The challenges to overcome for Vietnam’s tourism future

June 04, 2024 | 14:44
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The tourism industry in Vietnam is currently facing two challenges that threaten its sustainable development.

The first is the sharp increase in the price of domestic flight tickets, prompting Vietnamese travellers to prioritise international trips. The second challenge is the intense competition for tourism market share, both do-mestic and internationally, from neighbouring tourism destinations.

The challenges to overcome for Vietnam’s tourism future
Dr. Nuno F. Ribeiro, Senior lecturer in Tourism and Hospitality Manage-ment RMIT Vietnam

As a result, an increasing number of Vietnamese tourists are opting to travel abroad, selecting destinations like Cambodia, Indonesia, Laos, Malaysia, and Thailand for their trips. This shift in preference poses a threat to the domestic tourism sector in Vietnam, risking a loss of market share to other destinations.

Moreover, outbound tourism adversely affects Vietnam’s economy by exerting a negative impact on the country’s balance of payments. When Vietnamese citizens travel abroad, currency flows out of Vietnam, unlike when foreigners visit here, which contributes positively to the economy.

The escalating costs of domestic flights in Vietnam result from an aircraft short-age, particularly medium-sized planes such as the Airbus 320 and 330, and Boe-ing 737. The introduction of new airlines and sustained growth in Vietnam since the liberalisation of the airline market in the 1990s have exacerbated aircraft scar-city, affecting domestic availability.

Additionally, recent surges in maintenance and operating costs have reduced the number of flight-ready aircraft, especially during peak travel seasons. The short-age of qualified aviation professionals, including pilots, engineers, and air traffic controllers, further compounds the industry’s woes. Government leaders have rightly raised concerns about the lack of pilots and aircraft engineers in Vietnam’s aviation industry, highlighting the challenges posed by the rapid growth of the sector.

The imbalance between supply and demand in the domestic aviation market leads to higher airline ticket prices. Vietnam has emerged as the world’s fifth fastest-growing aviation market, expected to reach 150 million air transport passengers by 2035, as reported by the International Air Transport Association.

With projections from the Civil Aviation Administration of Vietnam indicating a sustained annual growth rate of 7.5-8.5 per cent in the passenger market towards 2030, high domestic travel prices are not likely to go away anytime soon.

Strategic investments and initiatives are essential to address the challenges posed by limited aircraft availability, infrastructure deficiencies, and human resource shortages. Expanding the fleet, enhancing infrastructure, and resolving staff shortages can boost the industry’s capacity to meet the increasing demand for domestic air travel and alleviate pricing pressures.

The challenges to overcome for Vietnam’s tourism future

Vietnam has already taken steps in this direction, such as the construction of the Long Thanh Airport and the procurement of Boeing 737 MAX aircraft by Vi-etnam Airlines and Vietjet. Opening up the domestic aviation market to foreign carriers, like Thailand’s successful tourism promotion model in the 2000s, is an-other potential approach. These initiatives, however, can take years to implement.

In the short term, three possible solutions to reduce the cost of domestic flight tickets are government oversight to keep prices at reasonable levels; public-private partnerships to increase airline operation efficiency, reduce overheads, and optimise resource allocation; and special promotions by airlines in conjunction with marketing and hospitality organisations to offset some of the cost of ticket prices away from the consumer.

The second challenge is the competition for international tourists, particularly with neighbouring countries that have well-established tourism industries and ro-bust marketing strategies. Competition for international tourists, particularly with countries like Thailand, is often seen as one of the most significant hurdles for Vi-etnam’s tourism industry.

By ramping up promotional efforts, streamlining admin entry barriers, reducing prices, and improving flight availability and frequency, these nations and others are attracting tourists away from Vietnam.

However, a different perspective suggests that rather than competing, countries should prioritise collaboration and partnerships to foster sustainable tourism growth. Studies published in leading tourism scientific journals as early as 2011 highlight the benefits of cooperation among tourism destinations. They empha-sise that working together can result in increased tourist flows, shared resources, and cultural exchanges, creating unique tourism experiences that draw in a di-verse range of international visitors. This is particularly crucial for Vietnam as it aims to lessen its reliance on a limited number of outbound tourism markets and attract long-haul visitors who include Vietnam in their travel itineraries alongside Cambodia, Laos, and Thailand.

Both the United Nations World Tourism Organization (UNWTO) and the World Travel & Tourism Council (WTTC) advocate for a multi-country approach to tourism development, marketing, and promotion. The UNWTO emphasises the importance of partnerships in achieving sustainable growth by addressing com-mon challenges, promoting cultural understanding, and fostering a more inclu-sive and resilient tourism sector.

Similarly, the WTTC emphasises the potential of cross-border tourism partner-ships in driving economic growth and job creation, enhancing destination com-petitiveness, and attracting international tourists. By establishing strategic partner-ships, sharing industry best practices, and actively promoting cross-border initia-tives, Vietnam and other ASEAN countries can cultivate a more interconnected and adaptable tourism ecosystem.

These collaborative efforts not only enhance the overall competitiveness of the region but also foster sustainable growth and development in the Vietnamese tourism sector. Through cooperation and knowledge exchange, destinations can leverage their combined strengths to offer innovative and diverse tourism experi-ences, ultimately benefiting both the destinations themselves and the travellers seeking enriching and memorable journeys.

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By Dr. Nuno F. Ribeiro

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