Story: TUAN HUNG
Photos: NICK M, SHUTTERSTOCK

Numerous factors are casting a veil of uncertainty over Vietnam’s tourism industry in 2023. However, the industry is finding solutions to adapt.

2022 marked the spectacular comeback of Vietnam’s tourism industry. The industry went from being the sector hardest hit by the Covid-19 pandemic to the one experiencing the quickest recovery. Statistics have pointed out that the number of domestic tourists was even higher than in 2019, which was the industry’s peak period. The tourist season started right after the Lunar New Year in 2022 and continued until July, giving the tourism industry a big boost.

It’s difficult to forecast the tourism industry in 2023

However, Vietnam’s tourism industry only attracted 2.35 million international tourists, which was less than half of the expected goal of 5 million. At the same time, many travel agencies witnessed a 40 – 50% drop in revenues starting from October, when the tourist season ended. Other factors—such as some countries opening up later than Vietnam, China’s “Zero Covid” policy, the Russo- Ukrainian conflict, inflation, and the risk of a recession— are considered to be the underlying reasons for the shortfall of international tourists following the domestic tourist season. These factors complicate the forecast for Vietnam’s tourism industry in the coming year.

INTERNATIONAL TOURISTS AS THE KEY FACTOR

Phung Quang Thang, the chairman of the Vista – Hanoi, said that when Vietnam opened up again, many key markets such as China or Russia had yet to recover. At the same time, South Korea and Japan have only recently begun to reopen their countries.

 “Our neighboring countries have the same problems as well. Currently, there are many problems affecting the number of international tourists, such as military conflicts and inflation, which cause service costs to rise and impact tourists’ purchasing power. It’s even harder to attract tourists from Europe or the US because the flights are long and expensive,” said Mr. Thang.

The Vietnam’s tourism industry is adapting to recover after the pandemic

It is very difficult to predict the number of international tourists in 2023 since these factors show no signs of ending. However, we may expect that “more countries will open up now that the Covid-19 pandemic is approaching its fourth year.”

According to Mr. Thang, a key task for the Vietnamese tourism industry in the coming year is to identify potential markets and promote tourism there. This is particularly important since tourists from China, which accounted for the most inbound tourists in 2019, will not be coming back soon. Tourists from Russia are in the same situation.

“Reaching the 2019 milestone of approximately 18 million international tourists will be no easy feat. That was probably our all-time high. However, if we choose the right markets to promote tourism in, the number of international tourists will definitely increase,” said Mr. Thang.

On the topic of the international tourist market, Mr. Vu Tien Van, the chairman of the travel agency Adavigo, claimed that India will definitely be one of the top target markets for Vietnam’s tourism industry in 2023. He also said that many airlines were eager to tap into this market and that Indian tourists, who are keen globetrotters, are also more willing to pay. He also suggested promoting tourism in Southeast Asian countries to capitalize on their geographical proximity and easy visa application process. Tourists from Uzbekistan, Kazakhstan, and Poland can gradually replace Russian tourists.

Vietnamese tourism businesses must transform themselves in addition to finding prospective market

“Of course, these countries do not have as much potential as the Chinese market. However, in the current context, we still need to make up for the shortage of tourists,” said Mr. Van.

UPCOMING CHANGES TO THE DOMESTIC MARKET

In addition to the international market, the state of the domestic market in the upcoming year is also a concern for many travel agencies. After what happened in 2022, there are mixed opinions on domestic travel trends for 2023. Some predict that the domestic market will return to its pre-pandemic levels. Others anticipate domestic visitors to be “more flexible,” which means tourism activities will be spread out across various months, rather than only during the summer, as in 2022. Moreover, many tourists have begun to choose short-haul destinations for weekend getaways.

Nevertheless, most experts agree that domestic tourists will be less willing to spend even when travel demands continue to rise. Therefore, travel agencies will have to introduce new products that are both attractive and budget-friendly. Most travel agencies have affirmed that the price of tour packages cannot go any lower. In the past two years, agencies have implemented attractive prices to stimulate demand. However, in the current context, it is very difficult to introduce such shocking promotions. Instead, travel agencies will have to find alternative support methods.

 A representative from Best Price travel agency said they have worked with several financial firms to assist tourists with their budgets. For example, for a 5-day-4-night tour in Thailand that costs approximately VND6.9 million tourists need only prepay about VND1.75 million paying off the rest in installments over three, six, or twelve months with zero interest.

Vietnamese tourism businesses must transform themselves in addition to finding prospective market

SELF-RENEWAL

In order to attract new visitors, Vietnamese tourism businesses must transform themselves in addition to finding prospective markets. Some changes that can be implemented include increased flight frequency, simplified travel processes, and the introduction of new products suitable for the target markets. 2022 may be the stepping stone for international tourist growth. In 2023, the inbound tourism market may warm up again. By 2024 or 2025, it is likely that this market will return to where it was in 2019, barring unpredictable factors.

Moreover, developing new products should not only be the primary responsibility of travel agencies but also of local stakeholders. According to the chairman of Vista – Hanoi, local stakeholders must join hands to create more specialty products to attract more tourists. Phu Quoc in 2022 is a notable example of this self-renewal. Instead of being just another seaside destination, Phu Quoc is now known as a resort paradise with a wide variety of amusement, entertainment, and shopping attractions. The road to attracting tourists, whether domestic or international, is not a single-lane track but a highway that requires cooperation between travel agencies and local stakeholders.