Vietnam Tourism: Past, Present and Future

activities - Vietnam: Aug. 13, 2018

"Vietnam. It grabs you and doesn’t let you go. Once you love it, you love it forever." - Anthony Bourdain

The First Generation – Adventure Tourism

If you are reading this article in Vietnam, there is a fair chance it is in part because of Anthony Bourdain. As Vietnam slowly opened its doors to the world during the last few years of the 20th century, celebrity chef and author Anthony Bourdain epitomised the country’s first generation of tourism: adventurous Westerners with backpacks travelling halfway around the world to explore the sights, sounds and tastes of an exotic country. Only 20 years ago, Vietnam received a meagre 1.5 million international visitors. These early adventure travellers increased in numbers over the next decade and as they explored the country, their favourite places became Vietnam’s first generation of tourist locations. By 2008, arrivals nearly tripled. Of course not all were these adventure travellers: Asian businesspeople, Chinese cross-border shoppers, veterans of the war and Russian oil expats were also in the mix.

tourismImage source: st-christophers.co.uk

It was not all smooth sailing. During the last decade of the 20th century and the first decade of the 21st century, growth was not linear or even a certainty. The SARS scare of 2003 reduced the total inbound visitors nearly 8 percent from the year before, and the Thailand political unrest in 2009 affected the entire region, dropping the number of arrivals to Vietnam in 2009 by more than 10 percent from the year before.

Despite the ups and downs, businesses serving these adventure tourists multiplied as savvy Vietnamese saw the profitability of focusing on foreign visitors. A small number of foreigners fell in love with the country (or someone) and became expats, often opening a business for the adventure travellers who followed. Inside the cities, Pham Ngu Lao (Ho Chi Minh) and the French Quarter (Hanoi) became known as “the backpacker area”. Outside of these two major cities, travel was difficult in the early days and many of the first-generation locations arose because they were accessible. Phan Thiet/Mui Ne was the first spot where Highway 1A meets the ocean. Nha Trang and Danang/Hoi An had military airports converted to civilian airports which increased access.

Adventure tourism is not unique to Vietnam; it is often associated with developing countries and it often comes with problems. Ironically, adventure travellers en masse tend to destroy what they love. First-generation destinations are almost always not prepared for the growth in tourism. Adequate waste disposal, business regulations and security never quite catch up with demand. Once shops, restaurants and hotels are built along the roads, improving transportation infrastructure becomes much more difficult and costly. Many first-generation locations in Vietnam still struggle with these issues.

Vietnam will continue to be an adventure traveller’s dream in the foreseeable future. New locations such as Sapa are being discovered (and ruined) by travellers trying to get off the proverbial beaten path. Infrastructure improvements and a loosening of visa requirements will lower the learning curve, making the country more accessible to more people looking for that once-in-a-lifetime experience.

Video source: Benn TK

The Second Generation – Mass Tourism

In January of this year, Vietnam received nearly as many international visitors as all of 1998, but not because of a huge increase in adventure travellers. A recent seismic shift in the type of visitors changed the industry. To illustrate the point, only eight years ago nearly as many Americans visited Vietnam as Chinese. Now the Chinese visitors outnumber Americans by almost six to one.

tourismImage source: citypassguide.com

The second generation of tourists to Vietnam are the new Asian middle-class from nearby countries. The growth of people with disposable income in Asia is unprecedented in the history of humankind, surpassing post-World War II United States. That leads to interesting questions about where those new American middle-class consumers travelled and what they did. The answer is they overwhelmingly headed south to Mexico, a warm country with beautiful beaches, where Americans had more purchasing power, and the culture was interesting but not too exotic. By the end of the century Mexico was a top-10 international destination with 90 percent of arrivals originating from its northern neighbour. Vietnam is positioned almost exactly the same geographically to China as Mexico is to the United States. Mexico’s tourism industry is an excellent guide for understanding the past, present and future development of tourism in Vietnam.

