TMG – With Vietnam’s tourism industry yet to fully recover from the COVID-19 pandemic, Thien Minh Group, a company providing experiential travel services for international tourists, has shifted to the domestic market, creating momentum for the next few years.
Victoria Can Tho Resort towards the end of the last millennium, a 25-year-old man sitting with a cup of coffee found himself taken by the elegance of a newly built project featuring Indochinese architecture.
More than a decade later, the same young man, having founded a travel agency specializing in providing experiential travel services to international tourists, suddenly found himself with the opportunity to acquire the same Victoria Hotels & Resorts chain when the former investor made it known that the chain was up for sale.
Arranging to put up the US$45 million, Thien Minh Group and the then-36-year-old chairman caused a stir in the market when they beat out a slew of competitors to take ownership of the hotel chain with locations in several famous tourist destinations. In 2011, it was rare for a domestic company to acquire an international brand, especially when the value of the buyer was lower than the value of the acquired company.
Once the deal was sealed, the young owner faced a host of challenges: How would the high cost be recovered? With Victoria hotels spread across many locations throughout Indochina, how would they be managed? How to operate the chain more efficiently than the former owner? After integrating the chain into Thien Minh Group’s tourism ecosystem, the answer came as the hotel chain doubled its operating capacity after just two years.
“Victoria Hotels & Resorts has always been the most important and most emotional brand within Thien Minh Group,” Tran Trong Kien, chairman of Thien Minh Group, told Forbes Vietnam over a cappuccino on the lovely grounds of Victoria Can Tho Resort.
With a classic architectural style and an interior color palette of deep browns and pale yellows, Victoria Can Tho sits amongst green trees on the banks of the Hau Giang River where the resort’s ships take tourists on cruises along the Mekong to Phnom Penh. Boasting an expansive tourism ecosystem, Thien Minh Group specializes in providing experiential tourism services aimed at international visitors.
However, the good days ended when the COVID-19 pandemic broke out. The international tourism industry was frozen for the past four years, then adversely affected by the economic recession and world geopolitical conflicts, leading the company to refocus on promoting domestic travel in preparation for the recovery of the tourism industry.
Spotting a head of salt-and-pepper hair, white glasses, and a dignified manner, the businessman born in 1973 is all poise. Mr. Tran Trong Kien is no stranger to readers of Forbes Vietnam, having appeared in one of the magazine’s earliest issues (December 2013).
A speaker at the Forbes Vietnam Business Forum held in August 2023, Mr. Kien, as Chairman of the National Tourism Advisory Board, said: “Post-pandemic, the most important tourism trend is not going to be green travel but the shift towards visitors staying longer and spending more while also requiring a much higher level of service than before.”
Vietnam’s tourism numbers peaked in 2019 when it welcomed 17.3 million international visitors, contributing 9.2% of GDP. In terms of tourist numbers, Vietnam ranked fourth in the region after Thailand (39 million), Malaysia (26 million) and Singapore (19 million). The 2019 annual report of the Vietnam National Administration of Tourism said that international visitors to Vietnam spent US$1,074 per person, with an average stay of about seven days, making the average spend US$132 per day.
In 2023, Vietnam is expected to attract 12-13.5 million international visitors, recovering to about 60-65% from the pre-epidemic peak. According to the Vietnam National Administration of Tourism, at the end of September 2023, Vietnam had 3,718 international tour operators, including well-known names such as Saigon Tourist, Vietravel, Ben Thanh Tourism, Hanoi Tourist, Fiditour, Exotissimo Vietnam, etc.
Thien Minh is unlike any of these companies. To date, Thien Minh Group’s destination management activities have expanded to six countries. In Asia, it operates in Vietnam, Laos, and Cambodia, while in Europe, it operates in Portugal, Spain, and the United Kingdom.
“We are the only business in Vietnam that has an ecosystem of diverse and seamless travel products from travel and hotels to aviation and online services, serving most of our customers’ travel needs,” Mr. Kien said.
In terms of accommodation facilities, in addition to the Victoria Hotels & Resorts network targeting mature international travelers and multi-generational families, the group also operates the ÊMM Hotels chain which has properties in big cities aimed at younger customers and business travelers. Providing a range of tourism experiences, Thien Minh also owns Mai Chau Lodge which features walking tours and cycling activities, and the TUI BLUE Nam Hoi An resort which is known for leisure as well as MICE travel.
In addition to the four ships that make up the Emeraude Cruises fleet providing sightseeing opportunities and overnight holidays in Ha Long Bay, Thien Minh owns the 35-cabin Victoria Mekong Cruises offering 1-3 day and 4-7 day itineraries cruising through the Mekong Delta region.
Operating four Cessna Grand Caravan 208B-EX seaplanes that can take off and land on water, Thien Minh Group is one of two domestic companies providing flight services to explore the world’s natural heritage of Ha Long Bay. Founded in 1994, the company also owns the iVIVU online booking platform connecting travelers to 2,000 hotels in Vietnam and another 30,000 hotels worldwide.
