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    The past two years have been a difficult and challenging period for the tourism industry when international tourism has almost stagnated. However, it is also an opportunity for us to rethink, pay more attention and find new ways to approach the Vietnamese traveler market that still has a lot of room for development with approximately 100 million people.

    Since the beginning of the year 2022, both domestic and international tourism activities have been gradually resumed, but what we need to focus on is how to maintain the domestic market as a solid fulcrum for Vietnam’s tourism industry to develop more sustainable in the future. Destination Review had a conversation with Mr. Dang Manh Phuoc, CEO of The Outbox Company (Outbox), a travel & hospitality market research company to discuss the role and how to effectively approach and exploit this potential market.

    Despite working in the tourism industry, I must admit that travel is not a priority expenditure of people, it is second to their essential needs such as eating, sleeping, or daily consumption. Therefore, only when they have accumulated certain assets, their income is high and their standard of living improves, they will start spending on tourism. At this point, Vietnam is having a favorable condition in Southeast Asia. Looking at the context of Vietnam in the past 5 years, we have become an economic and production center of the region with strong economic growth. In particular, we have a potential market size only after Indonesia with a population of nearly 100 million, of which it is forecasted that nearly 30% of the population by 2030 will be a new middle class with high spending capacity. Therefore, I think it is not necessary to prove the potential of the Vietnamese domestic market, but we can confirm that the domestic market plays a very important role, in terms of both size and purchasing power.

    Moreover, the role and potential of the Vietnamese market is also not a new story. In previous years, while Vietnam still hadn’t paid much attention to the domestic market, other countries like Korea, Japan, Singapore, and Thailand showed a certain interest in Vietnamese tourists. They all set up tourism representative offices in Vietnam with many promotion programs and strategies. In addition, according to various reports in recent years, the spending of Vietnamese on outbound travel has grown rapidly and their spending is also very large. This is also proof that the Vietnamese tourist market is always a fertile and potential market for not only businesses and localities in Vietnam but also other countries around the world. The issue is that Vietnamese businesses and destinations must have a different perspective and approach to unlock the potential of domestic tourists.

    Actually, like all countries in Southeast Asia, we are in the travel flow of international tourists from the US and Europe. Therefore, both Vietnam and Thailand have had an important proportion of international visitors with high revenue contributors. As a result, the interest in the international tourist market has been also high. Especially for Vietnam, people often think that the key task of tourism is promoting the culture and image of the country, so attracting international visitors is even more important.

    Furthermore, from a business perspective, it can be seen that the domestic market did not bring big revenue. For example, the proportion of domestic tourists in Vietnam accounts for about 50%, but revenue contributes only about 15%. We will discuss the root cause of this later, but this is a major factor that makes people often not very much appreciated the Vietnamese tourist market.

    First of all, we have to go back to the reason why the domestic market was not valued or brought in great revenue previously. The first thing is the problem of the market strategy of Vietnam in general, not only for the domestic market but also for the international market. Broadly speaking, when international tourism has been opened recently, while many neighboring countries have a clear strategy to welcome guests back, Vietnam has not yet set focused goals. The same is true for the Vietnamese market, we currently do not have a well-defined strategy such as how much proportion of the general market structure is for Vietnamese tourists, and how much proportion is for the North American, or Western Europe market. From that overall strategy, we can come up with product development or communications strategies. Before the pandemic, we saw a very positive situation in the international tourist market, Vietnam always achieved a growth record but as I mentioned above, it is thanks to the natural growth that Vietnam, as well as Southeast Asia, have been emerging as a new destination hub for international visitors. Especially, China and Korea’s outbound tourists had very good growth but actually, we didn’t have many oriented strategies. On the contrary, the domestic market hasn’t performed well because Vietnam is not their new destination, if we don’t do anything, they will go elsewhere, which is such a common problem.

    As for the wish to develop tourism more sustainable based on the domestic market, the challenge is how we can attract Vietnamese people to travel within Vietnam. This requires two main aspects. The first is about the travelers. They will need to have interest and think positively about the destination image. From this perspective, Covid-19 becomes a favorable condition. Before the epidemic, most Vietnamese people would spend their higher travel expenses on traveling abroad. However, the two years of the epidemic have hindered Vietnamese people’s need to spend on travel abroad, so they have started to spend more on domestic tourism and could have a rethink about their destination. They recognized that Vietnam still has suitable services and products to satisfy them, leaving away the previous prejudices about domestic tourism.

    The second aspect is that destination management agencies and businesses must change their minds and learn more about the Vietnamese tourist market. We need fairness to come to an end of discrimination when looking at the international tourist market and the Vietnamese tourist market. We live in a flat world, which means if Vietnam does not meet the needs of the Vietnamese people, then they will have the right to choose an international destination. So we have to treat the Vietnamese market the same way as how we welcome guests from the Chinese, Korean, Japanese or Western Europe market. Only when we change the way we look and invest to understand and provide the right products, we will have a chance to keep Vietnamese tourists traveling in the country.

