Vietnam Tourism Report Q3 2012

The Vietnam Tourism Report examines the enormous long-term potential of the growing tourism market, which has experienced major growth in recent years. However, BMI notes that the tourism industry remains small on a regional basis and assesses the long-term goals for the government and businesses to grow the industry.

The report examines how best to maximise returns in the Vietnamese tourism market, while minimising investment risk and also explores the impact of the increasingly precarious looking external macroeconomic environment on the Vietnamese tour sector, which has proven particularly resilient so far.

The report also analyses the growth and risk management strategies being employed by the leading players in the Vietnamese tourism sector, as they seek to maximise the tremendous growth opportunities offered by the local market.

Key Findings Figures released by the Vietnam National Administration of Tourism (VNAT) in April 2012 show the country’s tourism industry continued to grow strongly in the first quarter of the year. Arrivals over the first three months totalled 1.8mn, representing growth of 24.5% year-on-year (y-o-y). This rate of growth is particularly impressive given a high base of comparison in 2011, when tourist arrivals grew by 17% yo- y.

BMI believes this continuing high rate of growth reflects the government’s concerted efforts to expand the tourism industry. Vietnam is now reaping the benefits of this higher level of investment and categorisation of the tourism industry as a strategic sector. Efforts to become a growing destination for regional tourists are also proving successful; tourist arrivals from China grew by 36% y-o-y in Q112, while arrivals from South Korea and Taiwan grew by 43.3% and 33.7% respectively. As a result, BMI has raised its arrivals forecast for 2012 to 6.6mn, although the deteriorating economic environment in Europe, a major source market, represents a downside risk to this forecast.

A sign of Vietnam’s booming tourist industry is the rapid expansion of the civil aviation sector. The International Air Transport Association estimates that the market will grow by 10% y-o-y in 2012, double the global average of 5% growth. Moreover, the Vietnamese government announced in April that five more international airlines have registered to operate in Vietnam, meaning that there are now 48 foreign airlines operating in the country. These include US carrier United Airlines, boosting the amount of US tourists likely to visit Vietnam.

Key Changes BMI has raised its arrivals forecast for 2012 to 6.6mn, although the deteriorating economic environment in Europe, a major source market, represents a downside risk to this forecast.

BMI assesses the implications of the forthcoming IPO by state-owned Vietnam Airlines and how this may affect the domestic airline market.

BMI analyses growing pressure to liberalise the gaming industry, with indications that the government may consider allowing more casinos to be built in the country.