Vietnam is a vibrant tourist destination from the bustling cityscapes of Ho Chi Minh to the traditional atmosphere of Hanoi. In 2024, Vietnam welcomed 11.4 million tourists within the first eight months of the year according to the General Statistics Office (GSO).
As tourists continue to pour in the country, the hospitality business presents many opportunities for both local and foreign investors. From budget accommodations like hostels and guesthouses to luxury hotels, many are jumping the bandwagon.
In this article, we will talk about how you can start your own accommodation business in Vietnam. We will cover the legal framework, requirements, necessary licenses, and the online registration process for accommodation businesses in Vietnam.
Understanding the Hospitality Market in Vietnam
Types of Accommodations Popular in Vietnam
The Vietnamese hospitality market is evolving rapidly. Trends such as sustainable tourism and digital transformation are making waves in the industry. From backpackers, business travelers, and high-income tourists, you can offer plenty of accommodation options to your clients:
- Hotels – classified based on their star ratings from one to five stars. The classification considers factors such as room quality, service level, and facilities offered. Five-star hotels provide luxury services, while one-star hotels offer basic accommodations.
- Hostels – Typically aimed at budget travelers, hostels offer shared accommodations and communal facilities. They are popular among backpackers and young tourists seeking affordable lodging options.
- Guesthouses – Often family-run, guesthouses provide a more intimate and homely atmosphere compared to hotels. They usually offer basic amenities and are favored by travelers looking for a local experience.
- Bed and Breakfasts (B&Bs) – combines lodging with breakfast services, often located in residential areas. B&Bs cater to tourists seeking a cozy environment with a personal touch.
- Resorts – larger establishments that provide comprehensive recreational facilities, often located in scenic areas or near beaches. Resorts typically offer a wide range of services, including dining, entertainment, and wellness programs.
- Villas – standalone properties that offer luxury accommodations with private facilities. They are often rented out for short-term stays and cater to families or groups seeking privacy.
Legal Framework and Requirements for Starting an Accommodation Business in Vietnam
Starting an accommodation business in Vietnam involves navigating a complex legal framework set by the Vietnamese government. The Investment Law No. 67/2014/QH13 outlines the regulations governing both local and foreign investors in Vietnam.
While local investors can fully own their business without restrictions, foreign-owned entities are facilitated as either a wholly foreign-owned enterprise or a joint venture with a local partner.
Here are the requirements to establish a hospitality business in Vietnam:
- Capital requirements – For joint ventures, a minimum share capital of 250 million VND (approximately $12,500) is required for hotel operations. There is generally no minimum capital requirement for wholly foreign-owned enterprises in the hospitality sector, but the registered capital should reflect the scale of operations and investment plans.
- Commercial address – the location should comply with local zoning laws and regulations that permit hotel operations. Certain areas may restrict hotel activities due to proximity to cultural or religious sites.
- Land Use Rights – Foreign investors typically acquire land use rights through lease agreements with the state or local authorities. These leases usually last between 30 to 50 years and may be renewed. It is essential to ensure that the chosen location aligns with local land use planning and zoning regulations.
- Operational Capital – While there is no specific minimum capital requirement for most hospitality businesses, it is advisable to register a capital amount that adequately reflects the expected operational costs and investments necessary for starting and running the hotel or accommodation service.
Licenses Required to Operate an Accommodation Business in Vietnam
Aside from pre-requisites for starting a hospitality business stated above you would need specialised licenses and permits to operate any type of accommodation in the country.
- Investment Registration Certificate (IRC) – you must submit an investment proposal detailing the project’s scope, location, expected investment capital, and operational plans to obtain an IRC from the local Department of Planning and Investment (DPI).
- Business Registration Certificate (ERC) – After obtaining the IRC, you need to register your business entity with the Trade Register to receive an ERC, which formalizes your hospitality business operations in Vietnam.
- Building Permit – if you want to construct a building for your hospitality business, you must obtain a building permit from the Department of Construction.
- Additional licenses – Depending on the services provided (e.g., food and beverage), additional certifications may be required, such as:
- Fire Safety Certificate – ensures that your company complies with fire prevention and firefighting regulations, safeguarding both the property and the safety of individuals within the premises.
- Food Safety Certificate – necessary for accommodations involved in food preparation, processing, or sale, ensuring compliance with health and safety standards to protect consumers.
