The Ultimate Guide to Saigontourist’s Prime Location Strategies in Ho Chi Minh City

Restructuring the Management of 77 Real Estate Addresses: A Case Study of Saigontourist

Saigontourist, or the Ho Chi Minh City Tourism Corporation, is a 100% state-owned enterprise operating in various business sectors, including hotels, resorts, restaurants, and travel services. As of June 30, 2024, Saigontourist managed 11 subsidiary companies, 7 joint ventures, and had ties to 23 associated companies. The corporation and its subsidiaries, in which Saigontourist holds over 50% of the charter capital, are responsible for 77 real estate addresses, 54 of which are located in Ho Chi Minh City.

This case study focuses on the restructuring and management of these 77 real estate addresses, in accordance with government regulations, specifically Decree No. 167/2017/ND-CP dated December 31, 2017, and its amendments in Decree No. 67/2021/ND-CP dated July 15, 2021.

Saigontourist’s portfolio includes prestigious hotels in prime locations in Ho Chi Minh City, such as the Royal Hotel Saigon, Continental Saigon, First Hotel, Oscar Saigon, Grand Saigon, and Majestic Saigon. They also manage restaurants and tourism areas like Binh Quoi 1, 2, 3, Van Thanh, and Tan Cang.

While Saigontourist generates significant revenue from its upscale hospitality businesses, its profits are relatively low due to high inventory costs. For the first half of 2024, the company reported consolidated revenue of VND 3,002.6 billion, a 10.3% increase year-over-year. However, after deducting inventory costs of VND 2,570 billion, their gross profit stood at VND 432.6 billion.

Selling expenses for the same period amounted to VND 75.1 billion, while management expenses totaled VND 216.7 billion. After accounting for various expenses and taxes, Saigontourist’s post-tax profit for the first half of 2024 was over VND 374 billion, reflecting a modest 4.2% increase compared to the previous year.

As of June 30, 2024, Saigontourist’s total assets amounted to VND 11,151.7 billion, a decrease of VND 516.5 billion from the previous year. This included cash holdings of VND 602.1 billion, short-term investments of VND 2,672 billion, and inventory worth VND 15,582 billion.

Addressing Mismanagement and Financial Irregularities

The Ho Chi Minh City Inspectorate recently issued Conclusion of Inspection No. 329/KL-TTTP-P5 dated August 14, concerning the management and use of two real estate properties by Saigontourist: one at No. 1 Hoang Viet, Ward 4, Tan Binh District, and the other at No. 301 Hai Ba Trung, Ward 13, District 5.

The property on Hai Ba Trung Street, with an area of over 996 square meters, was leased to Saigontourist by the Ho Chi Minh City People’s Committee for restaurant operations. However, instead of operating the restaurant themselves, Saigontourist repeatedly leased the property to other units. In 2003, they signed a contract with Van Phuc Trading Service Import Export Company Ltd., and in 2006, Van Phuc Company contracted with Que Huong Liberty Joint Stock Company. Saigontourist did not participate in the management or receive profits based on the business results, essentially subletting the property.

Despite fulfilling its financial obligations to the state since 2018, Saigontourist failed to register the land according to regulations. From November 2, 2021, after receiving the handover from Que Huong Liberty Joint Stock Company, the property has been vacant, and Saigontourist has not developed any specific plans to utilize this space.

Regarding the property on Hoang Viet Street, with an area of 2,575 square meters, Saigontourist was granted a lease by the Ho Chi Minh City People’s Committee for the operation of a hotel and restaurant. However, they subleased it to the First Phan Khang Shopping Mall Company Ltd. (Phan Khang Company) for the sale, installation, and warranty of electronic equipment, which is not in line with legal regulations.

Saigontourist also failed to register changes in assets attached to the land and obtain ownership certificates for the works, violating the provisions of Clause 1, Article 48 of the 2003 Land Law.

These irregularities in subletting the property for electronics and supermarket operations have resulted in a dispute with the Phan Khang Company, leaving Saigontourist with a debt of over VND 59.9 billion, including rent, late payment penalties, and accrued interest (as of March 15, 2024).

In light of these violations, the Ho Chi Minh City Inspectorate issued Decision No. 137/QD-TTTP-P5 dated June 21, 2024, to recover more than VND 20 billion in profits that Saigontourist earned from subletting and investing in business activities that were not in compliance with regulations. Saigontourist has paid the full amount into the city inspectorate’s temporary holding account.

The Ho Chi Minh City Inspectorate has recommended that the Chairman of the Ho Chi Minh City People’s Committee direct the Chairman of the Members’ Council and the General Director of Saigontourist to manage and use the two properties in accordance with the law. They should also take legal measures to protect their interests in the dispute with the First Phan Khang Company to promptly recover the property and the amount of over VND 59.9 billion at No. 1 Hoang Viet. Additionally, Saigontourist should organize a review of the responsibilities of collectives and individuals under their management regarding the violations mentioned.