Wonder how to own a hotel business in Vietnam?
Da Nang, Hoi An has long been a top tourist attraction in the region, with endless white sand beaches, magical old town in lights, and vast rice fields, winding rivers that make people’s hearts flutter, small valleys, big mountains… Along with beautiful nature comes a diverse and rich cuisine and friendly people.
And for a long time, many foreign individuals and businesses have been fascinated with these places, constantly returning to experience and seek for business opportunities or live long-term here.
With the mission of supporting individuals and foreign businesses to live, work long-term and do business in Vietnam, MVP Vietnam will open guides on popular business areas. For each specific type of business, along with instructions on procedures and paperwork, we will also provide notes related to offices, premises, and related business facilities.
So
HOW TO OWN A HOTEL BUSINESS IN VIETNAM
A.Purchasing a Hotel in Vietnam
B.Renting a hotel in Vietnam for long term
C.Building a hotel in Vietnam
And now we are going to through the details of these processes
A.PURCHASING A HOTEL IN VIETNAM
There are two ways for foreign individuals and businesses to own hotels in Vietnam in the form of acquisition.
1.The investor purchases the hotel building with land use rights and tangible assets related to the hotel, then the investor completes the legal procedures to conduct the hotel business.
The procedural steps are as follows:
Step 1: The investor signs a contract in principle to transfer and repurchase real estate assets associated with land use rights and other related tangible assets.
Step 2: The investor registers investment in the hotel business project and establish a hotel business.
Step 3: The newly established enterprise signs an official contract to transfer and repurchase real estate assets associated with land use rights and other related tangible assets;
Step 4: The new company conducts land lease procedures with the State of Vietnam and is granted a Land Use Rights Certificate;
Step 5: The new company completes the procedures to meet the conditions for hotel business according to the provisions of Vietnamese law.
Some points to note:
- If purchased in this form, the INVESTOR is NOT required to inherit the financial obligations of the former owner.
- Foreign-invested enterprises must carry out procedures to re-sign land lease contracts with the state, which is a time-consuming procedure. Investors and foreign-invested enterprises can only lease land from the state or be allocated land by the state with land use fees collected.
2.The investor purchases all capital contributions (Charter capital) in the legal entity that owns the hotel.
Step 1: The investor signs a principle contract on the acquisition of capital contribution in the hotel-owning enterprise, the investor conducts business appraisal (checks legal conditions for hotel business, legal inspection assets owned by legal entities, taxes, contracts and debts of third parties, employees… if any).
Step 2: The investor signs a contract to repurchase capital contributions and carries out procedures to register to repurchase capital contributions in Vietnamese enterprises at the Department of Planning and Investment where the enterprise is headquartered;
Step 3: Investors and Enterprises carry out procedures to change business registration content related to changing owners at the Business Registration Office – Department of Planning and Investment where the enterprise is headquartered;
Some points to note:
With this option, the investor can/must inherit all assets, rights and obligations of the legal entity that owns the hotel;
Implementation procedures are more convenient.
B.RENTING A HOTEL IN VIETNAM FOR LONG TERM
Renting a hotel in Vietnam for the long term offers a simpler, quicker, and less risky alternative to purchasing or building one from scratch. This option is popular among many investors, including established 4- and 5-star hotels and resorts looking to sublease their properties for various reasons, such as:
– Reducing management burden
– Improving their reputation and market reach
– Enhancing service quality
– Accessing capital for expansion or other investments
– Retiring or changing residence
Here’s what you need to know about establishing your hotel business through long-term rental in Vietnam:
Legal Requirements:Thoroughly understand the hotel’s legal status: Pay close attention to the fire protection system and licenses, ensuring they meet operational standards.
Negotiate and sign a rental contract with the hotel owner.
Use the lease contract to register your business, including obtaining an investment license and business registration certificate.
Complete additional procedures to qualify for operating a hotel business as per Vietnamese regulations.
Important Note:
Have the rental contract notarized for legal validity.
Ensure your registered investment capital reflects the initial costs associated with renting the hotel.
By choosing to rent a hotel, you can:
Bypass time-consuming complexities involved in purchasing or building a hotel.
Reduce financial risks compared to other ownership options.
Start your business operations much sooner.
Remember, seeking professional guidance from legal and business advisors familiar with Vietnamese regulations is highly recommended to navigate the process smoothly.
C.BUILDING A HOTEL IN VIETNAM
Legal and Tax Advisors: Navigate legal complexities and ensure compliance with relevant regulations.
Architect and Engineer: Design and plan the hotel based on local building codes and regulations.
Construction Company: Oversee the construction process, ensuring quality and adherence to timelines and budgets.
Secure Funding: Develop a comprehensive financial plan and secure funding for the project through debt financing, equity investment, or a combination of both.
Land Acquisition and Permits (6-24 Months):
Land Lease Agreement: Secure a long-term land lease agreement (up to 50 years) from a Vietnam state.
Investment Registration Certificate (IRC): Obtain the IRC from the provincial People’s Committee, authorizing your investment project.
Construction Permits: Apply for necessary building permits from relevant local authorities, including environmental impact assessments and construction licenses.
Construction Phase (12-18 Months or More):
Construction Management: Oversee the construction process by your chosen construction company, ensuring adherence to plans, quality standards, and safety regulations.
Inspections and Approvals: Obtain final inspections and approvals from relevant authorities, including fire safety and operational licenses.
Company Registration and Licensing: Register your hotel business and obtain necessary licenses for operation, such as a business registration certificate and a tourism business license.
Conclusion: Hotel businesses in Vietnam allow 100% Foreign Direct Investment (FDI)
The easiest and most popular method for foreigners to own and run a hotel business in Vietnam is through method B: Renting a hotel in Vietnam for long term. This option offers several advantages:
Simpler procedure: Compared to purchasing a hotel or building one from scratch, renting involves less complex legal and administrative processes.
Faster setup: It allows you to start your business much sooner, bypassing the lengthy procedures involved in acquiring or building a hotel.
Lower risk: Renting minimizes financial risks associated with purchasing or building a hotel, making it a good entry point for new investors.
Therefore, if you’re considering entering the Vietnamese hotel market, renting a hotel for a long term might be the most accessible and efficient option to get started.
Ready to embark on your Vietnamese dream?
MVP Vietnam, with over 5 years of experience and a diverse portfolio of properties available for rent in Danang and Hoian, is here to assist you throughout the entire process. From navigating paperwork complexities to finding the perfect hotel location, our team of experts is dedicated to your success.
Contact us today for a free consultation and let’s turn your vision into reality!
MVP Vietnam – Your trusted partner in Vietnamese real estate and company setup.