Tourism in Vietnam: The Past and Future

Working - Saigon/HCMC: March 27, 2017

American presidents usually give a “State of the Union” speech to the legislature around this time, discussing the past year and what their goals for the future are. While I don’t have orange skin, here is my address about the state of tourism in Vietnam and a few predictions for 2017.

travel in vietnam

Looking Back at the Monkey

Chinese and Koreans All Around...

By any measurement, last year was an excellent year for tourism in Vietnam. Out of 29 countries, only Cambodia showed a drop in international visitors to Vietnam. In fact, the number of inbound foreigners increased by nearly 50 percent in the last four years.

Those of you in Saigon reading this English-language newspaper and working in the hospitality or tourism industry may be surprised or sceptical about the numbers. That is because Vietnam has been experiencing a tremendous shift in markets. Nearly 70 percent of this growth has come from China and South Korea alone, the two largest and fastest-growing inbound markets in 2016.

This shift accelerated in 2016 at a staggering rate. Between 2012 and 2016, the number of international arrivals to Vietnam grew by 3,165,000 people. Of that increase in visitors, 2,230,000 came from China and South Korea.

The reason for the increase is pretty simple: China and South Korea have large populations with a rising average income which is creating a larger middle class. People typically begin travelling internationally when their family income reaches about $1,500 per month. The first trip is usually to a country nearby with a familiar culture. Vietnam is a close, warm-weather destination with a familiar Asian culture.

 

growth in arrivals

 

… and Also More Westerners

You might think all this growth is great, but not really relevant to your business if you rely on American, European and Australian tourists. Sorry, those markets haven’t grown significantly. That is why on 1 July 2015, Vietnam’s government waived visa fees for five European countries for a 15-day visit.

So, did it work? Apparently it did.

Granting a few months for word to spread, from November 2015 through the end of 2016 each month saw a significant improvement over the same month the year before.

However, while the chart may look fantastic, the actual increase in 2016 for these five countries averaged about 9,700 more tourists per month. Even if the fee exemption was expanded to North America and Oceania, a similar jump in tourists would result in only an average monthly increase of about 25,000 visitors this year. China and South Korea combined to grow an average of 119,000 visitors per month in 2016 and this coming year will see an even larger increase.

Just how much larger, you ask?

foreign visitors

Looking to the Rooster

Here are a few predictions for 2017:

  1. The new electronic visa system will grow eligible markets by over 50 percent.

At this time, it is not clear who will be eligible, but this may have a greater positive effect on tourism than waiving the visa fee. It seems more likely that the current system of travellers sending their passport to a Vietnamese consulate is a greater barrier than the visa fee.

  1. The number of Russians travelling to Vietnam will double in the second half of 2017.

The number of Russian travellers to Vietnam increased by 28 percent this year from last year, though the number is only up 19 percent over a two-year period. However, with U.S. sanctions likely to be lifted, the Russian currency will rise in value. Political problems in Egypt and Turkey make Vietnam a safe choice for chasing the sun.

  1. The number of Chinese tourists will grow faster than in 2016.

Chinese citizens embarked on an estimated 60 million outbound trips last year, yet only

2.6 million were to its southern neighbour. Despite China already being far and away Vietnam’s largest market, there is plenty of room to grow.

  1. Total number of international visitors to Vietnam will surpass 13 million.

See #1, #2, and #3 above.

  1. A domestic Vietjet flight will leave Ho Chi Minh City on time.

Just joking!

Let’s not get too crazy with these predictions.