Report Overview Vietnam Hotel Survey 2013 This is an Executive Summary of the full 60 page Hotel Survey Report. Full copies can be obtained from Grant Thornton Vietnam. Grant Thornton Vietnam June 2013
Introduction Grant Thornton Vietnam s Hotel Survey 2013 presents financial, operational and marketing information for the 2012 financial year from a range of Vietnamese hotels and resorts. For simplicity, Hotel refers to both hotels and resorts, with our survey covering 3, 4 and 5-Star rated hotels. Statistics are presented by Star Category (hotel rankings), Hotel Size (number of rooms) and Hotel Region (location). When presenting the statistics, hotel size is defined within three categories ranging from small to large hotels, described as less than 75 rooms, 75 to 150 rooms and more than 150 rooms. Lastly, hotel regions are separated into the three main areas of Vietnam; the North, the Central and Highlands and the South. In the North, the hotel participants are located in the capital Hanoi and Ha Long City. In the Central and Highlands region, the hotels are located in cities such as Da Nang, Hoi An, Hue, Nha Trang and Phan Thiet. Hotel participants from the South are mainly located in Ho Chi Minh City, Phu Quoc and Vung Tau. As can be seen later in this report, most data is presented in percentage terms or as averages. For instance, with financial statements Dollar figures are shown as a percentage of total revenues. In the market data analysis and other sections, statistics are in the form of averages of the respective items. For ease of comparison, the report presents the survey results of each specific category alongside key findings. In the Appendices, readers can also find tables showing the minimum, maximum and average values of market data for the 2011 and 2012 financial years. This report, however, does not attempt to set operating results for the Vietnam hotel industry. The figures and ratios in this report should not be considered as standards for any type of property. The report users also need to note that not all changes from one year s results to another are due to actual year-to-year differences. Sometimes, they may be a result of a different mix of survey participants. Readers should note that due to limits on analysing data based on specific sample sizes, the results should be regarded as indicative only. This report is prepared to provide readers with a general, as well as specific, view on hotel operations in Vietnam by presenting data covering different criteria for analysis such as hotel facilities, staffing, financial statements and market data. For financial analysis, the data is shown up to net profit before interest, tax, depreciation and amortisation ( EBITDA ) for the purpose of relevant comparability. The unit of currency is the United States Dollar.
Map of Hotels across Vietnam 15 Sapa Total number of 3 to 5-Star hotels in Vietnam 640 128 Hanoi 21 Ha Long 80 Da Nang/ Hoi An 33 Hue 11 Can Tho 34 Nha Trang 138 Ho Chi Minh City 19 Da Lat 48 Phan Thiet 25 Vung Tau (*) Data as at 30 May 2013 10 Phu Quoc
Key trends Average Annual Room Rates by Star ranking (2003-2012) Average Occupancy Rates by Region (2003-2012) 250 200 150 100 50 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3-Star 4-Star 5-Star 9 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 North Central and Highlands South 0.5% decrease in average room rates with 4-Star hotels declining by 4.8% 0.3% decrease in overall occupancy rates with the North reducing by 1.7% Expenses & Profit as Percentage of Revenue Revenue Per Available Room (RevPAR) (2003-2012) 10 28.4% 28.2% 28.2% 140 120 100 USD 80 60 40 2010 2011 2012 G&A expenses Sales & Marketing expenses Repair & Maintenance expenses Energy expenses Total departmental expenses Fixed charge Other expenses EBITDA 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 3-Star 4-Star 5-Star Maintained the same EBITDA between 2011 and 2012 at 28.2% 0.8% decrease in overall RevPAR with 4- Star hotels dropping by 4.6% Page 4