- Environmental Protection Certificate – you may be required to conduct an Environmental Impact Assessment (EIA) if your operations significantly impact the environment.
- Certificate of Eligibility for Security and Order – ensures that your establishment meets security regulations.
How to Set Up an Accommodation Business in Vietnam
Land Leasing Procedures in Vietnam
To start your accommodation business in Vietnam, you must identify and secure a suitable location. In Vietnam, all land is owned by the state, and individuals or organizations can only obtain land use rights through leasing.
Foreign investors can lease land for a period typically ranging from 30 to 50 years, with options for renewal depending on the terms negotiated. Before signing a lease contract, you must ensure the area is zoned for hotel operations.
Acquiring IRC and ERC from the Department of Planning and Investment
To obtain the Investment Registration Certificate (IRC) and the Enterprise Registration Certificate (ERC) in Vietnam, you must follow specific procedures and submit required documentation to the appropriate authorities.
Here’s the process to acquire an IRC:
- Register your investment project online through the National Foreign Investment Information System.
- After completing the online registration, you must submit a comprehensive application package to the relevant authority within 15 days.
- If rejected, authorities must provide written notification with reasons for rejection.
After obtaining the IRC, you can prepare your ERC application. This process usually takes about 3 working days once all required documents are submitted. Once you have an IRC and ERC, you may obtain all the specific licenses for hospitality businesses such as a Fire Safety Certificate, Food Safety Certificate, etc.
To streamline your application for various operational and business licenses, Emerhub will guide you through every step. Our experienced team of local experts can assist you in securing specific licenses required for operating a hospitality business.
Our experienced team will guide you through every step, from conducting an initial consultation to understand your specific business needs, to preparing and submitting all necessary documentation to the relevant authorities. With Emerhub’s comprehensive support, you can navigate Vietnam’s regulatory landscape efficiently and effectively.
Other Considerations for Starting an Accommodation Business in Vietnam
Staffing and Human Resources for your Accommodation Business
Another important factor to consider when starting your own hospitality business in Vietnam is staffing and human resources. As a business owner, you need to make sure you’re adhering to Vietnamese labor laws regarding employee contracts, wages, working hours, social insurance contributions, and occupational health and safety standards.
By prioritizing staffing and human resources, your business can not only meet current operational demands but also position yourself for sustainable growth in Vietnam’s booming tourism sector.
To make staffing and human resource management much easier for your new hospitality business in Vietnam, Emerhub’s Employer of Record (EOR) service offers a comprehensive solution. Emerhub handles all aspects of employment, including recruitment, payroll management, tax compliance, and employee benefits, allowing you to focus on your core operations.
Tax Obligations for your Hospitality Business
Tax obligations also need to be considered when starting a hospitality business in Vietnam. Here’s an overview of the key taxes applicable to your business:
- Corporate Income Tax (CIT) – the standard CIT rate is 20%, applicable to all corporate entities, including foreign-owned businesses operating in Vietnam. Certain sectors, including hospitality, may qualify for tax incentives, such as reduced rates (10%, 15%, or 17%) or tax holidays, depending on the location and nature of the business.
- Value Added Tax (VAT) – The standard VAT rate in Vietnam is 10%, but hospitality services such as hotel accommodations typically enjoy a reduced rate of 5%. Certain goods and services may also be exempt from VAT or subject to different rates. Businesses must file VAT returns monthly, with payments due by the 20th of the following month.
- Business License Tax – an annual fee based on the registered charter capital of the business. Companies with charter capital over VND 10 billion (approximately USD 430,000) pay an annual license tax of VND 3 million (USD 130), while those with less pay VND 2 million (USD 85). New businesses are exempt from this tax in their first year of operation.
- Withholding Taxes – your business may also be subject to withholding taxes on various payments made to foreign contractors and service providers. The rates can vary depending on the type of service provided, typically ranging from 0.1% to 10%.
To help you with taxes and accounting for your hospitality business in Vietnam, Emerhub provides tailored tax reporting services. From bookkeeping, payroll management, and financial statement preparation, Emerhub lets you focus on your core operations.
This integrated approach not only simplifies financial management but also helps mitigate risks associated with non-compliance, allowing businesses to thrive in Vietnam’s competitive hospitality market.
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