    Firstly, regards the role of the domestic tourist market in Vietnam, we need to look a little wider at the overall structure of the industry. In general, there is no country having a developed tourism industry without a vital role of the domestic tourism market. In countries with a developed tourism industry such as China, Korea, or the European region, the domestic tourism market always accounts for a high proportion of both visitors and revenue. This is explained by the fact that domestic tourism has many advantages in terms of conditions for short-term tourists such as easier access to information or booking services. Looking at Vietnam, we are a big market of nearly 100 million people. We have a lot of favorable conditions in terms of geographical location, language, and communication to easily reach and attract Vietnamese guests. However, we often only look at the domestic market on the surface. In the future, we will have to divide the domestic market into smaller groups according to the characteristics of generations, income levels, preferences, etc. instead of simply looking at the domestic market as a group.

    To do so, it is necessary for all stakeholders to focus and put the market issue first. We must dig into this market, and have the perseverance to research, understand then come up with approach and product strategies that are suitable for the market. After having focused and persistence, we also have to invest more in the Vietnamese tourist market. Currently, we have a lack of information about this customer market like what they want, what they like, how they change, and their consumption behavior, which are very basic things to be able to develop the market or build communication solutions. Statistics on the domestic tourist currently have not been unified under a clear statistical mechanism. There is still an ambiguity in data of passengers traveling by air or tourists. It is also not possible to separate the data between MICE guests and leisure guests. And of course, when we do not understand the customer, our products will not be met their needs.

    Every tourist market decides to choose a destination based on factors including attractive information, cost, and product. Looking at the outbound market in the past few years, we saw that there were a few prominent and attractive destinations for Vietnamese tourists such as Taiwan and South Korea, they all have clear oriented strategies on both micro and macro levels from the preferential policies in terms of visa, or in terms of products with the understanding of Vietnamese people. For example, in Korea, they offer tours to discover local cuisine or picking strawberry tours in Japan. That are very basic products that Vietnam can do, but we do not have much investment to improve these experiences. Most investors focus on building resort projects, and when we focus more on them, domestic guests will only spend on resorts and if they want to explore culture, they will choose other destinations that give them new and more rewarding experiences. That’s how the market works.

    Besides, when it comes to prices, outbound destinations also have very good competition. It can be seen that a tour to Korea will basically cost about ten million VND only, while sometimes the price for the tour from the South of Vietnam to the North is similar. Flight from Ho Chi Minh City to Thailand is also sometimes cheaper than flying to Hanoi. Those are the issues that will affect tourists’ decisions on their journey. When tourists choose a destination, they will have priority factors for comparison. For the same price, they will always favor destinations that are novel and beyond their cultural understanding. Therefore, when we cannot solve the problem in terms of costs, or about flight routes, customers will not choose us.

    As a Vietnamese business, Outbox understands the great role of the Vietnamese tourist market more than anyone else. At the same time, we sees the lack of information and data, especially the traveler characteristics in the travel journey of this market. Getting the right insights about a customer market will require a system of continuous tracking day by day, month by month, and year by year. From there, we can compare how Vietnamese travelers are changing to come up with appropriate plans. This measurement is not just some seasonal survey, it needs to be done on a regular basis.

    Talking about market data in Vietnam, we often think of simply surveying tourists, but if we look deeper, there are a lot of different indicators to create the general picture of tourists. It can be the travel sentiment of visitors at a certain time, or their behavior at each stage, or the level of visitor satisfaction. And many of those indicators must be systematized together, from which we can potray Vietnamese travelers and their travel behavior. Understanding this, we have launched the Vietnam Travel Tracker research series with the desire to solve the problem of data tracking and management for not only tourism businesses in Vietnam but also for all of our customers and partners globally when they want to attract Vietnamese tourists. Following Vietnam Travel Tracker, in the near future, we will also replicate other research models for other international markets, not just in Vietnam. Outbox’s vision is to track and build a standard, centralized and accessible data system for all different traveler markets.

    In terms of forecasting, Outbox released a report on “Vietnamese travel sentiment” in January with the result that from March to June, Vietnamese tourists will have the highest level of willingness to return to travel. And we also saw that since March, domestic tourism activities have recovered very well, especially on the occasion of April 30 – May 1. With this basis, we can be confident that the domestic tourist market will recover positively in the upcoming summer. From my perspective, I think that familiar destinations in the vicinity such as Phu Quoc, Vung Tau, Da Lat, Thanh Hoa, … will still play an important role in the upcoming vacation. Vietnamese tourists will also still prefer self-guided travel for simple domestic trips. For travel agencies, there will be positive opportunities thanks to company & incentive trips.

    Regarding the outbound market, it is still relatively early to discuss, but with positive signs going on when some traditional outbound destinations of Vietnamese tourists such as Singapore, Thailand, South Korea, and soon Malaysia will officially reopen. Of course, the number of outbound visitors will not be much this summer, but this will be a good impetus for the recovery of the outbound market. This is also a great potential for travel agencies to exploit because when traveling outbound, nearly 50% of Vietnamese still choose travel companies, especially in the current uncertain context. However, for Vietnamese destinations, this is a challenging deadline to convince Vietnamese to stay in domestic tourism. The situation that Vietnamese have to choose domestic destination because of Covid-19 is gone. In the near future, Vietnamese people will have the choice between traveling abroad or traveling domestically. The third and fourth quarters of the year is the period when domestic beach tourism will be no longer an advantage. Most of our destinations will fall in the winter, so tourists will then begin to shift to outbound travel. It is the problem that Vietnam destinations will have to solve.


    Thank you so much for your sharing!

    #Take-A-Sip is a series exploiting new perspectives from experts on striking issues in tourism and travel.

    Vietnamese traveler market: high potential but also full of challenges


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