Potential niches for Vietnam domestic tourism post-Covid-19 pandemic

Giang Phi
05:00:22 - September 30, 2021

Despite the fact that the number of domestic tourists significantly outweighs the number of international tourists, the focus of tourism research and tourism development in Vietnam has had a strong bias towards international tourism. This article seeks to address this gap by investigating the key tourism niches that Vietnam domestic tourism can focus on to survive and thrive during and post Covid-19 pandemic.

There are four potential niches for Vietnam domestic tourism: luxury tourism, M.I.C.E, community-based tourism and proximity/backyard tourism.

Luxury tourism

Luxury tourism is traditionally associated with high-end integrated resorts where tourists can enjoy high-quality infrastructures, fine dining and pampering services. For the past decade, many luxury tourist facilities in Vietnam have been built with the specific aim of catering to international tourist markets. Today, as the pandemic unfolds and inbound arrivals come close to zero due to cross-border travel restrictions, domestic tourists, now as the only tourist market available, can start enjoying luxury infrastructures previously preserved for international tourists. Many luxury resorts in Phu Quoc, Nha Trang and Danang have offered heavily discounted high-end tour packages throughout the pandemic. This shift of target market for luxury tourism in Vietnam aligns well with the fast-rising of the middle-class population, which currently makes up 10% of the population.

Concurrently, Vietnam has the world’s fastest-growing percentage of individuals with net worth of at least USD 30 million, and the number of millionaires in Vietnam has tripled in the last decade. As outbound travel also comes to a halt during the pandemic, many high- end resorts have taken the opportunity to target this group of Vietnamese elites with extremely high disposable incomes, appealing to their needs for privacy, comfort and safety (i.e., away from the normal tourist crowd). Public relations strategies have been employed extensively, with many Vietnamese celebrities and social media influencers broadcasting their luxury trips inside Vietnam in their social media channels.

Meetings, incentives, conferences and exhibitions (M.I.C.E) 

Together with luxury tourism, MICE tourism has the potential to offer significantly higher economic value per tourist for tourism and service providers as well as for tourism destinations. A report by Vietnam National Administration of Tourism found that MICE generates on average six times higher revenue than other types of tourism. Often supported by the companies’ funding, MICE tourists also stay 3-4 times longer and have higher overall expenditure. Unsurprisingly, many Vietnamese tourism operators are developing new MICE products and implement promotional campaigns to target this segment during Covid-19. Vietnam TravelMart, for instance, has extended their focus beyond the traditional packaged tourist market to the MICE tourist market, and has started to welcome groups between 100-200 in this market segment in 2021 [10]. Some travel and hospitality businesses have also collaborated to offer incentives and discounted packages for these target groups.

The growth of M.I.C.E as a cornerstone for Vietnam domestic tourism recovery is further stimulated by favourable policies from public authorities in destinations that already had a focus on this market before COVID-19. Danang city is a prime example, where the authorities have committed a budget of VND300 billion (USD $13 million) to attract 100 MICE delegations to visit the city in 2021.

Community-based tourism

As tour operators seek new products to cater to increased demands for socially distanced leisure and recovery from pandemic anxiety, many parts of Vietnam are experiencing a rise in domestic rural and CBT. In an interview with me, a tour director noted that even Hop Thanh, a very remote commune in the Northern mountain of Vietnam, still received steady flows of tourists during the pandemic from its adjunct city of Lao Cai. He thus believed that “there is unlimited potential to develop rural and community-based tourism targeting the urban citizens of Vietnam’s 87 cities”.

The rise of rural and community-based tourism is further supported by government policies to stimulate domestic tourism in Vietnam. Officials in both the Northern mountainous areas and Southern highlands are promoting tours that showcase ethnic minority cultural practices, including weaving and harvesting activities, as well as traditional musical performances to local tourists.

Ms. Vuong Hoang, Head of the Culture and Communication department at Sapa stated in an interview with Laocai TV: “Currently, we are building a few pilot models, in which the homestay designs can be altered to meet the needs of Vietnamese tourists, along with new ‘check-in’ tourist attractions and increasing the quality of food and beverage services.”

Similarly, Khanh Hoa province has issued a strategic plan to support CBT between 2021-2025. This includes over 13.6 billion VND to support homestay design and associated CBT tourism products and services, as well as local capacity tourism training.

Proximity and backyard tourism

The road to tourism’s full recovery is not straightforward. Since the beginning of the pandemic, Vietnam has experienced a few local breakouts of Covid-19, each time leading to massive travel cancellations by domestic tourists and further risks of travel restrictions. Hence, before we can truly move towards a ‘post-Covid’ world, the promotion of ‘proximity tourism’ or ‘staycation’ remains a more relevant strategy during the pandemic.

This type of ‘staycation’ or ‘backyard tourism’ can help both to reduce the risks of being stranded or exposed to Covid-19 for tourists, and to channel some of the pent-up travel demand to support the struggling tourism businesses at home. Amid prolonged travel restrictions, staycation and backyard tourism has been promoted heavily in many countries such as Australia, Singapore and Denmark. In 2020, the Singapore Tourism Board, for instance, just invested S$45 million in the next 9 months to encourage Singapore residents to take a local holiday through the ‘Singapoliday’ campaign.

Besides developing new products, adopting discounted pricing strategy for locals across all tourist attractions can also contribute to stimulating backyard tourism. In the past months, many luxury hotel chains in Hanoi have offered staycation packages for locals to enjoy tourism experience in their city at a reasonable price. For many years, attractions such as Hoi an Impression theme park and Bana Hills have offered special pricing for locals to encourage their frequent visits. During COVID-19, this preferential pricing for locals should be further encouraged.

Conclusion

The Covid-19 pandemic has created significant challenges and changes to Vietnam travel industry. While many of its impacts are detrimental, there are also opportunities to leverage the disruption caused by the pandemic to develop and strengthen Vietnam domestic tourism.

With correct pricing strategies and creative product development that better cater to the needs of the key segments of domestic tourists, destinations in Vietnam can secure a stronger balance between benefits created by the domestic and international tourism market, in turn creating a more resilient travel industry in the long-term.

Potential niches for Vietnam domestic tourism post-Covid-19 pandemic

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