Travel and tourism in VietNam

Travel and Tourism - Vietnam Euromonitor International : Country Market Insight April 2010 List of Contents and Tables Executive Summary 1 Still Faced With Inflation and Fuel Price Growth 1 H1n1 Epidemic Affects the Tourism Industry All Over the World 1 More Policies To Attract Tourists 1 More Luxury Hotels Springing Up 1 Vietnam Tourism Hopes To Recover in 2010 1 Key Trends and Developments 1 Impact of the Global Recession 1 H1n1 Flu Pandemic 2 Legislative Environment – Vietnam Offers VISA Exemption for Diplomatic Passport and Special Public Service Passport Holders 3 Inequality Distribution of Hotels Across the Country Poses Problems 4 Homestay and Vietnamese-cuisine-cooking Tours Are Becoming More Popular 5 Arrivals by Sea Start To Increase Again 6 Demand Factors 7 Balance of Payments 7 Market Indicators 7 Table 1 Leave Entitlement: Volume 2005-2009 7 Table 2 Holiday Demographic Trends 2004-2009 8 Table 3 Holiday Takers by Sex 2004-2009 8 Table 4 Holiday Takers by Age 2004-2009 8 Table 5 Length of Domestic Trips: 2004-2009 8 Table 6 Length of Outbound Departures: 2004-2009 8 Table 7 Seasonality of Trips 2005-2009 9 Market Data 9 Table 8 Balance of Tourism Payments: Value 2004-2009 9 Definitions 9 Tourism Parameters 10 Travel Accommodation 12 Hotel Price Platforms 14 Transportation 15 Car Rental 16 Travel Retail 17 Travel Retail Online Sales 18 Tourist Attractions 19 Health and Wellness 20 Internet Sales 20 Summary 1 Research Sources 21 TRAVEL AND TOURISM IN VIETNAM EXECUTIVE SUMMARY Still Faced With Inflation and Fuel Price Growth Vietnam is expected to face big problems of inflation in 2009. The government has also continually made many changes in the fuel price, causing it to fluctuate during the first half of 2009. Vietnamese people have tightened their purse strings and only spend money on the essentials, hindering travel and tourism. Therefore, all aspects of Vietnam tourism including arrivals and departures in the year 2009 have declined slightly compared with 2008. H1n1 Epidemic Affects the Tourism Industry All Over the World In 2009, Swine flu (H1N1),which started in Mexico and quickly spread all over the world mostly by means of tourism, caused a great deal of damage to the tourism industry, not only in Vietnam, but in every country in the world. Airports have started strict security checks whereby every tourist has to go through a temperature check before being able to board. People have also cut back on travelling for fear of catching H1N1, reducing the number of tourists. More Policies To Attract Tourists The government has implemented several initiatives to attract more tourists to Vietnam, such as hotels (mostly luxury hotels) and tourist agents all over the country offering lower prices. Some leading travel agencies such as SaigonTourist and Vietravel have reduced their prices by up to 30% for tours to major tourist destinations in Vietnam. Hotels and travel agencies have also increased the service quality such as room service, car rental, and airport transfers. Some provinces are chosen to host festivals like the sea festival at Nha Trang, fruits festival at Can Tho, and the Mekong festival. These festivals last a few days and there are a lot of activities like parades, concerts and exhibitions to attract more tourists. These are traditional festivals but they were previously on a small scale and celebrated only by locals. Since 2005, the government has made them into big events spanning several days, with a lot of activities to attract more tourists. Although they seemed to be fascinating for the tourists initially, the festivals just repeat themselves every year offering nothing new and many tourists feel that the festivals are becoming too commercial and have lost their spirit. This is the reason why the number of tourists drawn to these festivals is declining every year. More Luxury Hotels Springing Up Many international corporations have recognized the promising tourism business in Vietnam and decided to invest. Many luxury hotels are being built and existing ones are going through renovation. Vietnam’s first six-star hotel is being built in Vinperland, Nha Trang and is said to go into business at the end of 2010. However, there tends to be a mismatch in locations of luxury hotels. Tourists prefer travelling to mountainous and quiet areas such as the highlands, Sapa, and the countryside, but the hotel rooms in these areas are often all booked well in advance. Vietnam Tourism Hopes To Recover in 2010 With good medical attention, most H1N1 swine flu cases took one week to recover. According to the WHO, travelling restrictions are not necessary. In 2010, the H1N1 epidemic will have been controlled and the global financial crisis should begin to lessen. Travel and tourism will recover and tourists will come back to Vietnam, putting the industry in a good position to gain further revenues in the longer term. KEY