Veterans with new energy launch white label management firms in Asia

VIETNAM - The number of third-party management companies being launched by veteran industry players in Asia Pacific is visibly rising. That is good news for owners – and branded chains – who have been lamenting the lack of professional white label operators in the region.

Australia leads with first movers that include La Vie, formed by Jerry Xu,1834 Hotels (Andrew Bullocks), Vista Hospitality (Jan Smits) and, most recently, Trilogy, launched by Scott Boyes, Tony Ryan and Grant Alchin.

In Southeast Asia, Norbert Vas, a senior and experienced hotel executive, has set up Optimum Hospitality Indochina, focusing on Vietnam.

The long-time vice president of business development for Archipelago International in Indonesia has parted ways with the company and teamed up with another veteran, John Gardner, in the new venture. Gardner had a 15-year career with Caravelle Hotel Saigon.

The road to Vietnam for Vas started around 18 months ago when Archipelago tried to expand in the country by establishing Archipelago Indochina. Alas, the timing wasn’t good.

Norbert Vas, Optimum Hospitality Indochina

A downturn in housing sales and a corruption probe of real estate developers had a spiral effect on hotel opening and construction in Vietnam, as reported by Hotel Investment Today. Adding to the woes, tourism recovery was slow. Last year's 12.6 million foreign tourists were just 70% of 2019's level.

Getting management agreements was “a struggle,” said Vas, who is a veteran in signing contracts. He grew Archipelago International to 164 operating hotels under 10 brands, from five hotels and two brands when he joined in 2008. But despite Archipelago's track record, promoting an Indonesian chain in Vietnam wasn't easy, Vas said.

So why is he still pursuing Vietnam? Vas believes that approaching the market as a third-party operator widens the net. “We can operate hotels under the owner's brand or other brands, and we aren't anymore constrained to franchising only Archipelago brands. We can do consultancy or asset management,” Vas added.

Moreover, there’s a lack of professional third-party players in the market. “There are some local companies here [in Vietnam] but I wouldn’t call them a real white label operator,” Vas said. “Apart from those, La Vie already has a few projects in Vietnam.”

Better timing

Business is starting to flow for Vas’ Optimum. A big deal was clinching a one-year contract with the former VinOasis Phu Quoc. The 1,400-room hotel has been rebranded to Wyndham Grand Phu Quoc under a franchise agreement.

“They engaged us to implement Wyndham Grand standards at the hotel, elevate the service there, and do a PIP [property improvement plan]. They see us as helping them. The hotel staff are hungry for new leadership and ideas. And Wyndham is very cooperative. So, it’s a win-win for all. We’ve been on that project now for four months and enjoying it,” Vas said.

Considering the sharp competition in Vietnam, owners who feel their asset is underperforming would definitely benefit from advisory services. Those can be in the form of a spot review, focusing on specific pain points, or an operator search and selection.

Pierre Marachel

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Another Optimum project was operator selection for a property in Mui Ne, a beach resort town in southeast Vietnam. This became the Radisson Resort Phan Thiet after the selection process.

Yet another was to develop a contemporary brand for a Vietnamese developer.

There are definitely opportunities for new entrants in Vietnam, observed Pierre Marachel, vice president, Strategic Advisory & Asset Management, JLL Hotels & Hospitality Group.

“Considering the sharp competition in Vietnam, owners who feel their asset is underperforming would definitely benefit from advisory services. Those can be in the form of a spot review, focusing on specific pain points, or an operator search and selection,” said Marachel when asked what the opportunities are. “Debt advisory is another type of service that would assist owners to navigate those uncertain times. Or a robust feasibility study can help aspiring owners to better understand the risks and opportunities."

Vietnam is ready for the third-party operator model, according to Vas. “Coming out of COVID, many owners of independent hotels in Vietnam started realizing the value of a brand and a global distribution system. Would I be able to fill 1,400 rooms in Phu Quoc without the help of Wyndham? No. That’s where white label comes in and why it’s becoming more popular,” he said.

Vas added that the third-party operator knows the game much better than the independent owner and can work with the brand more effectively. “A brand franchise and distribution is like giving you the owner a beautiful car,” he said. “But you still need to know how to drive it. You need to be in touch with the revenue management team, e-commerce team, et cetera, and challenge them, because if you don't, you won't get the maximum out of it.”

Another value of white label operators is a stronger local commercial capability that enables them to market to domestic travelers better than a global brand can, Vas added.

Vietnam’s domestic travel market is far bigger than its international travel market. Last year, the country recorded 108 million domestic trips, 8.5 times more than foreign arrivals.

Vas is confident that Vietnam will bounce back in full swing in 2025, saying that this is pretty much the sentiment in the industry.

“I see foreign direct investments are still coming into Vietnam, in sectors including warehousing and distribution. Infrastructure projects such as highways and high-speed trains, as well as new airports, are moving forward now. Some sectors of the government are becoming more flexible.

“In Phu Quoc, we are running almost 50% occupancy, which is not bad for a 1,400-room hotel, although it’s not 50% every day. Domestic demand is growin,” Vas said.

His goal for this year is to reach out to educate the market about the third-party operator model. “So, by 2025, we will be well-positioned to make a mark in the market,” Vas concluded.