How do international hotel companies create value for hotel owners?

According to Statista, the hotel market in Vietnam is projected to generate revenue of USD 1.68 billion in 2025. The market is expected to grow at an annual rate of 5.56% from 2025 to 2029, reaching USD 2.08 billion by 2029. By 2029, the number of hotel users is expected to reach 20.12 million.

Some 20 international hotel companies are currently present in Vietnam, offering dozens of brands from economy to luxury, with hundreds of hotels across the country. Apart from a few major domestic brands such as Vinpearl and Flamingo, which have established their position in the upscale segment, other mainstream brands will find it difficult to compete with international brands as globalisation gathers pace. As international hotels continue to expand in Vietnam, what value stands to be gained by hotel owners?

Reputational value

International brands enhance a hotel’s prestige, attract guests and elevate the reputation of the hotel owner. Reputation is particularly important in the luxury to ultra-luxury segments, where it supports the hotel owner in building business and political relationships. In mixed-use developments, for example, a hotel carrying a high-end international brand acts as an anchor, lending prestige to the entire complex and attracting leading international companies to the office building, top retail brands to the shopping centre and high-profile individuals to the serviced apartments.

Competitive value

International hotel brands create an advantage through distinctive products, loyalty programmes and extensive distribution networks. A large-scale loyalty programme is the decisive asset, enabling direct booking platforms to account for more than 70% of total system distribution and ultimately saving hotel owners booking costs, as a higher share of direct bookings reduces the commissions paid to third parties. Serving loyalty members may, however, lower room rates, but this is offset by revenue from food and beverage and other services. Loyal guests typically spend 2.5 times as much as non-members on food and beverage, and often invite friends to dine at the hotel. The hotel can therefore consistently generate sufficient revenue to cover the necessary costs and produce a profit.

Economic value

Scale strengthens bargaining power, lowers procurement costs and raises operating profit. Large groups, for example, can negotiate lower fees with online travel agencies (OTAs), increasing profit for hotel owners. Most independent hotels and small hotel chains pay commissions of 15 to 20% when selling rooms through OTAs, whereas large international hotel groups can enable the hotels in their systems to pay only 10 to 12%, meaning that gross operating profit can rise by at least 3 to 5%.

Performance value

International hotel companies improve operational efficiency through their expertise, technology and high-calibre personnel. Hotel owners, particularly those new to the industry, find that appointing a professional operator reduces costs and optimises room rates. With support from international organisations, many hotels are adopting ESG sustainability frameworks and EDGE green building certification to attract investment. Overall, the performance value of international hotel companies enables hotels to operate efficiently, increase profitability and grow sustainably.

Perceived treatment value

Hotel owners in Asian countries attach particular importance to perceived treatment value. Specifically, in Asian countries 90% of hotel owners value a good relationship with their hotel partner, while only 10% are more concerned with financial returns; in the United States and Europe, the proportions are exactly reversed. Although most hotel owners prefer to partner with large international hotel companies for their broader distribution, greater scale and other strategic factors, some hotel owners favour smaller international hotel companies. This is particularly true in the upscale and luxury segments, as smaller companies tend to focus more closely on every detail and on the guest experience to ensure flawless service, whereas larger companies with complex organisational structures may lack this capability.

In the luxury segment in particular, most hotel owners, especially in Asia, are high-net-worth individuals of considerable personal stature, and they therefore expect their relationship with the hotel company to involve a balance of power that is at least equal. In the lower segments, meanwhile, there are also hotel owners, notably first-time or small-scale hotel owners, who prefer to work with more focused international hotel companies, as these can devote more time to helping hotel owners develop and operate their assets.

In short, different needs and expectations lead to different choices, but perceived treatment value still plays an important role in the decision to partner with an international hotel company.

Conclusion

Hotel owners expand their real estate portfolios in one of two ways: organic growth, developing new projects to retain control over quality and construction costs; or inorganic growth, acquiring operating hotels to save time and maximise overall asset value, particularly assets that follow the triple-bottom-line performance model.

Hotel owners who pursue organic growth tend to hold real estate for the long term and may consider an international hotel brand on the basis of personal pride as well as other economic factors. By contrast, hotel owners who pursue inorganic growth through mergers and acquisitions (M&A) regard hotels as medium-term investments that may be sold five years after acquisition, once the asset value has risen. The international hotel brand may therefore be retained or changed, depending on the economic value it ultimately delivers.

In short, international hotel companies can offer hotel owners benefits such as reputational value, competitive value, economic value, performance value and perceived treatment value. Depending on their needs in expanding their real estate portfolios, hotel owners can select the international hotel company best suited to sustainable growth in a globalised market. To secure favourable contract terms and a balanced relationship with international hotel companies, hotel owners should appoint a professional investor’s representative to follow the hotel closely from development through to operation. The investor’s representative, also known as the owner’s representative, will help hotel owners oversee the hotel companies and manage the hotel asset in line with their investment objectives.