"Analyst Mark Gwyther tells the latest about the recent trends in tourism in Vietnam. With all of the changes this unique city is experiencing over the years, whether it be construction, increase in foreign residents, or business growth, tourism by far is one of the leading developing changes this country is encountering."
As we flip our calendars to 2015, it is a perfect time to look at the past twelve months and see if any trends can be identified to help guide us in the future. Last year was a very strange year for the tourism industry in Vietnam.
During the first four and half months it figured to be a huge year, with an upwards growth of 25%. Then the unpredictable East Sea crisis and the drop in value of the Russian Ruble set everything on its head. Instead of the 9 million international visitors some were predicting , only 7.8 million people came to Vietnam.
Those various events greatly affected the data. Removing China, Taiwan and Russia and then grouping countries into different regions provided some clarity. As an analyst, I am always looking at growth rates for comparable time periods. Rising growth rates are particularly exciting.
Unfortunately, three of the largest regions revealed a negative trend line in period-over-period growth. All three regions had fewer arrivals for much of the second half of 2014 than the year before.
* The growth rate from each month in 2014 versus the same month in 2013.
From the data, it is obvious the Chinese and Russian markets dipped in the 2nd half of the year but it is disheartening that the three regions shown in the graph experienced delayed growth as well. This should be very worrisome to the tourism industry in Vietnam.
GROWTH IN ARRIVALS
The graph below shows the stark contrast between the growths in arrivals (growth versus 2013 for the same period) from the first half of the year to the second. Even the other Southeast Asian countries followed this trend to further exacerbate the issue still excluding China, Taiwan, and Russia.
* SE Asia1 includes countries with greater GDP than Vietnam – Indonesia, Malaysia, Philippines, Singapore, Thailand
“THE MOST SIGNIFICANT TREND”
At this point you probably expect an analysis of why growth halted nearly across the board sometime in early summer. But some of you may have noticed an omission in the data above, and that is the most significant trend in Vietnam tourism.
One very important positive aspect can be found in the data from 2014: the increase in visitors from northern Asia. The number of visitors from Japan and South Korea increased by about 135,000 last year. More importantly, the northern Asia region showed very positive growth in the second half of the year. After digging deeper into the data I found that Japan’s first and second half rates were about equal. On the other hand, South Korea’s increased by 22% in the final six months.
That is not an insignificant amount of people, either. South Korea is the 2nd largest market in Vietnam, trailing only China. Businesses in Mui Ne and Nha Trang might be surprised to know that over twice as many South Koreans come to Vietnam than Russians.
SOUTH KOREAN TOURISTS ON THE RISE
This is not an anomaly. From prior research, it was found that people normally begin traveling internationally at an income level of about $1,500 USD per month, or $18,000 USD a year.
South Korea’s per capita GDP surpassed that amount in 2006 and has steadily increased to $23,900 in 2013. That means a significant amount of South Koreans began traveling internationally in the past few years and, if the trend follows, every year there will be many more traveling abroad for the first time. Vietnam is close, cheap and warm in the winter — all excellent attributes for return visitors. From my knowledge about the market, South Koreans come to Vietnam for a variety of reasons, whether it be cultural, weather-related, or for purposes of leisure, such as golf, shopping. Here in Ninh Chu Bay, for example, South Koreans come to enjoy kite surfing. If you are in the tourism business in Vietnam, it is advisable to adopt a South Korean strategy to appeal to this increase in tourists.