TRENDS AND DEVELOPMENTS Impact of the Global Recession In 2008, the world experienced a financial crisis that had a great impact on every country, including Vietnam. It continued to have an effect in 2009. Prices kept getting more expensive, especially petrol kept rising. Since the beginning of the year 2009, the Vietnamese government has adjusted the price of petrol nine times; only one of which was a decrease. With every adjustment, the price of petrol rose about VND500 per litre. Especially on 1 July 2009, the price of petrol rose from VND11,000 per litre to VND14,500 per litre (32% increase). This made people’s budgets smaller as salaries stayed the same. Consumer thought hard before buying anything; let alone travelling. Even though there have been many promotional campaigns such as reducing prices of plane tickets, hotels and tours, travel and tourism in Vietnam slowed down regardless. Current Impact The global recession only made its presence felt on Vietnam’s tourism and travel industry during the first half of the year 2009 because after that, swine flu broke out and “stole all the limelight”. Due to the global financial crisis, Foreign Direct Investment (FDI) in Vietnam has declined rapidly by about 70% (according to the Investment Report of the Ministry of Planning and Investment of Vietnam). Inflation is predicted to reach approximately 7% (about half that of 2008). However, GDP growth for Vietnam in the year 2009 is predicted to be at about 5.5% (decrease of one percentage point compared to 2008) but still positive, which shows Vietnam’s economy is gradually recovering from the crisis. Luxury hotels may suffer the most from the recession since people resort to much less luxury or budget hotels. Value sales of Jetstar, the only low lost carrier in Vietnam, also increased by 24% for the first six months of 2009. This means that people prefer low cost carriers during this hard time. Vietnam Airlines, however, did not do so well. Because Jetstar has “stolen” tourists from Vietnam Airlines, the sales of the latter decreased around 12% over the first six months of 2009. Moreover, Indochina, the first private airline in Vietnam, has been in debt since the beginning of the review period; its sales declining rapidly, by nearly 40%. Outlook During the last half of the year 2009, the impact of the global recession and swine flu died down. Prices of goods and services started to stabilise thanks to Vietnam government’s policies. People’s pockets are growing and sales are increasing again. IMF (International Monetary Fund) said that the global recession was coming to an end but many countries were still facing the aftermath of it and needed quite a long time to completely recover. Economists also said that the financial crisis in many developed countries such as the US had stopped by this time. It is predicted that Vietnam’s economy will completely recover by June 2010. Future Impact Along with the recovery of the economy, Vietnam’s travel and tourism industry will gradually increase as tourism is the economic indicator of Vietnam and generates a large percentage in GDP. It is predicted that Vietnam’s GDP in 2010 will grow at 6.5% and continue to grow positively until 2014. People will start to travel more, especially at the time of 2010’s Lunar New Year (mid-February). However, the prices of rooms will not increase or will only increase slightly because they do not want the tourists to be put off by such a sudden increase. If prices rise suddenly, tourists may opt to stay at budget hotels. Transportation is important to the travel and tourism industry and there are only a few airlines in Vietnam. Therefore, their sales will start to go up and soon will recover completely. H1n1 Flu Pandemic H1N1 (also called Swine flu) is a new kind of virus that has never before been circulated among humans. Swine flu started in Mexico in March 2009 and quickly spread to other countries and continents as people travelled. On 11 June 2009, the World Health Organization (WTO) announced Swine flu as phase 6 (which means it is considered a pandemic). Until 4 October, according to WTO’s update report number 69 about H1N1, there have been 375,000 cases of Swine flu and 4,500 deaths all over the world. As for Vietnam, according to the statistics, there have been over 5,000 cases with six deaths. Research is being taken in order to find a vaccine for Swine flu but in the mean time, every country and person has to follow some safety instructions to reduce the spread of the pandemic. Current Impact The outbreak of H1N1 has had a great impact on the tourism industry, not only of Vietnam but other countries as well. Even though the WTO has confirmed that travel restrictions are not necessary, people are still restrained from travelling as a means of safety. Vietnamese tend to worry a lot about small problems. Therefore, when Swine Flu broke out, it caused panic everywhere. People went