1. Introduction 
Vietnam is a nation of determined optimists who have weathered war after war, survived colonialism and communism, and are now getting to grips with the wheeler-dealer world of capitalism. Fiercely protective of their independence and sovereignty, the Vietnamese are graciously welcoming of foreigners who come as guests not conquerors (Lonely Planet, 2010). The GDP of Vietnam has been increasing 7.5% per year since 2001 (Department of Foreign Affairs and Trade, 2010). As a result of opening its economy to the world market in the 1990s, Vietnam’s tourism industry has experienced unprecedented growth (grown nearly twice as fast as GDP in recent years). According to UNWTO (Semone, 2008), the demand for global tourism will double by 2020.
2. Global Tourism Industry Analysis
Porter’s 5 forces model is used to analyse the current global tourism industry. Firstly, the threat of new entrants is medium as high capital outlay is required by respective governments and organisations to attract tourists. Besides, gaining distribution and awareness is easier with today’s technological advance. Moreover, the top 3% of all travellers in the world spend 20% of the total tourism expenditures, buyers’ power is medium. Also, travellers want variety each holiday, so loyalty may be difficult to acquire. Moreover, threat of substitutes is low as the global tourism demand is forecasted to grow. The supplier power is medium as large volume of materials is required from suppliers. Also, the industry rivalry is high because of high fixed costs, high exit barriers, high demand and strong competition. To conclude, the industry seems attractive. However, with intense rivalry among existing countries, establishing a sustainable competitive advantage is critical for success in the global tourism market.
3. Consumer Demand
According to Vietnam Travel (2009), the consumer demand for Vietnam as a tourist destination has increased to nearly 4.5 million tourists in 2008 from 500,000 in 1993, and Asian countries account for over 65% of total tourist numbers. After Vietnam started advertising in China, more Chinese tourists visited the country. Also, Vietnam Airlines increased the number of flights and routes available; Vietnam has experienced an increase in Tourist numbers from all other countries. Moreover, the family income growth in Western Nations has been more prominent amongst the lower and middle incomes brackets, which lead to an increase in demand for luxury goods.
The total growth forecast of Vietnam tourism from 2009 to 2014 is approximately 26%. A significant growth is anticipated from certain Asian countries (i.e. China, Japan, Malaysia, Singapore, Thailand, etc) and China remains the key market for Vietnam’s tourism industry. Furthermore, Australia, UK, USA, Germany and France have also been flagged as part of the trend of increasing tourist numbers in Vietnam. The prospects for luxury travel through 2010 are more positive for the personal travel segment than business travel. Surveys have found that when affluent tourists travel for their personal pleasure, they are far more likely to move up-scale to the four- and five-star accommodations that they have come to enjoy over the years
4. Consumer Characteristics
Morgan (2004) states that generic pampadour/ luxury travellers are referred to up-market, DFY (do-it-for-you), indulgent, female skew, white collar and professional skew, fashion-conscious with 5-star product preferences. Generic compatriots/ family travellers are forced to compromise, family-focused, role-driven, good shoulder market, activities focused, budget conscious, like resorts and don’t like camping, favour 3-star, but aspire to 5-star.
From Asian market, Chinese overseas travellers are mainly from high to middle-income groups. Also, Asians are becoming more sophisticated and are more demanding for 4- or 5-star accommodation (Becken, 2003). Additionally, from western countries market, luxury travellers are more active in their approach to relaxation, exploration and relaxation.
5. Political & Cultural Environment
The consumer demand may be interfered by both political and legal issues. In Vietnam, all major and minor areas of policy are decided and imposed by its one-party communist state (Vision & Associates, 2010). Besides corruption problems, the legislative bodies within Vietnam continuously confirm to guarantee the legal capital and assets of foreign investors. Also, travel firms and the Tourism Administration Agencies of China and Vietnam have signed cooperation agreements.
