Vietnam's Tourism Industry

Barely fifteen years ago, the tourist industry in Vietnam played a very limited role in the economy of this South East Asian country. For decades, nearby Thailand had been attracting the largest numbers of visitors and therefore was better prepared to welcome international tourists. However, following a series of social and economic changes in the region, the Vietnamese tourist industry has begun to gain importance and the country is now ready to compete with other neighbouring countries. In this article we take a detailed look at the tourist industry in Vietnam, from its development in the late 1990s to its current booming status and future prospects.

An overview of the tourist industry in Vietnam

The growth of the tourist industry in Vietnam is closely linked to a series of socio-economic reforms implemented by the Vietnamese authorities in the late 1980s. These measures were meant to open up the country's economy so that it could compete in a market-oriented economy. The reforms were successful, and in just a few years the local economy was experiencing annual growth rates of up to 8.6 per cent, which in turn made the country a desirable destination for Western visitors.

Another important development that contributed to the growth of tourism in Vietnam was the establishment of the Vietnam National Administration of Tourism, a government agency created in 1992. The figures speak by themselves, as one year after the creation of this agency, the number of foreign tourists barely reached 500,000 a year but this figure followed an upward trend for a decade, reaching a 286 per cent increase in 2008, when the country was visited by nearly 5 million tourists.

The decline of agriculture and the rapid industrialisation of this South East Asian country were also partly responsible for the growth of the tourist industry, as many individuals abandoned their former jobs and turned to the service industry.

However, the latest figures suggest that growth is slowing down in this sector following a few years of tourist bonanza. There are several reasons for this. First of all, inflation levels of up to 30 per cent have caused an increase in the prices of basic tourist services, such as transportation, food, and accommodation. Secondly, the country enforces a dual pricing system where foreign visitors are charged significantly more than locals. Dual pricing is not as prevalent in other nearby countries, such as Thailand, the Philippines, or Malaysia, so many visitors are turning to these destinations instead.

The global economic recession also contributed to a slow decrease in the number of visitors who travelled to Vietnam in 2009 and 2010. This decrease is not specific to Vietnam, as other well-established tourist destinations have experienced the same situation. While the struggling economies of North America and many Western European countries have reduced the number of visitors to Vietnam originating from these countries over the past three years, the number of Asian tourists is on the rise. Currently, approximately 65 per cent of all visitors to Vietnam come from Asian countries, most notably China, India, Singapore, South Korea, Japan, and Thailand. Australians and New Zealanders account for 7 per cent of all tourists. In some coastal destinations, Russian tourists account for nearly 37 per cent of all visitors, and the Vietnamese Ministry of Culture, Sports, and Tourism has already allocated part of its annual budget to train tourist guides in strategic spots so that they can provide services in Russian language.

Currently, the tourist industry in Vietnam generates over $4.5 billion a year in revenues, which constitute more than 4 per cent of the country's gross domestic product.

Popular tourist destinations in Vietnam

Vietnam's natural resources are an important attraction for foreign tourists. Due to this reason, the coastal provinces and the mountainous areas are among the most visited destinations. Rich history, cultural heritage, and the local gastronomy are other factors commonly mentioned as the main reasons why visitors choose Vietnam as their holiday destination. The most popular destinations are the cities of Hanoi and Ho Chi Minh, along with Ha Long Bay, Hue, Sapa, the coastal resort of Nha Trang, the Mekong delta, and the island of Phu Quoc.

What does the future hold for the tourist industry in Vietnam?

The launch of several initiatives, such as the National Tourism Year (where more than 30 cultural events aimed at tourists were held across the country) or the National Tourism Action Programme show that the local authorities are seriously investing in the tourist industry. Over the past few years, the local infrastructure in the main tourist destinations has greatly improved, with several airports being open to commercial planes and new highways being built. Therefore, the future of the tourist industry in Vietnam will depend on the continued development of tourist infrastructure, along with the professionalisation of the tourist trade in the country.