Driven by Southeast Asia’s fastest-growing middle class, Vietnam’s tourism industry has seen phenomenal growth, which has led to the launch of Vietnam Airlines’ first-ever direct flights to the United States.
According to the Financial Times, Vietnam’s outbound air travel grew faster than ever last year, and according to a 2017 report by Euromonitor, Vietnam’s outbound tourism has grown at an annual rate of 10-15% over the past few years. This trend can be compared to Vietnam’s neighbor China, where the increase in disposable income is one of the main drivers of Chinese outbound travel.
The U.S. Federal Aviation Administration announced in February that the Vietnam Civil Aviation Administration has now met its personnel licensing, operational and airworthiness standards, opening the door for three local airlines, including Vietnam Airlines, to start direct flights to the U.S. earlier this year. Same – cut travel time by eight hours.
The other two airlines are budget airlines Vietjet and Bamboo Airways, which signed deals worth $20.9 billion with Boeing and General Electric when U.S. President Donald Trump visited Hanoi for a second summit with North Korea. U.S. dollar aviation agreement covering aircraft, engines and maintenance services. Leader Kim Jong Un.
The U.S. is Vietnam’s largest export destination and is home to two million Vietnamese diaspora, a move that is sure to strengthen ties between the two countries. About 690,000 people traveled to Vietnam from the United States in 2018, an increase of 12 percent and 60 percent from 2017 and 2014, respectively, the Vietnam Tourism Administration said.
Outbound travel peak
According to Vietnamese media reports, travel agencies said they received a 20-30% increase in overseas travel bookings in 2018 compared to 2017.
“The rise of overseas tourism is the result of the steady economic development and the expansion of the middle class. The more affluent younger generation now wants to see the world. They are willing to spend more money to experience new destinations,” said Nguyen Cong, deputy general manager of Hanoi Redtour Hoan said.
Meanwhile, a report by market research firm Euromonitor showed that in 2017 alone, Vietnamese tourists made 7.5 million overseas trips, with China the number one destination, followed by Cambodia and Thailand. According to the Vietnam Tourism Association, Vietnamese tourists spent $8 billion in 2016, the latest year for which data is available, more than double the $3.5 billion they spent in 2012.
In addition to outbound travel, domestic travel has also grown. This is due to the increased number and availability of budget airlines such as Vietjet, Bamboo Airways and AirAsia.
growing middle class
Strong domestic demand and robust export-oriented manufacturing have helped Vietnam maintain steady growth momentum, with market research firm Nielsen estimating that the country’s middle class will reach 44 million by 2020 and 95 million by 2030.
Through these economic opportunities, employment continued to grow, adding 1.6 million jobs in manufacturing and 700,000 jobs in construction, retail, and hospitality between 2015 and 2018, boosting combined labor productivity. Increased demand for labor has also fueled rapid wage growth, which increased by a cumulative 15 percent between 2014 and 2016.
According to Nielsen, “Traveling is one of the top three hobbies among wealthy Vietnamese, ahead of eating out and buying new clothes.” The findings are based on a survey of 300 people aged 30 in Hanoi and Ho Chi Minh City, two of Vietnam’s largest cities. Survey of consumers between the ages of 55 and 5.
Vietnam’s middle class, which is largely made up of a young population, is also powering retail and consumer industries such as real estate and automobiles.
Vietnamese tourism and retail businesses can definitely capitalize on the surge in middle-class growth by ensuring their brands are promoted through all relevant channels.
Companies need to explore beneath the surface of economic data to understand where the best opportunities lie and use that analysis to guide their decisions and strategies to encourage market growth in all regions of the country.
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