Tourism Flows Inbound in Vietnam

• In 2011, the growth rate gets back to the stable rate of 8% after the rapid increase in 2010

• China is continuously taking the lead in the number of tourists coming to Vietnam, despite the rising tension from the Spratly Islands dispute

• Americans, Japanese, Koreans and Russians are those who spend the most on trips to Vietnam

• Number of inbound trips is expected to continue growing well over the forecast period with CAGR of 7%

TRENDS

• In 2011, international tourists tended to choose Vietnam because the country seemed to be more affordable compared to other neighbouring destinations such as Singapore or Thailand. More importantly, the Vietnamese government invested approximately VND50 billion in the marketing campaigns to promote Vietnam’s tourism industry in 2010 through various channels, including CNN, global tourism magazines and tourism road shows in Europe, South Korea, Japan and China. Vietnam gradually gained rising interest from international tourists. Therefore, the number of arrivals to Vietnam grew at 8% in 2011 to reach nearly 5.6 million trips.

• Arrivals by air remained the largest mode of transport. Apparently, air transportation is the fastest way of travelling into Vietnam. As a large percentage of tourists come from China, the US and South Korea, airplanes provide tourists high convenience and help them to save time.

• Aside from airplanes, Vietnam has good opportunity to develop sea tourism thanks to its long coastline with beautiful beaches, ports and islands. Rail and coach are also popular modes of transport for tourists who come from the neighbouring countries such as Laos and Cambodia thanks to their lower cost compared to airplanes.

• In the context of the review period, Vietnam Airlines Corp was the leading airline in the country with many direct flights to both local and international destinations. The company recorded two thirds of its profit from international passengers. In 2010, Vietnam Airlines officially joined the SkyTeam alliance in the hope of extending its network to provide its consumers more benefits.

• Low-cost carriers such as Tiger Airways, Jetstar and Air Asia have gained more customer attention thanks to their affordable price. However, these low-cost carriers typically provide flights from neighbouring countries such as Singapore, Thailand, Malaysia and Australia to Vietnam. The higher acceptance of low-cost carriers in the country is also due to the fact that the flying time between neighbouring countries is usually short. Most consumers accept the low quality of service provided by low-cost carriers to save more money. The popularity of low-cost carriers has fuelled the rising number of inbound tourists from neighbouring countries.

COUNTRY OF ORIGIN

• China continued to take the lead in the number of arrivals to Vietnam, recording more than one million tourists in 2011. The similarity in culture and traditional customs was the main contributing factor for Chinese tourists to visit Vietnam. In addition, the tight fair-trading policy between the two countries was also contributing to the large number of tourists to Vietnam for business. Another reason which explained the high number of arrivals from China was the further expansion of China’s economy in 2011. China has become the second largest economy in the world, and Chinese are more willing to pay more for travel as they are becoming richer.

• Japan and Russia were the second and third key inbound countries in 2011. Arrivals from Japan increased by 16%, which was the highest growth rate, whilst Russia’s growth rate closely followed at 15%. The strong growth of Japanese tourists to Vietnam was thanks to the efforts of the Vietnamese government to encourage Japanese to visit Vietnam. For example, the Vietnam National Administration of Tourism (VNAT) was successful in setting up a website in Japanese to advertise Vietnamese tourism. In addition, the Vietnamese government allowed Japanese citizens to stay in Vietnam without obtaining a visa if they stay for less than 15 days.

• VNAT was associated with travel agencies and hotels to deploy advertising campaigns to foster the development of Vietnamese tourism. For example, in 2011, VNAT participated in various tourism fairs, such as Travex in Cambodia, ITB in Germany and MITT in Russia. Besides, Vietnam’s government also gave the permission to expand the length of stay for transit tourists in Vietnam from five days to 15 days.

BUSINESS VS LEISURE

• Leisure arrival accounted for 85% of the number of inbound tourist flows in 2011 with a total of almost six million tourists. The majority of tourists were backpackers who independently came single or in groups of three to four people with low level of expenditure. The rest were organised group tourists who liked to take package tours from tour agencies. Trans-Viet and Indochina were some of the most popular tour agencies which tourists normally chose when travelling to Vietnam.

• For the backpackers, Hanoi and Ho Chi Minh City are seen as not only travel destinations but also the transit locations to book short tours to other nearby destinations. There are a large number of cheap hostels available for tourists to stay in these places. Taxi service, coach and bike schemes are the most popular kinds of transportation for backpackers to commute on trips.

• Business arrivals accounted for about 15% of inbound tourists, amounting to over one million tourists, of whom 74% were MICE tourists.

• MICE tours are the kind of business tourism which requires a high-end infrastructure as well as the luxury services. MICE tourists are typically very generous and they tend to spend more than other kinds of tourists. Average spending for Europeans in MICE tours was approximately VND20 million per day whilst the average spending for an Asian tourist was around VND8 million per day. MICE tours in Vietnam gradually became favoured by foreigners because of Vietnam’s natural attractions, friendly environment and political stability. For example, Fiditour in 2011 received about 65,000 tourists in MICE tours.

