Young investors in Vietnam struggling to make profit in short-term rental industry

Vietnam: Short-term rentals have become more popular in Vietnam in recent years, especially at tourism sites and in big cities like Hanoi and Ho Chi Minh City (HCMC).

Analysts note that most developers in Vietnam are young investors with many of them renting apartments for business. However, not all of them can profit from the business.

Ha Anh, of district five in HCMC, rented an apartment in the central business district one in HCMC but had to stop after four months of incurring big losses.

Anh said she had over 10 foreign guests in the first months, but the number of clients decreased in the following months. One month, only two clients booked for one night and the money she got was not enough to cover rent, electricity and water bills.

She tried to look for clients through different channels, including Facebook, but her business would not last long with the unsustainable number of guests she was welcoming.

Anh said: “The competition was too stiff. I finally decided to give up as the financial burden became unbearable.”

Vu Van Khoi, of district two in HCMC, has two years of experience in running short-term apartment rentals. Vu now has a 100-square-metre place in Da Lat which brings him profit of 25 million Vietnamese dollars a month.

In late 2017, Khoi decided to rent a 60-square-metre room on Nguyen Du street at for 35 million Vietnamese dollars a month. His major clients were foreign backpackers.

However, his business was not sustainable there either and in September, Khoi gave the apartment back to the landlord and focused on the business in Da Lat.

Mai Thi Huong, of district three in HCMC, has been renting on the ‘westerners’ street’ of Bui Vien for five months and has been taking losses.

She has to pay seven million Vietnamese dollars a month from her pocket to cover expenses and she fears she may not be able to maintain the business if the current situation does not improve.

An analyst said the investors who take losses do not have long-term capital to invest, so the competitive nature is low. The monthly rent is also high so that eats into the profit.

The number of clients is unstable in the short-term rental industry in Vietnam and very few tourists return for visits because they want to stay in different places to experience novelties.