Figures released by the Vietnam National Administration of Tourism (VNAT) in December 2009 show that the industry experienced a sharp slowdown over the year. In the first 11 months of 2009, tourist arrivals fell by 12.3% year-on-year (y-o-y), to 3.4mn. This in itself was a slight improvement from H109, when tourist arrivals fell by 19.6% y-o-y. This indicates that arrivals
are beginning to recover, although still below 2008 levels.
One encouraging sign is that arrivals from the US, the second largest source of tourists for Vietnam, fell by only 2.3% to 33,063, indicating that US interest in visiting the country remains strong. This may also reflect political turmoil in nearby Thailand, another key US tourist destination, with concerns over security leading to some tourists to choose Vietnam instead. We expect arrivals figures to continue improving from their low point in early 2009, with the holiday season around Christmas and new year providing a temporary boost to arrivals. However, arrivals are likely to remain subdued in 2010 before they can return to pre-2008 levels of growth.
Cruise Sector Underperforms
Vietnams cruise sector has performed particularly badly in 2009, with arrivals by sea falling by a 57.1% y-o-y in the first 11 months of the year. In part this is the result of the overall slowdown in the tourist industry, but it also reflects long-term underinvestment in the cruise industry. The country has no dedicated cruise ship port facilities, forcing ships to dock at cargo facilities and discouraging some from including Vietnam on tour itineraries. Cruise arrivals fell by 35% y-o-y in 2008 and grew by only 1.0% in 2007, indicating that the sector was lagging behind the rest of Vietnams tourism industry even before the downturn hit. Although some domestic tour agencies have begun calling for greater state involvement in the industry, this appears unlikely to be a priority until the tourism sector has begun to recover. Airline Industry Outlook For 2010
While the airline industry has suffered in 2009 owing to slowing foreign tourist arrivals, domestic passengers have mitigated the negative impact on airlines., Civil Aviation Administration of Vietnam (CAAV) general director Pham Quy Tieu said in November 2009 that although the number of international passengers fell by 9% in the first three quarters of 2009, domestic passengers rose by 20%, including domestic travel by foreign tourists. He said overall passengers levels are expected to grow by 7- 8% in 2009 as a whole despite the downturn in foreign arrivals.
In order to assure this level of growth, the government is investing in air transport infrastructure. New airports have been built at Dong Hoi and Can Tho, while upgrades are in progress at Son That International airport (a new terminal), Da Nang and Lien Khuong. This is expected to facilitate increased domestic and international routes, such as new routes planned for 2010 between Hanoi and Can Tho and Ho Chi Minh City and Dong Hoi.