That’s what hospitality consultant Horwath HTL’s Asia Pacific managing director Robert Hecker told the Vietnam Tourism Property Opportunities Conference and Exhibition in Ho Chi Minh City Thursday.

The two-day event aims to promote Vietnam as an attractive destination for tourism investors by showcasing more than 300 potential projects from a dozen provinces.

Addressing day one of the conference at the New World Hotel Saigon, Hecker said the local tourism sector had enormous potential.

Ten years from now, Vietnam is expected to welcome more than eight million foreign visitors, double last year’s figure and higher than the forecasts for Thailand, Indonesia, Malaysia and Singapore.

“The interest is there,” Hecker said.

“But [the problem is] you can’t get as much of it because of constraints.”

Some challenges hindering the development of Vietnam’s tourism industry include the lack of supporting infrastructure such as airports and roads, inadequate marketing and promotion and a shortage of skilled staff, as well as rising costs.

Challenges as opportunities

In the hotel sector, undersupply was both the biggest challenge and the greatest opportunity for tourism investors, said Thibaud Paquin, Accor hotel chain’s development general manager in Asia.

A shortage of hotels, especially five-star rated properties, and high priced rooms is identified as a major stumbling block for the local tourism industry.

Consulting firm Grant Thornton Vietnam’s managing partner Kenneth Atkinson said one night at a five-star hotel room in HCMC now cost more than US$200, a price few were willing to pay.

In neighboring countries a similar hotel room would cost half as much.

Real estate services provider CB Richard Ellis forecasts top-tier luxury hotel room rates may reach up to $500 a night in Hanoi and HCMC during busy periods.

Though providing high-spending tourists with luxury hotels, villas and resorts should obviously be a major goal, foreign investors at the conference called for more attention to budget facilities and services catering to domestic customers.

“The biggest tourist in Vietnam, I say, is a Vietnamese tourist,” CBRE Vietnam’s managing director Marc Townsend told the conference.

When it came to choosing a foreign market to target, international investors said Vietnam should not neglect neighboring countries where interest in Vietnam was increasing.

Another major setback, which some at the conference believed would be short-lived was inflation, which is around 16 percent.

The government’s drastic and constantly changing measures to control price increases were also a concern.

HSBC Vietnam deputy chief executive David Morton said the government’s tight credit policy was temporarily causing some market distortions such as high interest rates, liquidity shortage and difficulties in currency conversion, which could create problems with investors’ financing.

Slow and steady

Despites these challenges, foreign investors at the conference were optimistic about the prospect of investing in the local tourism sector.

Head of Horwath HTL in Asia’s capital services department, Roger Griffin, said one of most appealing aspects of Vietnam as an tourism investment destination was the “evident enthusiasm” of the government in trying to attract foreign investors.

David Lim from legal consultant Mayer Brown JSM agreed.

He said although foreign tourism investors still faced mountains of red tape, especially when applying for land leases, local laws protected their most important rights, including a guarantee their property won’t be nationalized.

Head of the Ministry of Planning and Investment’s Foreign Investment Authority Phan Huu Thang assured the conference tourism was one of Vietnam’s prioritized industries, with foreign investment into the sector strongly encouraged.

Thang said around 10 percent of foreign direct investment went into the tourism sector, which was “too modest.”

Yip Hoong Mun, Deputy CEO at CapitaLand Vietnam Holdings, said though Vietnam had been slow to open up its market, it was slowly and steadily allowing greater access.

“Vietnam is a sleeping beauty,” Mun said.

“And the question is just how to wake her up to turn her into an international beauty.”