Mr. Nguyen Minh Tuan, Director of the Can Tho Department of Culture, Sports and Tourism, said: “Thien Minh Group is a major investor in tourism in Can Tho, helping to introduce our local culture to international tourists.”
Before 2020, Thien Minh welcomed about 650,000 international visitors per year from the main markets of Australia, EU and USA. The company’s products are positioned in the high-end segment where its main customer base comprises travelers who earn over US$50,000 per year. They love to explore, seeking out experiences in new lands and cultures.
On a typical itinerary, after having spent the night on Emeraude Cruises, a Thien Minh customer might fly over the world natural heritage scenery of Ha Long Bay; cycle and hike around the majestic mountains in the North; explore the ethnic lifestyle when staying at Mai Chau Lodge; spend a few days at ÊMM Hue or Victoria Hoi An to explore the culture, cuisine and beaches of Central Vietnam; then travel to the Mekong Delta where they can stay at Victoria Can Tho or Victoria Chau Doc and explore the fertile Mekong Delta and on to the enchanting capital of Phnom Penh aboard Victoria Mekong Cruises.
Mr. Le Trung Hieu, Director of the An Giang Investment and Trade Promotion Center said: “Victoria Chau Doc is the pride of An Giang tourism. It is a venue that provides a beautiful experience, showcasing local culture and landscapes.”
Typically, a Thien Minh customer will join tours lasting 1-2 weeks and spend US$2,000-6,000, depending on what level of service they prefer. There are even visitors whose vacations last three months. Before the pandemic, 85 of every 100 Thien Minh customers were foreigners, including CEOs and presidents of world-renowned technology companies, going on tailor-made tours. Currently, the ratio of international to domestic visitors is 55:45.
In an interview with Forbes Vietnam 10 years ago, the founder of Thien Minh shared his business view: “In the tourism business, don’t be afraid to charge too much for your services; the most important thing is to create a feeling of satisfaction and to look after your guests so that they feel their experience was worthwhile.”
This business formula was the key to how a medical student from Hanoi was able to turn a small office of 3-4 people in 1994 into a company that now provides experiential tourism services throughout Indochina.
The company has stuck by this underlying principle, even when pivoting to serve domestic tourists. Unlike international tourists who want to experience the culture and way of life in the places they visit, Vietnamese tourists prize amenities and cuisine. With a strong technology platform and digitized operations, the company allows visitors to self check-in early when rooms are available, leading to guest satisfaction on the part of Vietnamese tourists.
Especially for domestic guests, Thien Minh has added new Vietnamese dishes to their restaurant offerings and revamped menus so that the Vietnamese appear before the English. In particular, while international tourists are comfortable sitting and talking or perhaps reading a book after ordering, Vietnamese guests traveling in family groups usually don’t like to wait, so a sense of urgency was instilled among restaurant staff.
Vietnamese customs attach importance to social hierarchy, especially among the more well-off, so staff were retrained in communications. The Vietnamese language is rich in how to address others, sometimes using “mister/missus”, “aunt/uncle” and “brother/sister” instead of simply “You” and “I” as with foreign guests.
“Tourism is a product that people do not experience often, so they must be provided with the best experience,” Mr. Kien said, expressing satisfaction that Thien Minh properties were rated a leading 95.2 points by TripAdvisor users.
Tourism is a service industry that relies on the human touch. The group currently has 1,700 employees across its network compared to the 3,700 employees it had at its peak. However, during the most stressful period of the COVID-19 pandemic, this number bottomed out at 1,000. “Thien Minh, together with all other tourism, hotel, and aviation companies around the world, suffered the most and was subject to the most far-reaching consequences caused by the COVID-19 pandemic,” Mr. Kien recalled.
Except for the times when Thien Minh properties were involved in fighting the pandemic or implemented social distancing measures according to governmental policies, Thien Minh’s hotels and resorts did not close for a single day despite being empty. The founder of Thien Minh explained: “Thien Minh is like a second home, so if it stops operating, many employees will no longer have a place to lean on for moral support. Even in the most difficult moments, we were able to keep the team afloat and overcome every challenge.
While we didn’t lay off employees, when the company was only able to pay 50% of base salaries, some staff members were forced to find better-paying jobs to support their families. Within the company, we have numerous employees who have been with us more than 20 years, being promoted from receptionist to manager, from manager to hotel manager, and from director to regional director. Our spirit of service lies in kindness, in the company culture, and in how well people treat each other. Your employees have to be happy themselves in order to be happy when interacting with customers.”
According to Thien Minh, the company’s total assets are currently valued at US$500 million (according to IFRS standards). In 2023, the company’s revenue is estimated at US$130 million, or 60% of pre-pandemic levels but up sevenfold from 2021, the travel industry’s bleakest period. In 2023, the company expects to welcome 200,000 visitors, a slower recovery than expected.
