Vietnam, with the need for sustainable practices becoming increasingly important for long-term success.
Business strategies in the hotel industry should reflect a commitment to cultural sensitivity, ensuring that hotels cater to the preferences and needs of a diverse clientele.
Laws and regulations governing the hospitality sector in Vietnam should encourage accountability and fair competition, promoting a level playing field for all stakeholders.
Besides cost optimization, the luxury and lifestyle segment of the hotel industry in Vietnam can leverage unique local experiences and authentic cultural offerings to create a competitive edge.
The fragmented nature of the hotel industry necessitates collaboration and consolidation to overcome challenges, share resources, and create economies of scale.
General-news outlets can play a key role in raising awareness about the issues facing the hotel industry, sparking discussions about best practices, innovative solutions, and industry trends.
The finance industry can provide valuable insights and resources for hotels seeking to manage their costs effectively, offering tailored financial strategies and investment opportunities.
The war for efficiency in Vietnam's hotel industry is not limited to cost optimization but also encompasses the need for innovation, adaptability, and a commitment to ongoing improvement in service quality, customer satisfaction, and sustainable growth.