everywhere with masks; even in offices and schools. If someone had a mild cold and coughed, people would assume that he/she had Swine Flu and took that person to the hospital for medical isolation. Vietnamese were even scared of foreign tourists for they thought that international tourists were the ones who brought the Pandemic to Vietnam in the first place. In Vietnam, at the airports, both domestic and international tourists have to go through screenings to detect infections. Many schools and universities have been temporarily closed. Vietnam’s tourism has experienced a dramatic decline in the number of arrivals. Towards the second half of 2009, all the panics have died down and the number of newly-infected cases has reduced. People start packing their bags and going on vacation again, especially when Christmas drew near. Outlook By the year 2010, optimistically Swine Flu will have been controllable. As for Vietnam, the Lunar New Year is the time that many international tourists usually come to experience the atmosphere of Vietnam’s New Year with streets decorated with beautiful flowers and the festivals. Therefore, this is a good time for the Vietnam government to implement initiatives to attract more tourists. It is predicted that Vietnam travel and tourism will have completely recovered by June 2010. Hopefully in the year 2010, there will be no more pandemics or any other diseases and Vietnam’s travel and tourism industry will recover and develop. Future Impact Since Swine Flu is considered not so dangerous, tourists do not have to go through screening to detect infection at the airport or take their temperature before checking into a hotel. The sales of tours, hotel rooms and airline tickets will increase slightly and be back to normal in 2010. What Vietnam needs now is the right policies to attract more tourists and to advertise the beauty of the country to tourists all around the world. Vietnam has a stable political background, beautiful scenery, and a wide variety of cuisine. With all those potentials, travel and tourism will grow positively over the forecast period. Legislative Environment – Vietnam Offers VISA Exemption for Diplomatic Passport and Special Public Service Passport Holders Following the trend of integration and expansion of international cooperation, the Vietnam government has also signed 57 agreements on visa exemption with 55 countries; 54 of which are in force. According to those agreements, diplomatic passport and special public service passport holders coming from those 55 countries are allowed to stay in Vietnam for up to 90 days. Furthermore, during summer vacation ( from 15 May 2009 to 30 September 2009), Vietnam offers free visa fees for tourists going on holiday, provided by some particular travel agencies. According to this promotional campaign, named “Impression of Vietnam” to attract tourists, tourists going on tours will be given visas for free at the terminals and stamped “GRATIS”. This is an act of helping travel and tourism in the situation of recession and pandemic. The government hopes that this policy will help attract more tourists since they do not need to wait at the check-in desks for such a long time like before. Current Impact Since Swine Flu was still all over the news and causing panic everywhere in Vietnam, Vietnam government’s promotional campaign was a smart step to attract more tourists to save the decreasing industry. And as a result, more tourists came to Vietnam during summer vacation than any other time of the year. The act of providing free visa for diplomatic passports and special public service passports was a good way to develop business tourism (or MICE- Meeting Incentive Convention Exhibition) which has become a promising area in many other countries in recent years. MICE tourists not only stay in luxury hotels but also spend more on shopping and travelling to many other places in the country. Towards the end of the review period, Vietnam government has taken steps to attract more MICE tourists. As a result, during the first six months of the year 2009, the number of business arrivals increased by 30% (MICE increased by 35%). However, because of the Swine Flu Pandemic, the number has gone down dramatically for the whole of 2009. Outlook Vietnamese government is taking steps to sign more agreements on free visas for diplomatic passport and special public service passport holders with many countries across Europe and also the US. These agreements will come into effect in 2010. With the tendency of international trade and cooperation, Vietnam’s government will issue more free visas to tourists coming from some countries in Europe and from the US. This needs a lot of consideration as the more free visas are given, the more risks that the country faces in terms of illegal migrants. Vietnam’s legislative system still has some loopholes that illegal immigrants can exploit. Since 2008, Vietnam has