Vietnam Travel Channel

McKinsey: Vietnam’s tourism industry could recover by 2024

 

Global consulting firm McKinsey has said in a new report that Vietnam’s tourism sector could recover by 2024 if domestic travel continues to grow and the country is also able to maintains its low COVID-19 pandemic infection rates.

Vietnam’s tourism sector relies heavily on international travel – a sector of the economy which took a dramatic plunge last year – since foreign travelers spend 4 ~ 10x the amount on their vacations as domestic tourists.

In 2019, the tourism industry accounted for 12% of Vietnam’s GDP, and international travelers accounted for more than 50% of tourism industry revenue, while making up only 17% of the market. According to one report, domestic tourists spend an average of $61 on each trip, while foreign tourists spend an average of $673 per trip.

McKinsey says that an immediate return to pre-COVID-19 levels of international tourism may be far off, and that domestic travel is the key for the travel industry’s short-term survival.

On the other hand, even with increases in domestic tourism, Vietnam will be dependent on international tourism markets in the long-term.

Visitors swim during a Hon Son - Nam Du - Phu Quoc Islands tour off Kien Giang Province, Vietnam, March 2021. Photo: Duc Hiep / Tuoi Tre

Travel Industry Action Plan

As travel companies think about how to survive and even thrive, McKinsey suggests six actions that could jump-start Vietnam’s tourism recovery.

(1) Focus on Domestic Travelers
Revitalizing local demand by focusing on emerging destinations with joint cooperation from local governments, online travel agencies, attractions, hotels, and airlines. Operators must focus on affordability while striving to maintain high-quality products and experience.

(2) Consideration New Pricing Models to Build Demand
Rebuilding demand and propelling volume through discounts and pre-sales should be key tactics during the early stages of recovery, especially for high-end operators unable to tap into international demand. Companies can also bundle products, maximizing cross-selling and upselling opportunities, and look at new revenue streams.

(3) Adopt Mobile & Digital Tools
Travel companies should revamp online touchpoints and experiences to improve customer experience and place digital tools in new places within the customer's journey. Strategic collaborations, such as online travel agencies providing ticket-booking services via instant messaging and social media platforms, could offer an opportunity for increased market penetration.

(4) Laying the Groundwork for Inbound Travel
Travel companies will need to be flexible and nimble in order to capture early international travel demand. They should be prepared to implement strict health and safety protocols that fulfill the stipulations of both domestic and destination security policies.

(5) Reinvent the Travel Experience
Travel companies should reimagine and reinvent the traveler’s experience beyond accommodations and “normal” tourism experiences, and tourism investments should be directed to unconventional and diverse destinations.

(6) Reimagining the Government’s Role in Tourism
In the short term, the government and industry associations need to ensure the survival of operators, while in the midterm, government-backed digital and analytic transformation is necessary. The government can connecting suppliers and distributors and intermediaries to promote specific areas of the country on a rotating basis and create packages attractive to a specific tourism segments, and then provide advertising and marketing support through international media.

 

 

 

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