Vietnam has its own characteristics, quite different from its neighbours. Vietnamese are “relationship-oriented”, and efforts to learn as much as possible about their culture will be highly appreciated by the Vietnamese. Vietnamese is the first language, but English and Chinese are becoming more important as a second language. Moreover, 70% of the population is Buddhist, 10% Catholic, and various others make up the balance.
6. Branding Opportunities
Competitive advantages of Vietnam over other tourist destinations include untouched exotic beaches in pristine condition, 5-star accommodation and services at 3-star prices and cultural heritage sites. Furthermore, the company can increase awareness and promote the value and benefits through travel magazines, strategic alliances, government funded country specific advertising campaigns, mass media and consumer-direct marketing and distribution.
7. SWOT Analysis
7.1.Strengths
The company may use new branding campaigns to reposition the Vietnam Tourism industry. Also, exotic landscapes and cultural attractions may increase number of international tourists. The offer of 5-star accommodation and services at 3-star prices will become a competitive advantage for the company.
7.2. Weaknesses
As a result of years of war, Vietnam’s infrastructure is weak although it is steadily improving. Language barriers and corruption may interfere with the consumer demand. Also, Vietnam is not always at the forefront of consumers mind for travelling.
7.3.Opportunities
Chinese tourists visiting international destinations are growing currently. Technology advance not only enhance the services supply to consumers, but also empower the consumer to be less reliant upon the traditional tourism supply chain. Emergence of sub-regional cooperative agreements increases the value and synergy for the tourist and the participating economies. The instability within Thailand allows Vietnam to gain market share from its competitors. From the government support, tourism offers a sustainable, long-term alternative to the manufacturing boom that is beginning to occur within the country.
7.4. Threats
As mentioned previously, the competition is fierce in the industry. Also, the global economic climate is changing rapidly, such as the inflationary pressures. Moreover, the political instability makes Vietnam susceptible to future protests by citizens. Well intended safety and security procedures and regulations are creating traveller inconvenience in the form of longer lines at airports and stricter visa policies and standards.
8. Recommendations
To succeed in the Vietnam tourism industry, the company should intensify marketing communication efforts. For example, to increase awareness of the destination and its attractions, reposition the brand to change consumer perceptions and communicate a distinct competitive advantage (5-star quality at 3-star prices). Also, it may adopt cross-section of communication channels, such as mass communication, direct marketing and e-marketing. Moreover, the company should establish training and development courses for Vietnamese. Language barriers have proven to be an obstacle for tour operations. In addition, building strategic alliances with travel agents can maximize the potential profits. Also, inter-government alliances should be encouraged which can help to overcome the cultural differences problems.
Vietnam is a nation of determined optimists who have weathered war after war, survived colonialism and communism, and are now getting to grips with the wheeler-dealer world of capitalism. Fiercely protective of their independence and sovereignty, the Vietnamese are graciously welcoming of foreigners who come as guests not conquerors (Lonely Planet, 2010). The GDP of Vietnam has been increasing 7.5% per year since 2001 (Department of Foreign Affairs and Trade, 2010). As a result of opening its economy to the world market in the 1990s, Vietnam’s tourism industry has experienced unprecedented growth (grown nearly twice as fast as GDP in recent years). According to UNWTO (Semone, 2008), the demand for global tourism will double by 2020.
2. Global Tourism Industry Analysis
Porter’s 5 forces model is used to analyse the current global tourism industry. Firstly, the threat of new entrants is medium as high capital outlay is required by respective governments and organisations to attract tourists. Besides, gaining distribution and awareness is easier with today’s technological advance. Moreover, the top 3% of all travellers in the world spend 20% of the total tourism expenditures, buyers’ power is medium. Also, travellers want variety each holiday, so loyalty may be difficult to acquire. Moreover, threat of substitutes is low as the global tourism demand is forecasted to grow. The supplier power is medium as large volume of materials is required from suppliers. Also, the industry rivalry is high because of high fixed costs, high exit barriers, high demand and strong competition. To conclude, the industry seems attractive. However, with intense rivalry among existing countries, establishing a sustainable competitive advantage is critical for success in the global tourism market.