• Hanoi, Ho Chi Minh City, Nha Trang, Hue and Da Nang were the places attracting the largest number of MICE tourists because of their modern infrastructure compared with other provinces in the country.

CITY ARRIVALS

• In 2011, the top three cities to attract arrivals to Vietnam were Ho Chi Minh City, Hanoi and Ha Long.

• Ho Chi Minh City received about 3.5 million international tourists with the growth rate of 45%. Ho Chi Minh City is the largest city in Vietnam. It is the centre of the country’s economy, contributing one third of Vietnam’s GDP. The most interesting attractions for tourists included Independent Palace, Notre Dame Saigon and War Remnants Museum. In addition, the city also carried out promotional activities like holding “September – Special Offer Month” or giving out more than 250,000 Shopping Handbooks for tourists to Ho Chi Minh City in 2011. It also houses the busiest airport in Vietnam, and acts as the transfer point for many tourists who want to visit other places in the country.

• Hanoi received almost two million arrivals by the end of 2011 with the growth rate of 41%. The strong growth of arrivals to Hanoi was thanks to the government campaign to persuade international tourists to visit Hanoi. The Imperial Citadel of Thang Long, Temple of Literature, Ngoc Son Pagoda, Perfume Pagoda, Duong Lam Village and Bat Trang Village were some places being promoted and advertised in the public media in attempts to attract tourists’ attention to the capital of Vietnam in 2011. More importantly, Hanoi was trying to improve its infrastructure and human resources for tourism. For example, the government offices planned to build Nhat Tan Bridge, which helped to reduce travelling time from Noi Bai Airport to the central areas of Hanoi.

• Ha Long Bay was one of the most attractive destinations for tourists to Vietnam. Ha Long is a UNESCO World Heritage site. The bay features thousands of limestone hills and mountains in various sizes and shapes. The limestone in this bay is said to have gone through 500,000 years of formation. Tourists can go on a trip on a boat to visit its limestone mountains, caves and islands, and then enjoy a night on the bay. 2011 saw a decline in the number of foreigners to Ha Long due to many ship sinking accidents in Ha Long reported in various channels in 2011. The accidents increased tourists’ concern about the safety of ships and cruises in Ha Long Bay.

• Aside from the three most popular destinations for international tourists, there are Nha Trang, Da Nang, Hue, Hoi An and many more. Nha Trang and Da Nang have the most beautiful beaches in Vietnam. Hue was once the capital of Vietnam during feudal society times, with many emperors’ palaces and its long history for tourists to explore. Hoi An is famous for its ancient houses and the beautiful beach.

PROSPECTS

• Arrivals to Vietnam are expected to grow at a CAGR of 7% during the forecast period. Growth will be fuelled by the constant government efforts in advertising and promotional activities for Vietnamese tourism. More importantly, government offices are likely to cooperate closely with hotels, tour agencies and restaurants to develop overall services and infrastructure to appeal to returning tourists.

• With the development of hotels, resorts and shopping malls, tourists are expected to benefit more from improvement of tourism services in Vietnam. Four-star and 5-star hotels and spa resorts will be the key trend in construction sites for tourism. There will be more luxury hotels and leisure complexes being built near coastline areas to provide high-end services with natural beauty. Besides, there are a lot of shopping malls being built in big cities to stimulate international tourists’ demand for shopping.

• One potential forecast threat to growth is the weak management by the government, which leads to many social issues that are unfavourable to tourists, such as tourist fraud, thefts and cheating. However, in comparison with neighbouring countries such as Singapore, Thailand and Malaysia, Vietnam still has many places that are not yet explored by international tourists. With the determined efforts to develop Vietnamese tourism as well as better management from government, tourism in Vietnam has a lot of potential to grow over the forecast period.

• Thanks to the fast development of the banking system in Vietnam, credit cards will be used more as the method of payment. However, cash will remain the major method of payment in spite of the availability of point-of-sale machines in shopping centres. It is due that the fact that traditional markets and small retailers need to take a long time to adopt point-of-sale machines.

• China, the US, South Korea and Japan will remain the top source markets which supply a large number of arrivals. MICE tours will be favoured by international business arrivals thanks to the professional, friendly and high-quality services provided in these tours.

• Hanoi and Ho Chi Minh City will continue to be the top tourist attractions in Vietnam as a result of their good infrastructure and high-quality customer services. Nevertheless, international tourists will look for more new places to discover and experience. Some of the places with strong potential for the future include Hue, Hoi An, Nha Trang and Phu Quoc.

• Promotions and discounts are expected to be more prominent during the five-year forecast period in line with the government campaign to promote Vietnamese tourism.