All-inclusive resorts: Next stage of tourism development

All-inclusive resorts Next stage of tourism development

“Obstacles” in tourism

According to the Vietnam National Administration of Tourism (VNAT), it is estimated that in 2017 the country welcomed more than 13 million international tourists, an increase of nearly 30 per cent against 2016. The number of visitors increased gradually towards the end of the year and peaked in the last months. For example, international visitors in November reached 1.2 million, up 14.4 per cent compared with October, while there were 1.25 million in December.

While the number of international visitors has been increasing constantly, industry insiders said that it is more important to encourage them to spend more money, stay longer, return sooner, and have a better impression of Vietnam.

In fact, over the first ten months of 2017, the number of visitors from Asia has increased by 32.8 per cent compared to the same period of 2016. Chinese travellers increased by a particularly high margin, by 45.6 per cent. However, according to the World Travel & Tourism Council, the average trip expenditure of visitors from China to Vietnam is very low, about $638 per person, while the spending of tourists from other markets is also very modest, only $943.8 per person.

This is the reason why revenue growth does not match the volume of visitors. Even in Ho Chi Minh City, a major tourism market of Vietnam, without giving any detailed figures, director of the Ho Chi Minh City Department of Tourism Bui Ta Hoang Vu also frankly acknowledged that the city’s revenue growth from tourism was not proportional to the number of visitors in 2017.

In many other countries, travel agencies have to design and prepare sophisticated “to-do lists” in line with Vietnamese culture and habits, providing Vietnamese visitors with a detailed guide of the essential things to do, see, eat, and buy during their trips. On the contrary, a lot of foreigners do not feel the same way when visiting Vietnam. Many resorts mainly invest to satisfy the needs for accommodation and business travel even though an all-inclusive resort complex needs two more things: shopping and entertainment. However, not many projects were able to develop all the required facilities.

This explains why Vietnam is home to a myriad of jaw-droppingly beautiful destinations that fail to attract tourists, including domestic visitors. There have been a lot of expectations for holiday travel routes along Vietnam’s Central Coast, but in reality, there are wide gaps between cities and provinces in terms of tourism development. Development projects are scattered and separated, not creating synchronous linkages to increase the value of travel products or attract visitors to stay longer in Vietnam.

Furthermore, according to Luong Hoai Nam, deputy general director of Vietstar Airlines specialised in passenger-cargo transport, aircraft repair and maintenance, aviation fuel supply, and pilot training in Vietnam, the systematic connection between the aviation industry and the hotel industry remains very loose, despite it being a very important factor, especially for making discounts and deals. Without such connections, it is hard for all stakeholders to reach a broad consensus when designing combinations of flights, hotels or car rentals. Obviously, there are a number of airlines which have been actively working in co-operation with hotels to build up appropriate pricing policies. However, in general, this combination is not fully effective yet.

“Investment in improving the quality of accommodation only represents one aspect of the whole picture. It is also advisable to pay attention to transporting visitors to the resort quickly and conveniently. It is true that lots of resorts and travel sites are heavily invested, but their facilities are not convenient enough to welcome guests,” Nam said. “The problem lies not in the quality of service at the resort, but in the fact that the resort might be located far from the airport, while tourists usually do not like to travel too far by car or any other means of transport.”

It must be said that the management of arrivals and the tourism environment is still inadequate, with fraud, clingy vendors, pickpocketing, and food hygiene being some painful problems for international tourists. Even famous tourist attractions which received intensive investments in infrastructure and offer modern and spacious facilities cannot avoid these “obstacles” in tourism management and service provision.

All-inclusive resorts

On January 16, 2017, the Politburo issued Resolution No.08-NQ/TW on developing tourism into a spearhead economic sector. By 2020, the tourism industry is expected to attract 17-20 million international visitors and 82 million domestic tourists, making up over 10 per cent of the GDP, with total tourism revenue reaching $35 billion. By these plans, the sector would also create four million jobs, including 1.6 million onsite jobs.

This is a big challenge, if not a huge one. In order to achieve this goal, one of the most important things is to fundamentally change the way resorts in Vietnam are developed, increasing the number of accommodation providers in line with service quality.

Given the sector’s growth potential and open market opportunities, not only domestic investors, but over time, international investors with abundant development and management experience in applying new high-quality resort business models appeared in the country. Accordingly, Vietnam has been able to adopt more advanced models of integrated resorts, which combine travel accommodation with entertainment facilities, as in some other countries of the region.

One of the localities which can attract huge flows of investment thanks to its natural endowments is Halong in the northern province of Quang Ninh. Soon after Sun Group launched Sun World Halong Complex in 2016, including the Sun Wheel, the Queen Cable Car (which achieved two world records), the Typhoon Water Park, the Fame Hall Wax Museum, together with the Dragon Park, Quang Ninh has witnessed a major change in tourism.

Vingroup has also developed a variety of integrated projects, such as Vinpearl Nha Trang and Vinpearl Phu Quoc, which cover a vast area of 170,000 square metres with beautiful castles, shops, and amusement parks straight out of fairy tales, the safari park or the upcoming casino and entertainment complex in Phu Quoc.

Another leading property developer, FLC Group, has joined the game by investing in an amusement park designed to be just as magnificent as Disneyland in the northern province of Vinh Phuc, worth VND5 trillion ($220.26 million) and located on an area of 250 hectares. FLC is also building a safari park on a 200-ha site in the central province of Binh Dinh’s Quy Nhon City.

In addition, it is worth mentioning Empire Group with its recent investment of over VND12 trillion ($528.63 million) in an entertainment complex named CocoBay Danang. In this place, besides the main resort, visitors can easily immerse themselves in the familiar atmosphere of some world-famous tourist attractions, with festive space combined with unique street art performances on a record-long walking street, open-air music shows every evening, beach clubs, and multi-style restaurant chains.

As calculated by Do Chi Hieu, head of Real Estate Investment at VinaCapital, one of Vietnam’s leading investment management and real estate development firms, about 60 per cent of international tourists will come to visit amusement parks or entertainment complexes if they are properly advertised. If the entrance fee of these amusement parks is set at VND500,000 ($22) on average, the revenue will be substantial and it definitely has a strong appeal for investors.

As the habits and tastes of tourist groups are becoming more complicated, diversified, and wide-ranging, it is essential that the Vietnamese tourism industry provide more diversified products to draw in tourists and make them “spend a lot” and happily return in the future.

For this reason, in 2018 and in the years to come, Vietnam needs to establish more large-scale and integrated tourism and entertainment complexes instead of small and separated business models. These complexes can attract and satisfy the tremendous and diverse demands of different tourist groups.

By meeting the needs of a variety of visitors with all-inclusive travel packages, these models attract a lot of visitors to come to enjoy exciting holidays and maybe return several times. As a result, new hotels and resorts will achieve high occupancy rates, thereby ensuring the profitability of the developers.