The Declining State of Tourism in Vietnam – And How We Can Help

By: Patrick Gaveau

In 2014, the international economical and geopolitical situation did not play in favor of Vietnam’s tourism. Inbound tourism arrivals dropped substantially for two of its largest markets, even if it did end with a slightly positive overall figure (according to official statistics). The main drop came from what was then the leading inbound Chinese market and what was due to be the fastest growing market in 2014 and 2015, Russia.

The problems of Vietnam’s tourism not only lie in the lack of budget to be spent on tourism promotion, but also in the lack of a reasonable mechanism on how to spend the allocated money. This is true at national, regional and local level because most Vietnamese tourism authorities do not understand travel market needs and the realities of today’s world. Travel is a fast evolving modern industry that requires a sufficient budget and enough qualified professionals to handle a growing influx of 7 million+ arrivals.

Most private stakeholders do recognize what recurrent issues negatively affect Vietnam’s travel industry. It includes visa procedures that are too complicated and costly. Furthermore, marketing and communication activities undertaken by the public sector are for the most part obsolete. This will expanded upon later.

Tourism performance in 2015

Vietnam welcomed 7.87 million international arrivals at the end of 2014, an improvement of 4% compared to 2013. But from June to December 2014, the country has seen seven consecutive months of decline, a worrying trend that continues into 2015. March this year marks the tenth consecutive month of decline in the number of tourist arrivals in Vietnam. According to the latest statistical data published by the Vietnamese National Administration of Tourism (VNAT), some 756,000 foreign visitors came to Vietnam in February, 10% less than the previous year. This is in sharp contrast with Southeast Asia’s stats (excluding Malaysia and Brunei), which grew marginally at 3.9%, while Northeast Asia experienced the most significant growth (+8.4%). Source: Pata.

The plunge of Chinese arrivals from one year to the next

Chinese New Year started late this year, but the combined figures for January and February 2015 alone show a 40% decrease in the number of Chinese visitors. It is clear that the recurrent political tensions between China and Vietnam over territorial disputes in the “East Sea” have played a significant role that lead to a tentative loss of 500,000+ room nights in 2014 alone, according to Mark Gwyther, City Pass market analyst. This is of particular concern since Chinese customers were until recently the leading group of inbound travellers in Vietnam.

How badly is travel to Vietnam affected by Russia’s current economical challenges?

Arrivals from Russia fell by over 25% in the first two months of 2015.  Professionals in both Nha Trang and Phan Thiet say it could mount up to 50%! Vietnam is not the only country to be affected by the absence of Russian tourists, whose currency (the Ruble) fell nearly 50% against the US dollar, which directly fluctuates with the Vietnam Dong.

This downturn has called for a halt on investment for several licensed hotel/resort projects in the southern coastline between Nha Trang and Phan Thiet. Hundreds of millions of USD have been cut off from these developments and tens of thousands of new jobs could be at stake if the situation continues in the coming years.

Is South Korea becoming the largest source market for Vietnam?

In contrast to the slowdown in China, Koreans contributed to 145,600 arrivals in February 2015 and 262,000 in the first two months of the year, up 68% and 55% respectively. In a recent article, we pointed out that if you are working in the tourism industry you need a South Korean marketing strategy. Now, reality tells us that most involved and willing stakeholders are not so well prepared or capable of handling the demanding needs of this growing Korean market: How many qualified hospitality staff can speak decent Korean? How many non-Korean hotels cater to the Korean market? How many restaurants have a Korean menu?

Is Vietnam tourism suffering from other ailments?

It is always easy to pinpoint and justify declines in tourism arrivals due to external factors such as political or economic reasons, about which little can be done. It is obviously more complicated to make an internal diagnostic and to face realities that matter most, but that often fly under the radar for too long. It is an unfortunate situation that leads to stagnation and to the incapacity to act.

Are Visa prices too high and is the attribution process too complicated?

A single entry 30-day visa to Vietnam costs at least USD 90+ when using a service provider and twice as much or more for a multiple entry visa. A letter of invitation is required for any Visa on arrival; alone, it usually costs some 20-30. Last but not least, the delivery process at airports is inefficient and frustrating. In February this year, my mother, who is soon to be 70 years old, waited in line for three hours at Tan Son Nhat Airport after a 20-hour flight!

How do Vietnam visa policies* compare with nearby destinations?

*The above listed visa fees (besides China) where taken from internationally renowned visa agency https://www.visahq.com/

Vietnam enforces the most expensive Visa fees when compared with seven nearby competitors. The 30-day visa cost is worth three times more than the second-most expensive destination, Cambodia! As for businessmen, even in restricted China, it is now possible to enter the country through Beijing or Shanghai for all nationalities (with a few exceptions) for 3 days without a visa. Why not in Vietnam?

How well is Vietnam’s external communication being handled?

Vietnam Tourism Agencies use outdated marketing and outreach efforts. The Vietnamese Administration of Tourism (VNAT) spends a large chunk of its budget on ineffective TV advertising campaigns – BBC and CNN Asia particularly – and for a spot at most large international travel fairs. The design of the actual booths are often weak, and they still hand out CDs to professionals full of mediocre photography, instead of proposing modern solutions with a decent website. The weak branding and inadequate offline and online communication strategies are blatantly apparent – there is even a lack of proper information centers nationwide, and the charming hostesses at fairs in Ao Dais sometime have difficulty speaking English!

