Hotel and Tourism Development in Vietnam

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Hotel and Tourism Development in Vietnam
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By:
Connie Mok, Associate Professor, Conrad N. Hilton College of Hotel and Restaurant Management, University of Houston, Houston, TX 77204.

Terry Lam, Lecturer, Department of Hotel and Tourism Management, The Hong Kong Polytechnic University ---
Since 1996, the introduction of an economic reform policy, Doi Moi, Vietnam has undergone a transition from a centrally planned economy to a free-market-oriented economy. Vietnam's entry into ASEAN in 1995 and the restoration of diplomatic relations with the U.S. are expected to bring a boost to the tourism and hotel industry in the country. Nonetheless, Vietnam is not ready for a large influx of tourists at the moment as there are a number of constraints hindering its development. This paper aims at providing an overview of Vietnam's tourism industry, its market potential and challenges during this transition period in the economy. Recommendations for future tourism developments are also presented. Introduction

The famous Vietnam War came to an end when the U.S. withdrew its troops from Saigon (now called Ho Chi Minh City) in 1975. Devastating wars had caused Vietnam's economy to virtually collapse. Rarely did visitors go to Vietnam for travel or to do business in the 1970s and early 1980s. In 1986 the Sixth Party Congress of Vietnam approved an economic reform policy called the Doi Moi, designed to remove restrictions on investment by the private sector, introduce foreign investment law, devaluate the official exchange rate and restructure the banking system. Foreign visitors started going to Vietnam to explore business opportunities. The introduction of Doi Moi, on the one hand, has helped the tourism industry to develop from scratch since 1987. On the other hand, the country's political stability has also laid down a good foundation for its tourism development. Nevertheless, there are a number of constraints hindering Vietnam's tourism development. They include the poor infrastructure, lax legal systems, graft, the lack of accommodation facilities of international standard, and inadequate skilled workers and qualified management people. This paper, therefore, aims at providing an overview of Vietnam's tourism industry, its market potential and challenges. Recommendations are presented for future tourism development in the country. Major Tourism Market

Vietnam has a high market potential to make tourism become a major industry. According to the Service of Tourism of Ilo Chi Minh City (HCMC), foreign arrivals reached 985,000 in 1994, growing from 440,000 in 1992, representing an upsurge of 124% during the period (Table I). Government information on the number of visitors is patchy and inconsistent, but some other government statistics reveal that Vietnam welcomed 650,000 visitors in 1993 (HKTDC, 1994), and 1,400,000 visitors in 1994 (Wong and Bloomberg, 1995). In terms of market share, Taiwan was ranked top, with the largest influx of visitors into Vietnam in 1994, while the U.S. and France, at second and third, also dominated the market (Table 2). According to the World Tourism Organization, approximately 2 million Vietnamese tourists or Viet Kieu, located in some 80 countries, will dominate the market when they return to their homeland for a visit (EIU International Report, 1993). Investment in Accommodation

According to a report of the Information Center of the State Committee for Sciences in Vietnam, in 1993 there were 10,500 hotel rooms in Vietnam, of which about 4,000 were of international standard. The Vietnamese government planned to increase this number to 9,000 international-standard rooms by the end of 1995, to accommodate about 500,000 visitors per year (EIU International Reports, 1993). Although the Vietnamese government encourages hotel investors to look optimistically into this booming industry, the supply cannot always match the demand, as for instance in 1994, when there were close to one million visitors to...
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