Tourism growth in downtrend

Global economic regression has clearly affected the Vietnamese tourism industry. In the first five months of the year, the number of international visitors coming to Vietnam rose by 16.6%; the figure for June, July and August was lower by 15% year on year.

Infrastructure makes no progress

Another worry for the tourism industry is the reduction of visitors from big and wealthy markets and segments: cruise tourists down by 19%, Japanese visitors 4.2%, South Korean 6.3%, American, British and Canadian over 3%, and Chinese 8.3%.

The trend in Vietnam is the general trend in Asia.

When the US dollar devalued recently, many European tourists chose the US instead of Asia. The prices at Asian restaurants were also more experience, influencing the attractiveness of Asia.

The Vietnamese tourism industry hopes that the number of foreign visitors coming to Vietnam will increase in the last months of 2008 to compensate for the reduction in the past three months.

However, Vietnam’s attractiveness also suffers as the prices of tours to neighbouring countries like Thailand, Malaysia and Singapore have risen 5-10% in the last year while tours to Vietnam have risen 15-30%, mainly due to the increases of room rates and air fares.

Vietnam’s aviation and hotel industries have developed very slowly in recent years so shortages of hotel rooms always happens in the tourism season while there are few choices for air routes and prices.

Speaking to TTG Asia, a travel newspaper, Richard Brouwer, Managing Director of the Diethlem Travel Group of Switzerland, forecast that the situation will get better for the tourism sector of Vietnam and other Southeast Asian countries in October-December 2008, or the tourism season. If during this time Vietnam has more local flights, Diethlem will organise more tours to Vietnam.

Yet, as Vietnamese airlines lack aircrafts and the aviation industry is facing a lot of difficulties, it will be difficult for local airlines to open new air routes and increase numbers of flights. Jetstar Pacific currently has had to temporarily suspend the HCM City-Hue, HCM City-Nha Trang air routes. Many travel agents have had to stop offering tours to Con Dao and Phu Quoc islands since they can’t reserve tickets to these destinations.

At least in the next two years, there will be no big changes in the number of hotel rooms so this will be still the disadvantage of the tourism sector.

HCM City plans to have an additional 950 luxurious rooms at the end of 2009 but only Kumho, Grand and Que Huong 1 hotel projects totalling more than 500 rooms can be completed before next year’s tourism season; other projects like Time Square, Givral, expanded Majestic, Kim Do and Continental hotels are not likely to finish before 2010.

In Hanoi, since mid 2005, there have been an additional 500 rooms of 4- and 5-star level, raising the total number of luxurious rooms to 2,400, while the demand is estimated at 7,000 rooms by 2010. Luxurious hotel projects that have commenced this year will be completed in 2010 at the earliest.

Hotel and resort projects in the central region, such as Vegas, Vinacapital, Hyatt Regency Da Nang Resort and Spa, Pulchra in Da Nang will become operational after 2010.

Opportunities in difficulties

Besides the above disadvantages, some other objective factors will benefit Vietnam. Presently, the attractiveness of Thailand’s tourism is falling because of its political instability and the prices at coastal resorts have highly increased. Since June the number of visitors at resorts in Pattaya and Phuket has decreased 5-10% year on year.

A manager of a Swiss travel group, Kuoni Group, forecast that the number of normal tourists will decrease while MICE (Meetings, Incentives, Conferences, and Events) tourists will rise. Vietnam has many things that are attractive to MICE tourists so it can grasp this opportunity by further advertising.

Vietnam is also attractive to tourists in the region. In the January-July period of this year, visitors from Singapore rose by 17.5%, Malaysia 21.6%, Philippines 55.1%, and Thailand 41.4%.

According to a recent report of the Singaporean Tourism Association, Vietnam is becoming a popular destination for Singaporean tourists. Despite economic recession, the number of Asian people who travel overseas has still increased this year and nearby destinations are their top choices.

Recently, the number of Hong Kong people travelling to Malaysia has dropped but those visiting Vietnam in the January-July period increased by 11.2%. If Vietnam well advertises its tourism and understands the need of Hong Kong tourists, Vietnam can partly earn compensation for its reduction of revenues in the past months.

In 2007, Malaysia, which has 22.5 million people, welcomed 20 million foreign visitors, Singapore (4 million) hosted 10 million international visitors, Thailand (63 million) had 15 million visitors, Vietnam (85 million) welcomed only 4.2 million visitors.

That wide gap will not be quickly shortened even as Vietnam’s tourism industry reaches annual growth rates of from 10-20%. In fact, with the growth rate of only 6.9% in the past eight months, that gap seems to be getting wider.

(Source: SGDNCT)