Nha Trang: the Next Honolulu?

Blogs - Nha Trang: June 3, 2015

Recently, the Chairman of the Khanh Hoa Province was unfairly maligned in the press after he compared Nha Trang to Hawaii. If he meant Honolulu, it is a justifiable comparison and a perfect model for Nha Trang to follow. Hawaii, like Khanh Hoa, has a variety of places that tourists can enjoy. An urban environment next to the ocean is one of them.

But recent fights over Nha Trang’s beaches clearly demonstrate the country’s lack of awareness about what it takes to draw the next generation of tourists, and another declining month of tourism numbers has caused considerable consternation among experts and the press.

Within a two-week period, the press ran several articles about why Vietnam cannot compete for tourists, ran features on Phan Thiet’s garbage problem, and then decried how Ana Mandara “ shoo(d) people away” from their beach. The vice-chairman of Nha Trang told the press: “No one has the right to ban people from walking on a public beach.” Well, tourists who can afford a room at a 5-star resort have the right to choose another destination; and they are.

Here’s the problem. Like any business transaction, when a tourist spends money they expect something back in return. If a community does not provide anything for tourists, why would they come? Additionally, if the bare minimum is provided, travelers spending the bare minimum will come. You don’t need a degree in Quantitative Economics and Decision Science to understand this relationship.

Several different development models can be followed. For instance, the beaches of Southern California and Honolulu are public. The local government collects taxes from the residents to provide life-guards, beach-cleaning, garbage collection, toilets, and the enforcement of basic rules which allow users to have a good experience. Those tourists spend money in the community, more than paying for the cost of these services.

Nha Trang: the Next Honolulu?

A more common model in less developed countries is to give - or sell at a reduced price - the community’s assets to qualified private businesses and allow those businesses to provide the services for a profit. In exchange, the community collects taxes, gets higher employment and the travelers spend money in the surrounding area.

Of course a combination of these approaches also works. Some provinces in Vietnam do neither. From reading the news, it is obvious that many people in the industry, the press, the government, and the local population believe better marketing and reduced visa fees will solve the problem. It will help draw people for the first time, but as soon as a person pays the money for a 5-star resort and spends the afternoon on the beach next to a loud bunch of locals getting drunk, leaving garbage, and urinating a few meters away (I’ve seen all of this), that will be the last trip they take to Vietnam. Bad online reviews will warn others away. Chastising a resort for trying to prevent this from happening is ridiculous. It also takes the incentive away for private businesses to provide the missing services that most tourists expect.

The Solution

So what should be happening? First of all, communities need a strategic plan and communicate that plan to the locals. Decide on which model will be followed. The biggest issue with Nha Trang right now is that they keep going back and forth. Over a decade ago, they allowed Ana Mandara to manage the beach in front of the resort. About five years ago Nha Trang decided to choose the urban public-use model of high-rise hotels across the street and make the beach accessible to everyone. At the time Ana Mandara should probably have been moved to Cam Ranh where resorts have beach rights. But even now, once a new huge controversial project claims beach rights, as soon as a few people complain, the rights are withdrawn. Potential investors should not believe anything they are told by the Khanh Hoa Provincial Government or Nha Trang City. Obviously either the plan changes constantly or no plan exists.

After having a plan, communities must make the hard choices and follow through. Some people will be left behind, but understand that the increased tourism spending will benefit many more. Whoever is in charge of Phan Thiet is doing a terrible job of this. The province makes a lot of money from kite surfers staying six months a year, yet they must share the entire bay with fishermen who keep nets and other dangerous objects in the water. The social cost of moving the fisherman would be more than made up by the increase in the number and quality of kite surfers spending money in Phan Thiet.

Doing it Right

Hoi An Vietnam

It is no coincidence that tourism in the central part of Vietnam is fine. The local governments understand this idea of giving up something to receive more. Danang has given large tracks of land to developers for golf courses and large sections of the beach for 5-star resorts. Hundreds of thousands of relatively wealthy South Koreans, Chinese, and Japanese spend money in Danang and as a result, many residents now have stable, middle-income salaries.

Hoi An has kept its charm by not allowing some locals to profit from selling land to developers who want to tear down the old buildings and create modern hotels. Many residents are also inconvenienced by walking streets which appeal to tourists. But these decisions have made Hoi An the most alluring destination in Vietnam.


Nha Trang needs to stick with a plan and better communicate it to the locals, the press and investors. More importantly, the government must start spending some of the money they receive from tourism to provide safety, cleanliness, and management of the beaches if they expect tourists to visit; and that means more than loudspeakers blaring warnings.