Figures released by the Vietnam National Administration of Tourism (VNAT) show that tourist arrivalsgrew solidly in the first seven months of the year, although below recent growth trends. In total, visitorsfrom January to July reached 2.6mn, representing growth of 6.6% y-o-y. Moreover, visitor arrivals in Julyreached 330,000, a y-o-y increase of only 3.2%. This arrivals data is well below recent rates of growth. In2007 visitor arrivals totalled 4.1mn, having grown by 16.0% y-o-y. Such rates had been maintained intoQ108, when arrivals grew by 15.7% y-o-y.
However, we have long warned that the impact of the US slowdown would begin to impact on tourismarrivals to Vietnam throughout 2008. In addition, the Beijing Olympic Games, held in China in August2008, will have attracted some potential tourists away from Vietnam and to China instead. Indeed, growthfrom Vietnam’s traditional tourist markets slowed in the first seven months of the year. Arrivals fromboth the US and the UK fell, to 249,973 and 58,473 respectively, As in Q108, regional arrivals providedthe bulk of Vietnam’s tourism, demonstrating the increasing value of the local market. Arrivals from thePhilippines grew by 55.1% y-o-y, following by Thailand, Singapore and Malaysia, with growth of 41.6%y-o-y, 27.5% y-o-y and 21.6% y-o-y respectively. This market will be of growing importance to Vietnamas slowing economic growth weighs on arrivals from further afield into 2009. While the January-Julygrowth figure is below our 2008 forecast growth rate of 10.0%, we expect tourism to pick up againtowards the end of the year and therefore maintain our current forecast for now.
Tri-country Tourism Agreement Signed
In recognition of the potential value of the regional tourism market, Vietnam has been making efforts toboost co-operation with neighbouring countries. In August, VNAT hosted a meeting between tourismofficials from Vietnam, Cambodia and Laos, in order to improve tourism opportunities around thecountries’ tri-border area. The representatives agreed to boost efforts to co-ordinate tours and marketingcampaigns, with Vietnam currently organising tours to Cambodian and Lao provinces across the border.In addition, the grouping called for their respective governments to increase infrastructure investment inthe area, with the aim of increasing the ease by which tourists can access the region.
Price Rises Drag On Industry Growth
The tourism industry is suffering from the impact of high global oil prices on fuel costs, with both touroperators and airlines subject to higher transport costs. Following a decision by the Ministry of Finance,domestic passengers have to pay a fuel surcharge on flights from August. As a result, both VietnamAirlines and Jetstar Pacific have put up their domestic prices, with ticket costs now ranging fromVND50,000 to VND180,000 per flight. This will not only impact on domestic passengers but also on tourcompanies operating for foreign tourists, Given that many tours are booked up to a year in advance, localtour operators will have to cover the cost of the higher flight prices, therefore operating at a loss.
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