Tourism in Mexico began with adventure travellers, just like Vietnam. As the numbers increased, Mexico learned from the problems first generation tourism hotspots like Acapulco encountered. Rather than continue to let development occur naturally, it allocated huge tracts of land for large developers in designated locations and provided incentives to build mammoth modern resorts. Mexico invested its oil revenues to develop the infrastructure surrounding these designated tourism locations. Unlike adventure travellers, the new middle-class travellers preferred resorts with walls that kept them inside and the locals outside. This successful strategy resulted in Cancun developing 26,500 hotel rooms and welcoming six million visitors a year by 2005.

Given these developments in Vietnam as well, it might lose some of the less mass-tourism-inclined visitors to less developed neighbouring countries, but many will be motivated to find less-known locations in Vietnam. An indirect benefit could be that tourism revenue may spread to some of the poorer areas of the country.

Vietnam’s second-generation of tourism is just beginning, despite tremendous growth in the last few years. The government is targeting 20 million international arrivals by the end of this decade. It is likely that nearly 30 million visitors will come to Vietnam by 2022. Destinations such as Phu Quoc, Cam Ranh and Danang are turning into Asia’s versions of Cancun and Cabos.

Video source: Hi Hai

Individually, these travellers might not spend as much money as more experienced travellers, but their sheer numbers make up for that and more. Additionally, the environmental and social impact is contained in a proportionately small area. For a developing country like Vietnam, the economic impact might be great enough to push the country towards the top end of the middle-income scale. For that to happen, the government’s proceeds from tourism should be reinvested back into programs that offer a high rate of return such as better infrastructure and education. While that may be uncertain, what is certain is that investors, developers and the Vietnamese government will continue to focus on this growing market segment.

The Third Generation – Sustainable Tourism

Once people travel internationally a few times, they become more adventurous and look for quality experiences outside the resort wall. The third-generation of tourism arises when the experience or activity is integrated into the surrounding environment. Specific cultural, geographic and historic properties are integral to the vacation. Companies engaging in third-generation tourism act in a more sustainable manner since their business model depends on the surrounding environment remaining relatively the same. This is also what industry experts mean when they discuss diversifying tourism products. Rather than focusing on a geographic market, the focus is on people from around the globe interested in some activity. Third generation tourists are searching for specific experiences and thus are willing to pay more. Price becomes less of an issue. This is the holy grail of tourism.

tourismImage source: baodulich.net.vn

How will tourism companies in Vietnam take this next step? Culturally, Vietnamese food is gaining an excellent reputation for being both tasty and healthy. Foodies all over the world might be interested in coming to Vietnam to experience their favourite dishes cooked and served authentically, especially if they know it is safe to eat. While an adventure traveller is comfortable eating on the street without guides, third-generation travellers need value added by a company that understands their needs. They pay more and expect more. Home stays and indigenous villages also offer a view into Vietnam’s unique culture. Vietnam has great potential for medical tourism as a low-cost alternative to Western medical procedures.

Vietnam’s incredible and diverse geography is another advantage companies may use to entice sophisticated travellers. Photography, adventure sports and spelunking are just some of the activities that potentially could bring vacationers from around the world.

Historical tourism will be a tougher road. Vietnam’s recent past damaged or destroyed many of its ancient sites. Although many Cham structures still stand, most could use renovation and support services to make the experience better. While war tourism is not a big market, maybe a small niche might arise for tours focused on the recent past wars. The Cu Chi Tunnels, after all, are a popular attraction.

tourismImage source: huracars.com

The evolution of tourism in Vietnam can and will happen concurrently. Third generation tourism businesses already operate quietly. Examples include the Amano’i Resort in Ninh Thuan Province which offers spa and wellness services to the super rich and famous. Eco-lodges in both the North and South try and co-exist with locals outside of the popular destinations. It will be up to individual businesses like these to move past the mega resort model since the Vietnamese government’s focus should be directed towards the low hanging fruit from the North. But Mexico’s tourism industry learned that as Americans gained more travel experience they eventually desired more than a beach and buffet. The new Asian middle-class travellers will also evolve past mass tourism, and those working in the tourism industry in Vietnam need to be prepared for the shift and get ahead of the curve.

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