Executive Summary Continuing with the success in 2010 and 2011, Vietnam achieved a growth in international arrivals with the total number of international visitors to Vietnam of 6.8 million in 2012, increasing by 13.9% compared with the previous year. This exceeded the forecast figure by 0.3 million. Grant Thornton s Hotel Survey report 2013 provides readers with a detailed analysis and evaluation of Vietnam hospitality sector s performance for the year 2012 compared with previous years. This year s survey also analysed the environmental awareness across hotels in Vietnam, conducted on behalf of the European Union-funded Environmentally and Socially Responsible Tourism Capacity Building Programme (ESRT) on behalf of Vietnam National Administration of Tourism (VNAT). Annual Room Rate, Occupancy Rate and RevPAR (2003-2012) Key Operating Figures 2012 Composition 3-Star 4-Star 5-Star Average number of rooms per hotel 60 113 243 Average occupancy rate per hotel (%) 68.5% 59. 56.3% Average room rate per hotel (USD) $46.53 $88.44 $124.50 Average RevPAR* per hotel (USD) $31.87 $52.16 $70.14 EBITDA (%) 26.5% 28.8% 33.6% (*) RevPAR: Revenue Per Available Room 2012 showed an overall decrease in average occupancy rate (60.2%) and average room rate (USD90.40), leading to a slight decrease of 0.8% in the revenue per available room (RevPAR). RevPAR is known as the standard industry measure of room utilisation and return. Looking at the analysis by Star ranking, 3-Star had a better performance in 2012 than the previous year with an increase in RevPAR of 5.4%. 140 120 100 80 60 40 20 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Annual average room rate ( $) RevPAR Annual average occupancy rate (%) Page 5
USD Room rates by Selected Categories Average Room rates ($) by Star ranking (2005 2012) 200 180 160 140 120 100 80 60 40 20 0 Compared with 2011, the average room rates of 3-Star and 5-Star hotels, in 2012, showed an increase of 2.2% and 1.2% respectively, whereas 4-Star hotels experienced a decrease of 4.8% during the year. In terms of Region, Central and Highlands had the highest growth of 13.3%, rising to USD94.34 in 2012. While both average room rates in the South and the North fell, of which the South had a significant decline of 7.6% compared with previous year. Average Room rates ($) by Region (2012 vs 2011) Location 2011 2012 Change North $90.72 $88.84 (2.1%) Central and Highlands 2005 2006 2007 2008 2009 2010 2011 2012 3-Star 4-Star 5-Star $83.25 $94.34 13.3% South $94.55 $87.37 (7.6%) Occupancy rates by Selected Categories Compared with last year, 3-Star and 4-Star increased their occupancy rate by 2.1% and 0.1% respectively, while the average occupancy rate of 5-Star hotels declined 1.1% in 2012. Average Occupancy rates (%) by Star ranking (2012 vs 2011) Star ranking 2011 2012 Change 3-Star 66.4% 68.5% 2.1% 4-Star 58.9% 59. 0.1% 5-Star 57.4% 56.3% (1.1%) When analysing annual average occupancy rates by Region, the North continued decreasing by 1.7% (last year the decrease was 3.7%) and the South performed better than the previous year, with an increase of 1.2%. The occupancy rates in Central and Highlands declined by 0.6% in 2012. Average Occupancy rates (%) by Region (2005 2012) 9 2005 2006 2007 2008 2009 2010 2011 2012 North Central and Highlands South Page 6
Revenue and Expenses Revenue breakdown (2012 vs 2011) Other sales 8.8% The high-end hotel industry in Vietnam maintained the same EBITDA as a percentage to sales between 2011 and 2012, at an average of 28.2%, in spite of the different structure of some related costs. F&B Sales 29.1% Room Sales 62.1% When looking at details of expenses, G&A expense which was one of the two main costs, decreased by 1.3% in 2012 compared with 2011. Conversely, departmental expenses comprising of room and F&B expenses had an increase of 0.7%. 2012 Expenses and Profit as Percentage of Revenue (2012 vs 2011) F&B Sales 28. Other sales 9.3% 2011 Room Sales 62.7% Revenue consists of room sales, Food and Beverage (F&B) sales and other services sales (income from banquet, spa, conference and business centre etc). 2012 showed an increase in Food and Beverage Sales (F&B sales) of 1.1%, meanwhile there was a decline in room sales of 0.6%. The decline in room sales was because of a decrease in both annual average room rates and occupancy rates. 10 9 28.2% 28.2% 5.2% 5.3% 5.1% 4.7% 19.4% 20.1% 14.3% 14.8% 5.8% 6.8% 3.6% 3.1% 4.6% 4.5% 13.8% 12.5% 2011 2012 G&A expenses/ Total sales Sales & Marketing expenses/ Total sales Repair & Maintenance expenses/ Total sales Energy expenses/ Total sales Room expenses/ Total sales F&B expenses/ Total sales Fixed charge Other expenses/ Total sales EBITDA Page 7
