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In the dynamic landscape of global hospitality, disruptions can cast shadows over promising destinations. Recent events in Vietnam have brought attention to an extraordinary case involving a female hotelier, Ms. Truong My Lan, known as “Madame Lan.” At 67, she was recently convicted of embezzlement and fraud, resulting in the harshest of sentences, the death penalty. This case is particularly notable as it is rare for a woman to be at the center of such a significant financial scandal. It has also ushered in a new era for Vietnam with a heightened focus on eliminating corruption, and an emphasis on the importance of transparency, accountability, and collaboration in the hospitality sector and for any business, for that matter. This moment of transition presents a unique opportunity.
Female Embezzlement Scandal: A Rare Phenomenon
The saga of Truong My Lan, known widely as "Madame Lan," captivated Vietnam and the global business community alike. At the heart of the nation's largest-ever financial fraud, Lan's story intertwines opulence, power, and a dramatic fall from grace. The chairwoman of Van Thinh Phat Group (VTP), Lan is accused of embezzling over $12 billion from the Saigon Commercial Bank (SCB) between 2018 and 2022, a staggering sum that exceeds the market capitalization of many Vietnamese banks. Utilizing an intricate web of ghost companies and inflated valuations, Lan funneled funds to herself and her allies, illustrating a breathtaking breach of fiduciary duty.
Her arrest in October 2022, as she prepared for bed in her luxurious penthouse, sent shockwaves through the financial sector, triggering a run on SCB and necessitating a state takeover to reassure depositors. Now, facing the death sentence, Lan’s story is a cautionary tale of irresponsible ambition. This incident highlights the need for strengthening Vietnam's regulatory framework and emphasizes the broader challenges of corruption. The Party's "blazing furnace" campaign aims to address these issues, ensuring robust governance as Vietnam continues to pursue rapid economic growth.
Vietnam's Hospitality Sector: A Beacon of Opportunity
As an advisor to hotel investors from around the world, particularly the US and Asia, it is imperative to address this situation with candor and insight while highlighting the continued opportunities for development in Vietnam. Despite this unprecedented situation, I share this case as a catalyst for important conversations. Now is the right time to invest in the country I love so much, Vietnam.
The Allure of Vietnam in a Global Economic Context
Why is Vietnam so special, particularly in the current global economic climate? The country boasts strong GDP growth and favorable diplomatic relations with Western countries, notably the United States. These factors make Vietnam an attractive destination for first-time hospitality investors looking to diversify their portfolios. With a relative slowdown in investment interest from local and regional Asian investors, now is the perfect time to explore opportunities in this vibrant market.
Booming Domestic Tourism and Skilled Labor Pool
From a micro-economic perspective, Vietnam's booming domestic tourism market, driven by a growing middle class, provides a solid base for sustainable tourism. With a population of over 100 million, Vietnam not only offers a robust business base but also a skilled labor pool for the growing hotel and hospitality industry. As the 15th largest country by population globally, Vietnam presents a significant opportunity for hospitality development.
Significant Expansion in Vietnam's Hotel Market
Vietnam's hotel market is poised for significant expansion, fueled by a resurgence in tourism. According to Statista, the sector is projected to generate a revenue of US $1.49 billion by April 2024. The tourism sector's GDP contribution is expected to exceed 5.5 percent this year, with international visitor arrivals reaching approximately 12.6 million in 2023. Revenue from the hotel market is anticipated to be $1.6 billion this year, with an annual growth rate of 4% through 2028. This growth is driven by both leisure and MICE (Meetings, Incentives, Conferences, and Exhibitions) markets, particularly in the resort sector.
Vietnam: A Rich Cultural Destination
From a tourism perspective, Vietnam is an authentic and culturally rich destination, known for its beautiful beaches, scenic coastline, the Mekong Delta, delicious cuisine, and hospitable people. While Hanoi and Ho Chi Minh City are the primary markets, there are numerous other locations with abundant investment opportunities.
Reinforcing Integrity in Hospitality
Circling back to Madame Lan’s case, it's important not to paint the entire Vietnamese hospitality landscape with the same broad brush. Instead, this situation should reinforce the principles of integrity and ethical conduct within the sector. High standards, transparency, and integrity are crucial for anyone contributing to hotel development in Vietnam. Establishing strong partnerships with reputable local stakeholders fosters cultural understanding, navigates regulatory complexities, and engenders goodwill within the community. Local partners play a crucial role in ensuring adherence to regulatory frameworks, promoting sustainable development, and safeguarding investments.
A Personal Mission for Ethical Investment
As a Parisian of Vietnamese descent with a deep love for Vietnam and its culture, I advocate for a nuanced understanding of the Vietnamese hospitality landscape. Learning from past transgressions and recognizing the progress made is essential. As a woman passionate about hospitality, I am committed to guiding the global investment community to thrive in this emerging market. Understanding cultural subtleties and forming the right local partnerships are key to success.
As we say in French, “Il y a une brèche,” right now, there is an opening to peek through.
Linh Vu, ISHC, is a Paris-based hospitality strategist specializing in emerging markets, particularly Vietnam, Southeast Asia, and the Middle East. Linh can be contacted at linh@khcvietnam.com.