Domestically, economic difficulties have weakened purchasing power and the demand for tourism. In April 2023, a Bell-505 helicopter crashed over Ha Long Bay, creating a sense of insecurity among tourists. Hai Au Aviation consequently saw its revenue cut by half this past summer: “Hai Au’s planes and flights are completely different but many tourists still thought the crashed helicopter was ours. We lost an entire summer.”
Regarding international travel, Japan, China, and some Nothern European markets have not recovered as expected, so even though the flow of visitors from Australia, France, Spain, etc. has recovered well, the overall number of international visitors has not met expectations. Between 2016–2019, the online booking platform iVIVU.com doubled every year. The year 2022 saw a strong recovery but in 2023, growth has not met expectations as the demand for tourism has been weak due to economic difficulties.
However, where there is risk, there is opportunity. The slow recovery of the market proved to be an opportunity for Thien Minh to prepare for what lies ahead. Digital activities implemented during the pandemic continued to be expanded. The company’s engineering team has grown to 100 staff members as “difficult economic times have made it easier to recruit.”
Applying technology to every business process, the company realized it didn’t need as many employees as it used to. The slowdown in the market has also been an opportunity for the company to refine its service processes: The Victoria hotel system has 800 operational standards, while the ÊMM hotel system also has about 700 standards.
In 2023, Thien Minh also allowed member companies to reach out to customers directly to offer better rates, to better understand customers and to provide improved levels of service. Thanks to the investment in technology, hotels can maximize available space by implementing promotions and stimulating demand based on the number of available rooms.
The sustainable tourism trend emerged before 2020 and was accelerated by the COVID-19 pandemic. Booking.com’s Sustainable Tourism Report 2023 said that globally, 80% of survey respondents affirmed that “sustainable travel is increasingly important.” Despite the economic difficulties ahead, 75% of Vietnamese tourists surveyed said they would be willing to pay more for sustainable tourism options.
With nearly 30 years of experience providing experiential services for international tourists, especially with the growth in Northern European tourist numbers, Thien Minh is actively promoting the sustainable tourism activities it has in place.
At the end of October, Victoria Hoi An Beach Resort & Spa achieved Travelife’s Sustainable Hotel standard – the most valued certification from the Global Sustainable Tourism Council. It is expected that in 2023, all 11 Thien Minh properties will be the first hotels in Vietnam to achieve Travelife certification.
From US$2,000 in tour guide services in 1994 when still a student at Hanoi Medical University, Tran Trong Kien founded Buffalo Tours, a company providing experiential tourism services focusing on local culture and outdoor activities including mountain climbing, cycling, and kayaking. In 2008, Thien Minh Group was established with investment capital from the Vietnam Investment Group Joint Stock Fund, centered around its core business of Buffalo Tours.
After acquiring the Victoria Hotels & Resorts chain in 2008, the company grew exponentially, opening up new business segments with Hai Au Aviation and the online travel product distribution platform iVIVU.com. In 2018, Thien Minh sold Buffalo Tours and several other brands to Flight Centre Travel Group Limited (FLT) for US$65 million.
In early October 2023, Thien Minh appeared in the press with news about an agreement with bondholders to extend the duration to pay back bond losses valued at VND 150 billion. Was Thien Minh in a difficult spot? Mr. Kien said that the company’s total debt of about US$60 million, largely due to losses during the three-year pandemic and accounting for 12% of total assets, was not a risky figure.
“Thien Minh’s biggest challenge was how to restructure losses during the 2-3 years of the pandemic to be able to operate normally. During the pandemic, we still had to invest in people and technology, expand markets, mergers and acquisitions. If we focused on repaying debts now, limited financial resources would mean not having the opportunities to invest in expansion,” Mr. Kien explained.
In 2023, the company has restructured its finances and is moving forward with investing in new hotels in Cat Ba and Nam Hoi An. It is expected that in the next 2-3 years, Thien Minh will build and develop more hotels, increasing its capacity by 2,000 rooms. By 2026, Thien Minh Group aims to serve about 1.5-2 million visitors, double its pre-pandemic peak.
Victoria Hotels & Resorts is the heart and pride of Thien Minh. The name comes from the spirit of the Victorian era, a period when Britain reached its zenith with a host of technical inventions and journeys to discover the world. This “Victorian spirit” is embodied by Thien Minh as it aims to provide visitors with the opportunity to explore the culture and way of life in new destinations. The company’s 2024 target is to increase revenue by US$300 million in its vision to become the world’s best local experiential travel group.
“To be able to stand here today, with our common assets intact just as they were before the pandemic, and the size of our personnel, reduced but not significantly compared to the overall situation of the travel industry, Thien Minh really had to struggle to overcome all these limitations. We have shown resilience in survival and are now working step-by-step to fully recover and create momentum for the future,” Mr. Kien said.
Source: Forbes Vietnam