Popular travel destinations are feeling the pressure as tourism bounces back from a pent-up, two-year low.
At the height of the pandemic in Vietnam, the tourism and hospitality industry suffered a great deal. Due to social distancing and global mobility restrictions, hotel owners and operators faced unprecedented pressure as revenue plummeted.
As the situation eased, Vietnam gradually halted requirements for medical declaration and Covid-19 testing requirements in entry procedures. The country's tourism industry immediately witnessed a spectacular recovery.
The first five months of 2022 saw a total 48.6 million domestic and 365,000 international arrivals, according to Vietnam National Administration of Tourism. Total revenue in the period is estimated at VND211,000 billion ($9.07 billion) and is expected to continue growing strongly until the end of the year.
Information from Google's keyword ranking tool shows that international search volume for Vietnam tourism is growing by about 50-75%, the fourth-highest increase in the world. Topping the list are Ho Chi Minh City, Hanoi, Danang, Phu Quoc, Hue, and Hoi An.
Most international arrivals came from South Korea and the U.S., followed by Taiwan and Japan. While Chinese tourists were unable to travel due to social distancing regulations, arrivals from neighboring markets like Cambodia, Laos, and Singapore increased sharply.
While a resurgence in tourist arrivals is good news for the industry, too many tourists flocking to the same destination at once can cause overload
For many years, famous destinations like Danang, Phu Quoc, and Dalat always operate at full or over capacity on holidays, Tet, and weekends. During these times, accommodation facilities from affordable to luxury are all maxed out.
Up to now, the total number of accommodation rooms across Vietnam is 650,000 rooms, including 3-4-5 star hotels, apartments, and villas. A wide range of high-end luxury domestic and international hotel brands are present in Vietnam's tourism hotspots, including IHG, Accor, Marriott, Hyatt, Reverie, Caravelle, Majestic hotel, and Rex hotel.
However, the average occupancy rate is only around 52%, showing a stark contrast between occupancy rates in peak season versus low season. To reduce over-tourism in peak season and promote off-season travel, we note a number of trends that hotel operators could adopt.
Staycation, or local tourism
More than half a year ago, while the international tourist market was still frozen, the first stop on the road to recovery for the hotel and tourism industry was the domestic market. Domestic hotel chains continuously launched package promotions to positive feedback.
After the situation stabilized, this type of local travel is still favored by families who want to go on a quick vacation, young people who like to change their working environment, and couples who want a romantic getaway.
The keyword "staycation" can still be seen promoted by major hotel chains, proving that this is not a temporary trend but an essential need of the people as well as an effective solution to low-season vacancy.
MICE tourism
Corporate events combined with tourism (Meetings, Incentives, Conferences, Exhibitions - MICE) attracted a lot of attention from investors and operators. This type of programs requires a large enough space with a well-organized schedule for a large group of tourists.
With many large hotel chains and resorts at beautiful locations that can house up to thousands of guests, Vietnam’s present conditions are suitable to conquer this niche.
Demand for MICE is growing, coming from both domestic and foreign businesses. World Tourism Organization has forecast that by 2025, revenue from MICE tourism would reach over $1.4 trillion.
Sports tourism
A new trend that has been noticed in recent times, especially running and cycling. The first two quarters of 2022 have witnessed races being organized one after another every weekend in many different scenic locations, bringing together thousands of athletes from all over the country.
After an event, many athletes choose to stay in the area for the rest of the weekend before returning to work. According to Vietnam Statistics Office, the recent 31st SEA Games attracted many international and domestic groups to visit and enjoy the events.
Golf tourism
Golf, long considered a high-class sport, is flourishing across Asia, followed by an increase in golf tourism demand. Golf tourism is among the main pillars of Thailand's tourism and has brought in more than $11 billion in revenue for the country in 2020, according to Reuters.
Golfers are more willing to spend a premium to travel and play golf. With favorable weather and attractive natural landscapes, Vietnam is fully capable of competing with other countries in the region for a piece of the "golf pie".
Destination wedding
Destination weddings are weddings combined with a honeymoon, a trend that is very popular in the Western scene, and it’s recently getting even more popular in Asia.
Usually, the wedding will be held at a high-end resort, guests will travel to the destination for the ceremony and stay for the weekend. This concept requires a high level of professionalism and creativity to really create a meaningful ceremony and exciting stay for both the couple and guests.
Due to seasonality, the industry is increasingly building and developing integrated entertainment and services like theme parks, water parks, and hot mineral springs to encourage longer stays and attract visitors throughout the year.
The potential of the domestic market is still very promising with a rapidly growing middle class helping boost tourism demand. We believe that the tourism and hospitality industry in Vietnam will recover and regain strong growth momentum by the end of 2022.