A move to ease visa restrictions is helping Vietnam’s tourism industry rebound, with momentum expected to build in 2016 against a background of planned investments in related infrastructure.
Tourism is playing an increasingly significant role in Vietnam’s development, contributing VND367.2trn ($16.4bn) to the economy last year, equivalent to 9.3% of GDP, according to the World Travel & Tourism Council (WTTC).
However, with easing visitor numbers from China and Russia weighing on the industry’s performance, the country will be looking for further relaxed visa regulations and regional cooperation agreements to boost arrivals from other key source markets.
Incentives to visit
Vietnam introduced its visa exemption policy on July 1, offering waivers to 22 countries in Europe and Asia, including Britain, France, Germany, Russia and the nine other ASEAN member states, among others.
The rules allow visitors from countries on the list to enter Vietnam without a visa, provided their stay is for a term of 15 days or less, for a cost savings of $45 per person.
While the visa initiative has been criticised by some in the industry who would have liked to see longer stays granted under the scheme, early figures suggest the policy is already generating an upturn in arrivals.
According to data from the Vietnam National Administration of Tourism (VNAT), international arrivals reached 626,000 in September, an 8.3% year-on-year (y-o-y) increase. While year-to-date arrivals were down 5.9% y-o-y to 5.6m in September, many attribute this to weaker economic conditions in Russia and China – two of Vietnam’s primary source markets.
A decline in arrivals from Russia, stemming from a weak rouble and other economic challenges, was a key contributor to Vietnam’s lower visitor numbers. Total arrivals from Russia dropped by nearly 11% y-o-y during the first nine months of the year, according to VNAT data.
Visitor numbers from China – Vietnam’s largest single tourist market – have also been in decline this year, down 18.2% y-o-y in the first nine months of 2015. The fall has been attributed to a slowing of the Chinese economy and lingering concerns over anti-Chinese protests in 2014. While there are signs that the rate of decline could be easing somewhat, total arrivals for the year are unlikely to match the 1.9m recorded in 2014.
Other government measures aimed at attracting tourists could provide the industry with a further boost in the months ahead. In mid- August Hoang Tuan Anh, minister of culture, sport and tourism, announced plans to extend the validity of tourist visas for US citizens from three months to one year.
Having identified the US as a key growth market, Vietnam is looking to boost the number of American tourists visiting the country from around 444,000 in 2014 to 1m by 2017.
As Vietnam looks to drive long-term sector growth, key regions of the country are being targeted for investment, with a particular focus on the north.
In late August the government announced plans to channel extra funds into projects across Hanoi, Hai Phong, Vinh Phuc, Bac Ninh, Hung Yen, Hai Duong and Quang Ninh, with a view to attracting 55m domestic and foreign tourists per year by 2030, generating VND200trn ($9bn) in annual revenue.
A raft of major infrastructure and transport projects will be rolled out over the next 15 years, with seven tourist areas planned, as well as waterways in Haiphong City and Quang Ninh Province and a rail link to China’s Yunnan Province.
Plans to target regional infrastructure upgrades have been welcomed by industry players, and could advance further in the coming years, thanks to a series of bilateral agreements signed with Laos, Cambodia, and Myanmar at the beginning of September to work on joint regional tourism initiatives.
The proposed investments are expected to yield results, according to analysts, with the number of hotel rooms also forecast to increase over the next three years on the back of higher levels of direct investment in Vietnam’s tourism industry.
According to a report issued earlier this year by property consultancy CBRE, hotel supply across Ho Chi Min City and Hanoi is expected to expand by 8% per annum through to 2018 on rising demand in both the leisure and business segments.
“Vietnam’s demand for domestic destinations is on the ascent compared to 10 years ago, and this has created an important boost for hotel developments outside Ho Chi Minh City and Hanoi,” Pierre-Jean Malgouyres, general director of construction consultancy Archetype Group, told OBG.
The WTTC’s forecast was similarly optimistic, with its most recent report predicting annual industry growth of 6.2% over the next 10 years. Job creation is also expected to increase, with direct employment growing by 1.8% per annum through to 2025.
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