Overview of public funds allocated to the national tourism authorities in 5 nearby tourism destinations:

What is being done to improve Vietnam’s image and the traveler’s experience?

National and regional authorities do not make any concrete efforts to create the appropriate environment and employ communication tools to enhance the pre-arrival and on-site experience of travellers in Vietnam.

Currently, VNAT does not have the necessary budget, tools or professionals to effectively handle the necessary leading travel information systems needed to promote and serve traveller interests.

Due to the lack of budget, VNAT does not use experienced and qualified media agencies to handle Vietnam’s declining brand and offline and online communication activities. Many tourists visit Vietnam only once, and few return for a second visit. This is just one of the signs that the destination is on the decline. If more travellers were returning to Vietnam like they do to Thailand, this would be a huge step for the country. But there is no real strategy for return visitors. There isn’t even an adequate brand presence – people have a difficult time identifying the aspects that make Vietnam such a special place (unless they’ve spent some time acclimating to the environment).

How well are travellers being treated when they arrive?

Most leisure travellers begin their journey in Hanoi, Vietnam’s capital. The city is well known for dishonest taxis and their recurrent ripoffs, recounted to friends by word of mouth and to millions online through the social media sphere. Instead of reassuring tourists on arrival, taxis (in Hanoi especially) often scare them off. For travelers, it might be their second negative impression of Vietnam following their tentative distress upon arrival when getting their visa.

What else?

I could continue the list and include the fact that amenities are mostly nonexistent, tourism regulations are poor, tourism education and training systems are weak, attractions are poorly funded and maintained, none of it being marketed, etc. We could also pinpoint that access to most destinations and attractions by roads and/or rails are not suitable; as a result, this leads to extensive travel time from point to point and increases cost for travellers.

Gorgeous specimens of colonial architecture – of particular interest to some travellers – are being destroyed regularly for the sake of modernity, eroding the heritage that remains one of the key values for most destinations. Furthermore, some traditional values and assets are disappearing day by day. Some examples are: the traditional Ao Dai dress that is now barely used but for special events; the slowly disappearing street vendors in favor of large malls (at least, in Districts 1 and 3 in Ho Chi Minh City); and fewer and fewer people are riding bicycles, at one point a charming aspect of Vietnamese life. But you cannot tell people to stop modernising; it’s a part of growth, even if it means chipping away at heritage.

The pollution – the plastic bags and garbage ubiquitously thrown around – and the noise factors also contribute to disturbances that negatively affect the traveller’s experience, and the fact that environmental resources are being depleted so fast is worrisome.

There is also the difficulty of driving a private or rental car in Vietnam. The rules are confusing, and are not presented in a clear manner, mainly due to the fact that the country has not yet recognized valid international driving licenses. 

Conclusion

For those like us who love Vietnam it is sad to report on all this because it is and will remain a special place for us. A place that is full of joy and simplicity, a place where humans are connected to one another, a place where smiles and friendly people are the norm. Vietnam is so young and vibrant, so safe (there are almost no violent crimes, and an absence of arms), the food is so good and the faces full of sincere smiles. It is also a land of opportunities where so much can be done. The level of freedom enjoyed here is also remarkable.

The various stakeholders at the national level and those in private sectors must begin to take responsibility to ensure that we can start to change the course of actions soon, so that we begin to move constructively into the right direction and preserve what’s left of Vietnam that makes it such a special place to be.

The short-term-gain mentality is not likely to change soon. But knowledge and awareness of the impact this sort of mentality has on tourism is enough to start things slowly moving in a more positive direction.

Here are 12 proactive ideas:

1. Create a proper Ministry of Tourism with sufficient resources (In Spain it is the 5th most important ministry).

2. Create a budget for tourism authorities. To do so, impose a 5 USD fee to all airlines for each passenger arriving by air to fund the national tourism authorities. To fund the local and regional representative tourism authorities, apply a tax on all room nights. The tax should range from US$ 1 to US$ 10 depending on the price of the hotel room.

3. Invest in education programs/schools for tourism nationwide with the support of foreign schools with expertise in the field.

4. Hire a professional and experienced foreign media agency to handle all external communications for Vietnam.

5. Allow free visa to most citizens for any stay less than 30 days.

6. Ensure that all main travel destinations have proper access by road and train.

7. Invest in and develop sophisticated online marketing and IT tools to communicate more effectively.

8. Build professional tourism offices nationwide in main destinations to promote the works of all local providers and to facilitate the stay for travelers.

9. Close some roads in the main tourism areas to allow for safe walking in the street.

10. Create/organize events on a regular basis in most of the main destinations to create further attractions on site.

11. Impose cooperation between national, regional and local tourism authorities so they combine their regulatory and marketing efforts.

12. Push for qualified local private professionals to take a part in the planning of tourism regulations and development at the regional and local level.

City Pass Guide, a private enterprise, focuses its activities on improving Vietnam’s image and the traveler’s experience while providing qualitative tools online and off-line free of charge. City Pass Guide’s content is available in 5 languages. The company also prints 230,000+ free travel guides and some 400,000+ free city maps. Each year these efforts are being done without support from the local, regional and national authorities.

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