Vietnam tourism: better marketing?

With its fascinating history and culture and diverse scenery, from soaring mountains to two thousand miles of coastline, Vietnam has many natural attractions as a tourism destination.

But investors are growing increasingly concerned that Vietnam’s tourism industry is failing to live up to its potential and fear that a recent construction boom could leave hotels struggling to fill rooms.

Although Vietnam received a record 5m visitors last year, a 35 percent increase on crisis-hit 2009, it still attracted fewer tourists than Bulgaria, Syria and Ukraine, according to Baron Ah Moo, a representative of the lobby group for investors in Vietnam’s tourism industry.

Even neighbouring, poverty-stricken Laos and Cambodia, which are far smaller in terms of population and land area, put Vietnam to shame, registering far higher numbers of visitors per capita. Both received around 2.5m visitors last year, with populations of 6.5m and 14.7m respectively, compared to Vietnam’s 87m.

So where is Vietnam going wrong? The two key problems are the lack of a proper destination marketing campaign and Vietnam’s cumbersome visa requirements, according to Ah Moo, who is also chief executive of the hotels and resorts division of Indochina Capital, a long-standing foreign investor in Vietnam, with $540m in assets under management.

While other countries in the region have successfully used destination marketing to boost visitor numbers (think “Malaysia: Truly Asia, “Incredible India” and “Amazing Thailand”), Vietnam’s under-funded tourism authority has struggled to keep up.

Ah Moo reckons the government only spends of $1m-$1.5m on tourism promotion, a number dwarfed by the investment in tourism advertising from the likes of Thailand and Malaysia.

The Vietnam tourism administration’s latest attempt to generate a new catch-line through a public competition floundered when the winning entry – “Vietnam: A Different Orient” – was dropped in April following criticism from the public and the industry.

Vietnam’s previous slogan – “The Hidden Charm” – was perhaps more an accurate summary of the problems facing the country’s tourism industry than an effective promotion tool.

“The slogan should be the outcome of a destination marketing campaign, not the starting point,” said Ah Moo. “They need to ask what they really want Vietnam to be.”

But he urged the government to take on Cowan, the marketing agency that came up with the latest slogan, or another such firm, which officials have indicated they will do.

Marketing matters, other tourism industry executives say, particularly because many visitors still see Vietnam as a “cultural destination” and once they have been once and ticked it off their list they are much less likely to come back than visitors to Thailand, Malaysia and Indonesia, who often return to favourite resorts or towns.

Visas are another bugbear of the tourism industry. Most tourists have to get a visa in advance from a Vietnamese diplomatic mission overseas or obtain a visa confirmation letter, which allows them to obtain a so-called “visa-on-arrival”.

The hassle and the cost put people off, especially when they can get in to Thailand and Malaysia without a visa and can obtain a genuine visa-on-arrival in Indonesia.

But the government remains concerned about the security implications of relaxing the restrictions and is not keen to make it easier for visitors from Western countries to come to Vietnam, at a time when they are setting the bar for Vietnamese tourists and students very high indeed, requiring guarantee letters and evidence of financial assets.

In a presentation to the government at the end of May, Ah Moo warned that the industry was facing a challenging time, with 2,500 hotel rooms set to be added to the market in Hanoi, Ho Chi Minh City, Nha Trang and Danang this year, according to Savills Vietnam, and 3,700 next year.

That highlights one key problem in Communist-ruled Vietnam: while investment, particularly in real estate, has been growing at a rapid rate, the government and the bureaucracy tends to move at a much slower pace.