3. Consumer Demand
According to Vietnam Travel (2009), the consumer demand for Vietnam as a tourist destination has increased to nearly 4.5 million tourists in 2008 from 500,000 in 1993, and Asian countries account for over 65% of total tourist numbers. After Vietnam started advertising in China, more Chinese tourists visited the country. Also, Vietnam Airlines increased the number of flights and routes available; Vietnam has experienced an increase in Tourist numbers from all other countries. Moreover, the family income growth in Western Nations has been more prominent amongst the lower and middle incomes brackets, which lead to an increase in demand for luxury goods.
The total growth forecast of Vietnam tourism from 2009 to 2014 is approximately 26%. A significant growth is anticipated from certain Asian countries (i.e. China, Japan, Malaysia, Singapore, Thailand, etc) and China remains the key market for Vietnam’s tourism industry. Furthermore, Australia, UK, USA, Germany and France have also been flagged as part of the trend of increasing tourist numbers in Vietnam. The prospects for luxury travel through 2010 are more positive for the personal travel segment than business travel. Surveys have found that when affluent tourists travel for their personal pleasure, they are far more likely to move up-scale to the four- and five-star accommodations that they have come to enjoy over the years
4. Consumer Characteristics
Morgan (2004) states that generic pampadour/ luxury travellers are referred to up-market, DFY (do-it-for-you), indulgent, female skew, white collar and professional skew, fashion-conscious with 5-star product preferences. Generic compatriots/ family travellers are forced to compromise, family-focused, role-driven, good shoulder market, activities focused, budget conscious, like resorts and don’t like camping, favour 3-star, but aspire to 5-star.
From Asian market, Chinese overseas travellers are mainly from high to middle-income groups. Also, Asians are becoming more sophisticated and are more demanding for 4- or 5-star accommodation (Becken, 2003). Additionally, from western countries market, luxury travellers are more active in their approach to relaxation, exploration and relaxation.
5. Political & Cultural Environment
The consumer demand may be interfered by both political and legal issues. In Vietnam, all major and minor areas of policy are decided and imposed by its one-party communist state (Vision & Associates, 2010). Besides corruption problems, the legislative bodies within Vietnam continuously confirm to guarantee the legal capital and assets of foreign investors. Also, travel firms and the Tourism Administration Agencies of China and Vietnam have signed cooperation agreements.
Vietnam has its own characteristics, quite different from its neighbours. Vietnamese are “relationship-oriented”, and efforts to learn as much as possible about their culture will be highly appreciated by the Vietnamese. Vietnamese is the first language, but English and Chinese are becoming more important as a second language. Moreover, 70% of the population is Buddhist, 10% Catholic, and various others make up the balance.
6. Branding Opportunities
Competitive advantages of Vietnam over other tourist destinations include untouched exotic beaches in pristine condition, 5-star accommodation and services at 3-star prices and cultural heritage sites. Furthermore, the company can increase awareness and promote the value and benefits through travel magazines, strategic alliances, government funded country specific advertising campaigns, mass media and consumer-direct marketing and distribution.
7. SWOT Analysis
7.1.Strengths
The company may use new branding campaigns to reposition the Vietnam Tourism industry. Also, exotic landscapes and cultural attractions may increase number of international tourists. The offer of 5-star accommodation and services at 3-star prices will become a competitive advantage for the company.
7.2. Weaknesses
As a result of years of war, Vietnam’s infrastructure is weak although it is steadily improving. Language barriers and corruption may interfere with the consumer demand. Also, Vietnam is not always at the forefront of consumers mind for travelling.