faced illegal immigrants mostly from some African and Asian countries coming to Vietnam to commit fraud , launder money, or withdraw money with fake credit cards. This is a very serious problem that the Vietnam government still cannot solve. Future Impact Due to the policies of giving free visas for diplomatic passports and special public service passport holders, Vietnam is going to establish good relationships with many countries in the world. This is also an advantage to develop other industries such as import, export and education. Vietnam’s emerging inbound origins are the US, Japan, Korea, China and some countries in Asia. Therefore, Europe is considered a promising market as Europeans travel a lot and spend a lot of money on shopping and entertainment. With this act of the Vietnam government, hopefully in the near future, the number of European tourists will increase. Illegal immigrants cause a lot of damage to the country’s economy and legislative system. Vietnam’s government is tightening the laws, not giving visas to some suspicious individuals coming from some African and Asian countries, as well as heavily fining hotels or other accommodation providers for letting illegal immigrants stay without a visa, expelling immediately illegal immigrants or travellers coming from Vietnam to commit crimes. Inequality Distribution of Hotels Across the Country Poses Problems Along with the development of travel and tourism comes the need for more hotels. Vietnam has a long coastal line so most of the hotels are concentrated near the beaches and in some big cities such as Ha Noi, Ho Chi Minh City and Da Nang, whereas in some other parts of the country with beautiful scenery in the highlands such as Sapa, there is a shortage of hotels. This has become a problem, since tourists tended to prefer the mountainous and quiet areas towards the end of the review period, and there is low supply of hotels there. Current Impact Vietnam is still a developing country and agriculture still accounts for a great part of the country’s economy. As tourists are becoming more aware of the environment, most of them would like to travel to the countryside or mountainous areas to get away from the busy life of big cities with noise, traffic jams and pollution. Tourists can experience the beauty of the terraced fields in the Highlands, Mid-lands or the Northern Region in Vietnam. Mountainous areas are a great part of Vietnam’s varied culture. There are 61 different ethnic groups in Vietnam. Most of the country’s population is “Kinh” ethnic and live in big cities or plain areas whereas, the smaller part of the population come from other ethnic groups and live in mountainous areas. They have their own languages and culture. Many foreign tourists find it fascinating to stay among the ethnic groups and learn about their lives. However, the shortage of hotels in mountainous and country areas means that both international and domestic tourists are unable to stay long. Usually people just come and leave within the day or stay for just a short time. It is also a very difficult problem because if people build many hotels in those mountainous areas, it will destroy the natural beauty of it and tamper with the lives of the ethnic groups. But if they do not build hotels in those areas, Vietnam will lose a lot of tourists. Some travel agencies do offer tours in which tourists can stay and join the lives of the ethnic people. However, those tours are just for a small number of tourists as there are not enough places in the villages to accommodate many tourists. The inequality in distribution of hotels is becoming bigger. In 2009, there were 88 new hotels built in coastal areas. Meanwhile, there were only five new hotels in mountainous and country areas. The shift of tourists’ preference from big cities to much quieter places causing a shortage in hotels. In high-peak season, like Tet holiday or summer vacation, all the hotel rooms are booked well in advance while in big cities many of the hotel rooms are available. There is also an inequality in distribution of luxury hotels. There are about 31, 5-star hotels in Vietnam in 2009; 21 of which are located in Ha Noi, the capital city and Ho Chi Minh City. There is a shortage of luxury hotels in other cities; tourists who visit those cities have to stay in mid-sized or budget hotels with old-fashioned rooms and poor customer service. Outlook It is a big regret that Vietnam cannot accommodate tourists for longer in those areas. The beauty of the scenery is one very distinct advantage that Vietnam has over other countries. It is also a very good way to introduce the country’s various culture and natural and “untouched” beauty to the world. Vietnam needs to solve the problem of how to develop tourism in mountainous areas whilst preserving its natural beauty. Tours to the countryside to experience the lives of Vietnamese farmers are also a really good idea. Touri