Is Vietnam losing its appeal to Western tourists?

By Michael Modler* - Apr 19, 2018 | 09:22 AM GMT+7

TheLEADERWestern tourists are not better or more desirable than those from East Asia but the tourism industry’s growing dependence on domestic and regional tour groups may be unhealthy in the long run.

Is Vietnam losing its appeal to Western tourists?
Hoi An Old Town used to have a hidden charm to foreign tourists.

As an American expat who has traveled in Vietnam quite a bit over the years, TheLEADER's recent interview with Kenneth Atkinson of Grant Thornton peaked my interest. I agree with Mr. Atkinson’s point that a more open visa system could make Vietnam more competitive as a tourist destination. But I would like to share some additional thoughts on tourism development in Vietnam from a Western perspective.

I made my first visit to Vietnam in 2002 as a university student and came back many times before coming to live here in 2012. During the 2000s, I remember the Tourism Administration’s advertising campaign was built on the theme of “hidden charm.” At the time, my Vietnamese fiancé (now wife) told me locals frequently mocked this slogan. But in a way, it seemed like a fitting expression of Vietnam’s appeal to Western tourists.

Vietnam’s “charm” was derived from the culture and history that seemed fascinating and exotic. And despite being very beautiful and reasonably accessible, Vietnam was also “hidden” in that it was mostly untouched by huge crowds and crass overdevelopment.

Vietnam’s tourism sector has evolved a lot over the past fifteen years, and many of those changes have been for the better. Obviously, infrastructure has improved dramatically, especially in the most established destinations. The standards of restaurant and hotels have also improved, among other advances. However, Vietnam seems to have lost much of its “hidden charm” appeal.

The number of travellers (both foreign and domestic) has grown by leaps and bounds even as the tourism industry has remained clustered in a relatively small number of well-known locations. These destinations are now far from hidden.

The most extreme example of this is probably the Danang/Hoi An area. In my first visit to Vietnam, the Furama Hotel was the only large-scale modern resort along My Khe Beach, and the old town of Hoi An was still a quiet place with only a smattering of tourists. Nowadays, it seems like the entire stretch of sand from Danang to Hoi An is occupied by hotels and construction sites. The old town of Hoi An is still beautiful, but basically, every building is now a tourist shop. It is also utterly overwhelmed by huge crowds in the evenings.

I don’t want to be too sentimental here. The growth of tourism has obviously been a major positive for tourists who enjoyed their vacations despite the crowds, as well as the huge number of people who make a living in tourism and related sectors. Nevertheless, I do hope tourism authorities and businesses will shift more of their attention to the development of other destinations. After all, this a rather large country with a lot of beautiful and interesting places!

The country’s charm remains, but it seems the tourism industry has made little attempt to make use of it in recent times. From what I can see, most of Danang’s new hotels are enormous and expensive. The main appeal of these projects seems to be their extensive, well-kept and high standard facilities. But the massive size of these projects makes them impossible to blend in with the natural surroundings, offer good food, or deliver a high level of service. Finally, these resorts tend to be quite sterile, generic and similar in appearance with almost no attempt evoke Vietnamese culture.

These types of resorts are clearly popular with Vietnamese and Chinese tourists, who tend to travel in large groups. But they won’t appeal to most Western travellers, who normally come in smaller groups and are likely to demand a more intimate and authentic experience at such high prices.

Western travellers are not better or more desirable than those from East Asia, and it would make no sense to cater to Western tastes exclusively. However, the growing dependence on local and regional tour group travellers may be unhealthy in the long run. What if the number of Chinese visitors to Vietnam begins to fall for some reason? What if Vietnamese and Chinese tourists lose their appetite for these types of resorts?

Diversification is an important element of any economic or business strategy. For a textbook example of what can go wrong when diversification is lacking, we can look at the rapid rise and stunning decline of tourism in Atlantic City in the US.

Atlantic City’s hospitality industry boomed in the 1980s and 90s after local laws permitted casino gambling. During its peak years, its casino hotels employed 50,000 people and generated more revenue than the famous Las Vegas strip.

However, by the late 1990’s developers like MGM, Wynn and Las Vegas Sands began building more sophisticated projects in Las Vegas that could appeal to a much broader market. These “integrated resorts” had world-class convention centers, event venues, shopping arcades and family-friendly entertainment to go along with casinos. Atlantic City’s hospitality industry failed to broaden its appeal beyond gambling, and it remained heavily dependent on day-trippers and short-stay punters from nearby New York and Philadelphia.

Atlantic City’s only real draw (gambling) suddenly became threatened when other localities in the Northeastern US moved legalize casinos. The continued growth of budget airlines also made weekend trips to as Miami, Las Vegas and other locations more affordable. Once Atlantic City began to fall out favor with New Yorkers and Philadelphians, casinos began losing money, and several large ones eventually went bankrupt in just a few years. Many of these have since become derelict eyesores blighting the New Jersey coastline.

I personally doubt that Danang’s future will be as grim as Atlantic City’s, but it seems distressing that other prominent tourist destinations like Nha Trang and Phu Quoc are basically copying the Danang model of tourism development (i.e. focus on massive resort and condotel projects catering to domestic families and regional group tours).

Given that Vietnam has a lot to offer tourists, I think Vietnam could easily attract more Western travelers if there were more accommodations and activities catering to their tastes. This past weekend, I had the pleasure of staying at the An Lam Saigon River Retreat, in Binh Duong province. The property is shady, lush and small in scale. The design was traditional and unpretentious, easily blending in with the natural environment. Although Vietnamese in style, it offered the highly personalized service and relaxing experience that I associate with resorts in Bali and Thailand. Nearly all guests in this resort were Westerners, and if Vietnam wants to attract more Western travelers beyond the backpacker segment this is the kind of resort that could lure them.

*The article reflects the author's personal opinion. Michael Modler is Business Development Manager at Global Integration Business Consultants (GIBC) in Ho Chi Minh City.