Employees The graph below illustrates the average revenue and average expenses per hotel employee from 2003 to 2012. The revenue earned per employee in 2012 decreased by 3., while cost per staff continued to increase by 8.4%, from USD4,139 in 2011 to USD4,485 in 2012. Average revenue and payroll per employee (2003 2012) 25,000 20,000 15,000 Source of Guests Source of Guests (2003 2012) 2012 78.2% 21.8% 2011 78. 22. 2010 71.5% 28.5% 2009 73.7% 26.3% 2008 80.3% 19.7% 2007 87.1% 12.9% 2006 83.3% 16.7% 2005 79.1% 20.9% 2004 79.5% 20.5% 2003 83.7% 16.3% International Domestic 10,000 5,000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 The proportion of international and domestic guests in 2012 was similar in proportion to 2011, with only 0.2% difference, which was attributed to an increase in international guests. Average revenue per employee Average expenses per employee Origins of Guests 2012 Oceania 9.1% Others 7.6% Vietnamese 21.8% North America 8.1% Europe 28.4% Asia (excluding Vietnam) 25. 2012 In 2012, Asian guests, including Vietnamese, still maintained first place among the origin of guests, accounting for 46.7%, increasing by 5.5% compared with the previous year. Interestingly, in 2012 there was a significant reduction in the proportion of guests coming from Europe (dropping by 5.6%) and a slight decrease from other countries eg, North America and Oceania, of 0.5%. Page 8
Purpose of Stay Purpose of Stay 2012 Other Guests 11.8% 14. Conference Participants 4.9% 7.6% Tour groups 28.2% 29.1% Individual Tourists 32.2% 32.2% Business Travellers 14.5% 21.4% Government Officials 1.5% 2.6% 5% 15% 25% 35% 2012 2011 Business travellers, individual tourists and tour groups are the 3 largest components of guests over the 10 years from 2003 to 2012. Of which, business travellers siginificantly increased by 6.9%, while MICE groups decreased by 2.7% in 2012, when compared with 2011. Channels of Reservations The most preferred reservation method in 2012 was through travel agents and tour operators. This channel continued to decline to 45.7% in 2012, a decrease of 0.3% compared with previous year. Booking hotels via the internet increased by 1.4%, to 16.1% from 14.8% in 2011. While direct booking with hotels experienced a decrease of 0.9%, however it still remained the second most popular method with 28.9%. Channels of Reservations 2012 9.3% Direct booking with hotel (including Hotel GDS) 28.9% Internet Sales 45.7% 16.1% Sales via Travel agents and Tour operators Sales via other channels Page 9
Environmental awareness Change in the awareness of environmental and social issues in the last three years 10 9 5.3% 36.8% 13. 26.1% 52.6% 52.2% North Central and Highlands 15. 15. 25.8% 60. South Major change Minor change No change 11.3% 54.8% Total The results of the recent survey of the hotel sector in Vietnam, conducted by Grant Thornton with a contribution from the ESRT, shows encouraging signs of progress in their awareness and management of the environment and quality standards in the operational side of the industry. More than half (54.8%) of hoteliers indicate major changes in the awareness of environmental and social issues, within their company, in the last three years. This is more strongly identified in the South and the North than the Central and Highlands. Regarding conducting training in the environmental aspects of hotel operations, the majority, 51.6%, of hotels have started to conduct training, especially in the 4-Star and 5-Star hotels, mainly based in the North. Only 6.5% performed limited training on environmental aspects and 3.2% did not include training at all, mostly in 3-Star hotels with 5.9% of 3- Star hotels saying Not at all. Environmental training in hotels by Star ranking 10 9 17.6% 41.2% 64.3% 64.7% 51.6% 30.6% 28.6% 17.6% 23.5% 5.9% 3.6% 6.5% 3.6% 0. 3.2% 3-Star 4-Star 5-Star Total Not at all Very little To some extent Yes, very much Page 10
Proudly Supporting www.gt.com.vn 2013 Grant Thornton (Vietnam) Ltd. All rights reserved. Grant Thornton Vietnam is a member firm within Grant Thornton International Ltd ( Grant Thornton International ). Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered by the member firms independently. This publication is general in nature and should not be construed as providing advice. No responsibility is taken for any party acting on the contents of this document. 10 of all proceeds from sales of the Report are donated to Operation Smile Vietnam.