7.3.Opportunities
Chinese tourists visiting international destinations are growing currently. Technology advance not only enhance the services supply to consumers, but also empower the consumer to be less reliant upon the traditional tourism supply chain. Emergence of sub-regional cooperative agreements increases the value and synergy for the tourist and the participating economies. The instability within Thailand allows Vietnam to gain market share from its competitors. From the government support, tourism offers a sustainable, long-term alternative to the manufacturing boom that is beginning to occur within the country.
7.4. Threats
As mentioned previously, the competition is fierce in the industry. Also, the global economic climate is changing rapidly, such as the inflationary pressures. Moreover, the political instability makes Vietnam susceptible to future protests by citizens. Well intended safety and security procedures and regulations are creating traveller inconvenience in the form of longer lines at airports and stricter visa policies and standards.
8. Recommendations
To succeed in the Vietnam tourism industry, the company should intensify marketing communication efforts. For example, to increase awareness of the destination and its attractions, reposition the brand to change consumer perceptions and communicate a distinct competitive advantage (5-star quality at 3-star prices). Also, it may adopt cross-section of communication channels, such as mass communication, direct marketing and e-marketing. Moreover, the company should establish training and development courses for Vietnamese. Language barriers have proven to be an obstacle for tour operations. In addition, building strategic alliances with travel agents can maximize the potential profits. Also, inter-government alliances should be encouraged which can help to overcome the cultural differences problems.
1. References
Becken, S. 2003. Chinese Tourism to New Zealand. http://www.landcareresearch.co.nz/research/sustainablesoc/tourism/documents/Chinese_tourism.pdf (retrieved September 10, 2010).
Department of Foreign Affairs and Trade. 2010. Vietnam Country Brief. http://www.dfat.gov.au/geo/vietnam/vietnam_brief.html (retrieved September 9, 2010).
Lonely Planet. 2010. Vietnam. http://www.lonelyplanet.com/vietnam (retrieved September 8, 2010).
Morgan, R. 2004. Tourism NSW: Traveller Types. http://corporate.tourism.nsw.gov.au/Traveller_Types_p1528.aspx (retrieved September 10, 2010).
Semone, P. 2008. 21st Century Trends in International Tourism. http://tourism101.org/archives/6 (retrieved September 9, 2010).
Vietnam Travel. 2009. Vietnam Tourism Statistics. http://www.vietnamtravel.org/vietnam-tourism-statistics (retrieved September 9, 2010).
Vision & Associates. 2010. Doing Business in Vietnam: Political and legal environment. http://www.vision-associates.com/client_resources/8/10/Political-and-Legal-Environment (retrieved September 9, 2010).
Becken, S. 2003. Chinese Tourism to New Zealand. http://www.landcareresearch.co.nz/research/sustainablesoc/tourism/documents/Chinese_tourism.pdf (retrieved September 10, 2010).
Department of Foreign Affairs and Trade. 2010. Vietnam Country Brief. http://www.dfat.gov.au/geo/vietnam/vietnam_brief.html (retrieved September 9, 2010).
Lonely Planet. 2010. Vietnam. http://www.lonelyplanet.com/vietnam (retrieved September 8, 2010).
Morgan, R. 2004. Tourism NSW: Traveller Types. http://corporate.tourism.nsw.gov.au/Traveller_Types_p1528.aspx (retrieved September 10, 2010).
Semone, P. 2008. 21st Century Trends in International Tourism. http://tourism101.org/archives/6 (retrieved September 9, 2010).
Vietnam Travel. 2009. Vietnam Tourism Statistics. http://www.vietnamtravel.org/vietnam-tourism-statistics (retrieved September 9, 2010).
Vision & Associates. 2010. Doing Business in Vietnam: Political and legal environment. http://www.vision-associates.com/client_resources/8/10/Political-and-Legal-Environment (retrieved September 9, 2010).
Eric Chen
Steven Davis
Shane Lennon
Amy(Ka Yee) Or
Manuel Ruess
Naif Al Shammary
Steven Davis
Shane Lennon
Amy(Ka Yee) Or
Manuel Ruess
Naif Al Shammary
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