Update day: May 10 , 2023

Foreign investor doing hotel service business in Vietnam

Vietnam is an ideal destination for foreign tourists due to many factors: safety, friendliness, culture, cuisine, and reasonable service prices… As tourism develops, it will lead to the development of other industries, including the hotel business, especially with the participation of foreign investors. In this article, we would like to share with you the business conditions and procedures foreign investor shall meet to operate the hotel business in Vietnam.

Table of contents:

1. Conditions for foreign investor to operate hotel business in Vietnam

Conditions according to international commitments

Vietnam has completely opened up the hotel service industry, and there are no restrictions on the level of foreign investment, applying to both direct investment (establishment of 100% foreign-owned enterprises) and indirect investment (capital contribution, share purchase). According to the WTO commitment document, the hotel service industry is recorded under CPC 64110 – hotel accommodation services.

Conditions according to Vietnamese law

Vietnamese law does not impose any particular conditions for foreign investor; the regulations of Vietnamese law are applied equally to both foreign and Vietnamese investor.

Currently, Vietnamese law classifies hotels into the following types:

Hotel means tourist accommodations built as a unit, ensuring the quality of facilities, equipment, and necessary services to serve customers.
Resort means tourist accommodations built as a unit or a complex of villas, low-rise houses, and apartments, typically located in areas with beautiful natural landscapes, and fresh air, usually near the sea, rivers, or mountains, ensuring the quality of facilities, equipment, and necessary services to meet the needs of vacation, entertainment, and sightseeing of customers.
Floating hotel means tourist accommodations anchored on the water surface and can be moved when necessary, ensuring the quality of facilities, equipment, and necessary services to serve customers.
Motel means tourist accommodations built near the traffic road, with a parking lot to serve the lodging demand of tourists using road transports (motorcycle, car) to travel or rest between long distances of tourists, ensure the quality of facilities, equipment and services necessary to serve the demand of customers.

In addition, Vietnamese law sets minimum conditions for technical infrastructure and services for hotels, specifically:

A minimum of 10 bedrooms; a reception desk, a shared bathroom;
A place to park for guests at resorts and roadside hotels;
A kitchen, dining room, and food service for resorts, floating hotels, and roadside hotels;
Beds, mattresses, blankets, pillows, face towels, and bath towels; replace mattress covers, blankets, pillows, face towels, and bath towels when new customers arrive;
Staff is available 24 hours a day.

These are just minimum conditions, based on which and the star rating conditions for the hotel that you can arrange the technical infrastructure of your hotel accordingly.

2. Procedures for establishing a hotel business in Vietnam

To operate a hotel business in Vietnam, foreign investors have two options: setting up a 100% foreign-owned enterprise or purchasing shares and contributing capital to invest in the hotel business. Corresponding to each investment form, investor shall perform legal procedures to start their business activities.

With the direct investment form – setting up a 100% foreign-owned enterprise:

Step 1: Applying an investment registration dossier to receive an Investment Registration Certificate, the processing time of which is 15 working days.

Step 2: Applying for a Business Registration Certificate, with a processing time of 03 working days.

After receiving the Business Registration Certificate, investor completes the publication of company information on the national business information portal, seal the company and performs tax procedures. At this point, the enterprise has the legal status to establish contracts with suppliers, partners, customers, and employees.

For the procedures for establishing a 100% foreign-owned enterprise, please refer to the article: “5 Crucial steps that Investors need to take to set up a business in Vietnam“

2. With the indirect investment form – foreign investor contributse capital to purchase shares in a Vietnamese enterprise:

With the complete opening up of the hotel industry, foreign investor is allowed to purchase part or all of the capital contribution and shares in an enterprise in Vietnam.

Step 1: Performing the procedures to obtain approval to purchase shares, and capital contribution, with a processing time of 15 days.

Step 2: After receiving the investment registration approval document, the investor proceeds to adjust the information on the business registration certificate.

For the procedures for Foreign Investor to contribute capital, and purchase shares in Enterprise in Viet Nam, please refer to the article: “Procedure for Foreign Investor to contribute capital, purchase shares in Vietnam”

At this step, the investor shall note that depending on the type of enterprise (joint stock, limited liability), the time of establishment, the percentage of shares, and the capital contribution, the investor’s information will be reflected or not reflected on the business registration certificate. For instance, in the case of a joint-stock company operating for three years, information about new shareholder shall not be recorded on the Business Registration Certificate unless the investor repurchases the entire capital contribution and becomes the sole owner of the enterprise in Vietnam.

For direct investment, after completing the procedures to obtain legal status as a Vietnamese legal entity, the investor shall obtain approval from competent state agencies to determine whether the enterprise has met the conditions for security and order; fire safety; food safety, and hygiene certificate; environmental protection, and some other types of licenses depending on the scope of hotel operations.

Time of writing: 03/05/2023

The article contains general information which is of reference value, in case you want to receive legal opinions on issues you need clarification on, please get in touch with our Lawyer at info@cdlaf.vn

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