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Vietnam Tourism Report Q4 2009
Business Monitor International, Oct 2009, Pages: 52
This Vietnam Tourism Report provides industry professionals and strategists, corporate analysts, tourism associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Vietnam's tourism industry.
Tourist Arrivals Suffer In 2009
Figures released by the Vietnam National Administration of Tourism (VNAT) in August indicate that the industry is suffering more than first expected. In the first seven months of the year, tourist arrivals fell by 18.7% year-on-year (y-o-y), to 2.2mn. Arrivals in July alone fell by 16% to 277,998. This followed minimal growth of 0.6% y-o-y in 2008 and indicates that Vietnam is suffering from a prolonged downturn in the industry. While Vietnam, like many other countries, is suffering from the global economic downturn, it is perhaps surprising that it is suffering such a major decline in tourist arrivals. However, the global outbreak of the H1N1 (swine flu) virus in April has hit the country hard, with more than 1,000 cases by August. As a result, it seems that tourists have been discouraged from visiting Vietnam. The publisher believes that tourist arrivals will begin to pick up towards the end of the year, particularly around the end of year holiday season. But with arrivals in the first seven months of the year being so poor, they are revising their full-year 2009 forecast down to 3.82mn arrivals.
Industry Opens Up To Foreign Firms
In a sign of the problems being experienced by the domestic travel industry, the government has opened up the domestic tourist market to foreign firms, albeit on a trial basis. From August 2009 until December 2010, foreign companies that are part of a joint venture with Vietnamese firms will be able to offer outbound tours and travel services from Vietnam. Previously, foreign firms could arrange for tours within Vietnam but not arrange tours starting in Vietnam to go on to another country. This should increase interest in Vietnam’s tourism industry among foreign travel agents, who may now find it easier to book multi-leg tours. However, there are concerns that the new regulations may increase competition for domestic firms, potentially putting some out of business. It is for this reason that the new regulations are on a trial basis only, and foreign firms must enter a joint venture with a Vietnamese firm to be eligible.
Vietnam Airlines’ Profit Slumps In H109
In line with the generally depressing outlook for the Vietnamese tourism industry, state-owned carrier Vietnam Airlines experienced a significant decrease in profit in H109. The airline’s pre-tax profit fell to VND28bn (US$1.6mn), a 77% fall y-o-y. Total revenue in H109 fell to US$630mn. The airline said its performance had been adversely affected by the global economic downturn and the outbreak of swine flu. The downturn has largely been felt with international arrivals, with foreign passengers declining by 11.8% y-o-y, to 1.5mn. In contrast, domestic tourism has been resilient, with domestic passengers up by 8.8% y-o-y to 2.9mn. Despite this sharp fall in profit, it is positive that the airline has remained in profit at all, and the publisher views this as a reflection of its positive fundamentals. The company remains confident and is using the downturn to reposition itself for the expected industry recovery. To this end, it is continuing to expand its fleet, having agreed to purchase 32 Airbus aircraft, 11 Boeing and 11 ATR 72s.
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