Vietnam for a long time has been a backpackers’ paradise. Its vibrant street-food culture, a host of colourful heritage sites and breathtaking scenery offer plenty to adventure-seekers on a budget.
But this is beginning to change. Once-sleepy beach towns are transforming into five-star resorts. For better or worse, city streets once filled with hostels and homestays are being replaced with one-stop shopping centre/hotel complexes.
Vietnam’s tourism and hospitality industries have expanded rapidly in the past few years. Alongside on-trend international hotspots such as Iceland and Mongolia, Vietnam was in 2017 identified by the United Nations World Tourism Organisation as one of the world’s 10 fastest-growing travel destinations.
During the first half of 2018, Vietnam welcomed 8 million international visitors, an increase of 27.2 per cent from the previous year. Overall tourism revenue was an estimated 312 trillion dong (US$13.4 billion), 22.5 per cent more than in the first half of 2017.
The government has ambitious plans, aiming for 20 million international visitors per year by 2020. In turn, it aims to develop the tourism industry into a sector worth US$35 billion annually, one that would be 10 per cent of Vietnam’s GDP.
This growth has been driven partly by a spike in South Korean visitors, with knock-on effects in the tourism, hospitality and aviation sectors.
Last year, mainland China accounted for the most visitors to Vietnam, with 3.4 million arrivals. South Korea was not far behind, with 3.16 million, an increase of 46.5 per cent from the previous year, according to local media.
Flights from Vietnam to South Korea accounted for a remarkable 44.5 per cent of the country’s outbound traffic in 2018. By comparison, China-bound flights made up 14.8 per cent in the same year.
South Korean airlines Asiana and Jeju Air began offering daily flights between Busan and Da Nang, the Vietnamese coastal city, increasing the route’s capacity by 86 per cent.
As a result, Da Nang, known for its resorts and pristine beaches, became the top foreign destination for South Koreans last summer.
Many South Koreans fly the route to visit Hoi An, a resort town about 30km from Da Nang. According to Vietnamese reports, more than 240,000 South Koreans visited Hoi An last year, an increase of 70 per cent from 2016. They now outnumber the 200,000 mainland Chinese visitors arriving annually.
Vietjet prides itself on having served more than 2 million Koreans, many of whom were travelling overseas for the first time. In December, the budget carrier announced a new route linking Seoul and Phu Quoc island, another destination attracting South Koreans.
The north of Phu Quoc island caters to Koreans, with resorts built specifically for this market. Most Koreans never leave their resort, which is equipped with a medical centre and golf course.
From the 1960s until the late 1980s, South Koreans were not allowed to travel freely and passports were issued only for special reasons. After the nation’s democratisation in 1988, overseas travel was finally permitted and, as its middle class expanded over the next three decades, many South Koreans began to explore the world.
You will see more and more Korean brands and cafes every time you visit Vietnam. There are a lot of Korea-related businesses. Vietnamese people also love Korean culture.
As in many Asian countries swept up by the so-called K-wave, South Korean culture has begun to exert a broad influence on Vietnam’s urban environment.
Korean retail brands, cafes and eateries are popular, and cater to local populations as well as the growing influx of Korean visitors.
K-pop musicians sell out large arenas. Korean soap operas have been popular on local television for years. Korean movies are in theatres every week. Korean barbecue and noodle restaurants can be found all over the major cities and even appear in smaller cities.
Chinese visitors, on the other hand, have not been as warmly embraced. Vietnamese media reported two years ago that the coastal city of Da Nang would publish a booklet in Chinese on do’s and don’ts for tourists, after reports surfaced of mainland tourists and tour guides behaving badly.
Some of the mistrust and hostility towards the Chinese stemmed from historical conflict between the two countries that has flared up in recent times.
Four years ago, China moved an oil rig into Vietnam’s territorial waters and several Chinese-owned factories in Vietnam were burned down, with protests resulting in the death of at least 20 Chinese expats.
China restricted tourists coming to Vietnam, which really hurt the tourism industry. South Korea’s economic support for Vietnam has also contributed to the warm relations.
South Koreans are by far the largest foreign investors in Vietnam with over US$65 billion in registered capital in the country. Samsung has opened several enormous factories that manufacture phones and electronics.
Hanoi and Ho Chi Minh City both have Korea towns where a significant amount of South Korean expats live.
Many younger Korean travellers forego a Korean experience while in Vietnam. But older travellers often with larger budgets still expect access to Korean services.
Those in their 40s and above look for Korean food and services during their stay. People of older age don’t travel a lot and need tour guides.
It has become second nature for Vietnam’s hospitality industry to offer Korean-language options.
Companies provide Korean brochures and Korean language menus. Travel agencies describe their information in Korean, and their staff can speak Korean fluently.
Vietnam’s jet fuel demand will surge to a record this year as its tourism industry attracts a wave of new visitors and the country’s airlines are rapidly expanding.
The country is on track to have 38 million international passengers and 16 million visitors this year, according to data from CAPA Centre for Aviation. That is up from 18 million passengers and 8 million visitors in 2015, according to the data.
Aviation demand in Vietnam is booming, Fuel consumption in Vietnam will reach a record high this year and will keep rising for the years to come, said Tran Hoai Nam, vice-president of Vietjet, Vietnam’s biggest private airline.
He added Vietnam’s growth in foreign arrivals was the highest in Southeast Asia, rising 8.7 per cent annually.
The surge in traffic has translated into a rush of jet fuel demand in Vietnam. Through November, the country has imported 1.87 million tonnes of the fuel, according to customs data, equal to 14.8 million barrels, and up 18 per cent from the same period last year.
For 2018, jet fuel demand in Vietnam was estimated to be increased by about 20 to 25 per cent in comparison with 2017, mostly due to the increase in consumption of the international flights, said a Hanoi-based trader at one of country’s jet fuel suppliers, who asked to remain unidentified due to company policy.
Vietnam currently consumes about 18 million barrels of jet fuel per year, according to data from Petrolimex Aviation.
By 2035, Vietnam will have 150 million airline passengers per year, nearly four times what it was in 2015, according to a 20-year forecast from the International Air Transport Association (IATA).
Over the same period, India will have 442 million passengers, 3.6 times what it was in 2015, while China will have 1.3 billion passengers, 2.7 times what it was in 2015, IATA said.
In November, Vietnam issued an aviation licence to Bamboo Airways, which would be the country’s fifth airline after Vietnam Airlines, Jetstar Pacific Airlines, Vietjet Aviation and Vietnam Air Services Co.
Bamboo signed a provisional deal to buy 20 of the wide-body 787-9 jets from US manufacturer Boeing and agreed a memorandum of understanding with Europe’s Airbus for up to 24 of the narrow-body A320neo jets in March.
VietJet, which currently operates 60 Airbus jets, has signed a US$6.5 billion agreement to buy 50 new jets.
Vietnam’s jet fuel imports will continue to surge as the country only has two refineries, Dung Quat in the central province of Quang Ngai and Nghi Son in Thanh Hoa province, near to the capital Hanoi, which only started operations last year.
Vietnam imports most its jet fuel from refineries in Singapore, Thailand and China, trade data showed.
Despite the steep growth outlook for Vietnam’s aviation sector, passenger growth might may be uneven as the country grapples with capacity constraints at its airports.
Vietnam’s biggest airport Tan Son Nhat, serving Ho Chi Minh City in the south, receives about 10 million more passengers per year than it is designed to serve.
The government is planning a second international airport at Long Thanh, 40km east of Ho Chi Minh City, that will serve 25 million passengers a year starting in 2025.
Tourism Observer
