Premium tourism the way forward for Vietnam: official

Vietnam is still in the early phase of developing strong premium tourism products, but that is the correct path for the country to meet its goal of getting into the top 30 nations for tourism, said Nguyen Anh Tuan, director of the Institute for Tourism Development Research (ITDR) under Vietnam National Administration of Tourism.

The Vietnamese tourism market is recovering but still far from pre-pandemic levels, while the global economic slowdown is raging. As we observed, many businesses have opted to develop premium or higher-end tourism products given that competition is stiffer and the high-end segment might bring better cash flows despite a decline in the number of international travelers. Do you agree this is becoming a trend?

That's an accurate finding. Premium tourism is absolutely the correct choice amid the post-pandemic recovery and the demand for such products is rising, thanks to the growing economy and tourists’ changing demands. Tourism revenue has become more and more dependent on quality and attracting high-spending tourists. Additionally, the trend is suitable with Vietnam’s tourism development strategy to 2030.

The 2030 strategy sets a clear focus on premium tourism, instead of general services, aiming to serve tourists with high budgets and long stays. This segment is huge, however, Vietnam has yet to focus on it because the country is still in the early stages of tourism development. With the updated goals, businesses should be aiming for premium products.

An advantage for Vietnam to realize the 2030 target is the country’s high potential, which will facilitate businesses’ competitive advantages.

How well do Vietnamese businesses understand premium tourism, in your opinion?

Premium tourism means that we provide high-quality services worth the money spent by tourists. For example, four-star and five-star hotels are a part of premium tourism, thanks to their accommodation, restaurants, and quality of staff.

What are your recommendations for tourism businesses and tourism real estate firms?

The key for businesses is to understand market demands, especially trends and tourists’ preferences. With such insight, firms can build products suitable for the market, instead of continuing offering products that only play to their strengths.

Market trends are constantly changing. The Covid-19 pandemic also added to these changes. Since 2021-2022, demand has been rising for trips to cool places with untouched nature, a healthy environment, and large spaces featuring unique local cultures. Along with this trend, wellness tourism with personal spaces and mental healing is becoming trendy.

Another trend is adventure tourism, which also provides untouched nature and a healthy environment.

What are Vietnam’s supporting policies for premium tourism and what more can the country offer?

At the moment, supporting policies for tourism businesses are the same as those for all businesses. Meanwhile, destinations meeting above-mentioned trends are in remote areas or islands. To encourage business investment, the authorities should provide direct support for firms, or improve infrastructure to facilitate businesses’ investment.

Another solution is to encourage premium services in urban areas, such as developing huge shopping centers, recreational zones, and events venues. Even in Hanoi and HCMC, those facilities are limited. The move can help boost Meeting, Incentive, Conference, and Event (MICE) tourism in Vietnam, towards competition against top MICE service providers in Singapore, Thailand, and Hong Kong.

Feasible destinations in Vietnam for such services are Ha Long Bay and Van Don district in Quang Ninh province. Hosting global major events is a key solution to attract premium visitors, as offering MICE services, top packages at resorts, and recreational demand will enhance Vietnam’s competitiveness.

What are Vietnam’s advantages and disadvantages in developing premium tourism?

In the region, Thailand, Malaysia, and Singapore are the front runners in premium tourism. However, they have reached their full potential, and their products are saturated. Meanwhile, Vietnam offers massive raw potential. Initially, some top facilities in Vietnam have gained global recognition, such as Amanoi resort in the central province of Ninh Thuan, which is an indication of Vietnam’s capabilities in the field.

However, Vietnam should focus more on developing all aspects of premium tourism simultaneously. The authorities and businesses should work synchronously in improving marketing, promotions, connection between suppliers, a friendly environment, and management. Vietnam falls behind its regional peers in these areas.

Nevertheless, the country has made strong progress in this field, as some firms can now compete in the global market. However, generally speaking, Vietnam is not yet a top destination.

Is Vietnam’s visa policy an advantage for tourism?

Vietnam has recently eased its visa policy for tourists, a massive step. However, in comparison to regional peers, the policy still falls behind and is not yet an advantage for tourism. For example, versus regional peers of Malaysia, Thailand, Indonesia, and the Philippines, Vietnam’s list of visa exemptions is shorter. The authorities should consider a move similar to Thailand giving visa exemptions to Chinese and Indian visitors.

The government has recently implemented an e-visa policy, which was a good move for tourism. Businesses have been urging the government to provide more help, such as adding more countries to the visa exemption list, as the e-visa policy already applies to the country's on the visa exemption list.

What are your expectations for 2024 and beyond? Has the tourism industry recovered yet?

The market is very challenging at the moment as many foreign economies are struggling. Chinese and European citizens, traditional sources of tourism for Vietnam, have had to tighten their budgets amid weak economic performances, hence they have cut their tourism budgets. With such difficulties, businesses should aim for other potential markets, such as India and Middle East nations.

Such a move can reinforce the suggestion that firms have to grasp market trends and that authorities should help to promote tourism in foreign markets, as the domestic market is facing challenges with Vietnamese citizens cutting their spending. While many markets are struggling, approaching lucrative tourists is the key and Vietnamese businesses should focus more on marketing and conduct these tasks together, not individually.

Vietnam has been emerging in the premium tourism sector, with top facilities in Hanoi, Ho Chi Minh City, Phu Quoc island, Khanh Hoa province, Ninh Thuan province, and Binh Thuan province. For the authorities and businesses to develop the sector synchronously, they should invest in infrastructure, including traffic, telecommunications, utilities.

For example, firms should invest more in wastewater treatment, in line with the global trend of a circular economy, green growth and tourists’ higher demand for a green lifestyle.

According to data from the General Statistics Office, Vietnam recorded tourism revenue of VND34 trillion ($1.4 billion) in the first 11 months of 2023, up 50.5% year-on-year. Was this a strong performance?

In my opinion, this was an underperformance, below the country’s potential. In particular, Vietnam has yet to encourage visitors to spend more at night. The government has already paid attention to this by piloting a night-time economy in 12 locations. However, the move is still limited due to lackluster services and restrictions against night-time activities.

Vietnam should learn from Thailand and China. For example, China turned Chongqing into a 24-hour city with round-the-clock activities in only 10 years, earning massive incomes from night-time attractions.