Vietnam’s economic outlook is positive, despite signs of growth moderation. From its July 2019 data, the World Bank described Vietnam’s economy as “Vibrant economic growth, albeit moderating”. Following a good year in 2018, Vietnam’s real GDP growth slowed down in the first quarter of 2019. Nevertheless, growth remained significantly higher compared to the first quarter of 2016 and 2017. Moreover, real GDP growth is projected to remain robust at around 6.5% in 2020-2021 while annual headline inflation is stable for the seven consecutive years.

The country’s sustained GDP growth continues to support a dynamic labor market with strong job creation and real wage growth. Job creation remains outstanding in high productivity sectors, such as manufacturing and services, the two sectors which make up the highest GDP contributions.

However, rapid growth and industrialization have not been friendly to the environment and natural assets. This is one factor that the Vietnamese government is looking into. Despite all these, the tourism industry of the country remains excellent and booming. Hotels & Tourism is the 4th top contributor to the country’s GDP as of Q1 2019.

Vietnam, with its vibrant natural and cultural tourism assets, is expected to benefit from the strong market demand. According to the World Economic Forum’s (WEF) 2017 Tourism Competitiveness Index, Vietnam ranks 32nd globally (out of 120 countries) in terms of the volume and attractiveness of natural and cultural resources, and 3rd within Southeast Asia. Moreover, Vietnam is home to 8 UNESCO World Heritage sites, tied with Indonesia at the top spot for SEA. The country also has premier urban tourism destinations such as Hanoi, Ho Chi Minh City, and Da Nang, which have been growing rapidly for the past years as well.

Over the past decade, Vietnam has experienced a boom in both inbound and domestic tourism. The number of international tourist arrivals has reached nearly 14.5 million in the first 10 months of 2019 (13% more than the same period last year). Domestic tourism, which is greater in volume than inbound tourism from abroad, has experienced excellent growth as well. In 2018, there was a four-fold increase in the number of domestic traveler trips, from 20.5 million in 2008 to 80 million in 2018, manifested by Vietnam’s rapidly-growing middle class, who have a strong appetite for travel and leisure.

Since both international and domestic travels have grown rapidly together, tourist destinations are facing increasing over-tourism pressures, especially during high seasons. The is placing strains on Vietnam’s frequently-visited destinations due to risks of overcrowding. This also leads to other issues such as traffic congestion and pollution, particularly in already-densely populated areas. Most tourism-related infrastructure investment in recent years has focused on expanding the supply of accommodation while improvements to other facilities such as electricity, water, waste management, etc. have remained slow.

Meanwhile, the supply of tourism workers is not enough and has been increasingly unable to keep up with the demands of the growing sector. According to the Vietnam National Administration of Tourism (VNAT), the country’s tourism sector directly employed around 750,000 workers in 2017, but will need roughly 870,000 workers in 2020 to keep up with demand growth, or 40,000 per year. However, current tourism schools churn out only around 15,000 graduates nationwide each year.

Despite this, VNAT also reported that tourism education in Vietnam has seen recent improvements. One study stated that Vietnam’s Ministry of Education and Training launched a ‘National Action for Tourism’ strategy resulting in 22,000 students entering tourism training each year in Vietnam (a 22% increase for 2010). Moreover, 80% of tourism graduates find suitable work in the industry. VNAT also claimed to now have 2000 lecturers, teaching, and management staff in tourism education at all levels. Despite all the challenges, the government of Vietnam is still continuously prioritizing tourism as a strategic sector and driver of socio-economic development.

The government aims to convert tourism into a spearhead industry and Vietnam into a leading destination in Southeast Asia. This will be achieved through continuing infrastructure development, strengthening tourism promotion, generating a favorable environment for tourism businesses, developing tourism human resources, and improving State management of the tourism sector. With the government’s consistent support to its tourism industry and with Vietnam’s natural potentials, the economic challenges that the country is facing in terms of tourism are not stopping international hospitality businesses to continue expanding in this striving country. In fact, as the country has witnessed a large amount of tourist influx, so does a growth in the number of international hotel brands over the past few years.

Fusion to open 10 hotels across Vietnam in the next 3 years. Fusion, the only fully vertically integrated hospitality company in Southeast Asia, is continuously expanding its presence in Vietnam by tripling the number of properties. Over the next 3 years, Fusion will launch 10 new properties, with 1,385 rooms and private villas, suites, and apartments.

Centara to open 20 hotels by 2024. Award-winning Centara Hotels & Resorts is continuing its expansion in Vietnam, with the goal of opening 20 new hotels across the country in the next few years. Targeted destinations include key economic hubs such as Ho Chi Minh City, Hanoi, and Haiphong, and other high-growth areas.

Avani announces a new beachfront resort in Nha Trang. Avani Hotels & Resorts announced the signing of an agreement with TTC Hospitality in Vietnam. Scheduled to open by mid-2020, Avani Doc Let Resort is situated along the stunning shores of Doc Let Beach in Nha Trang. Avani currently operates 27 hotels, resorts, and residences in 16 countries, including two in Vietnam.

Radisson Blu Hoi An Hotel to Vietnam by 2021. Radisson Hotel Group announced one of its newest projects, a beachfront property in Hoi An. Set to open in 2021, Radisson Blu Hoi An will be nestled directly on the soft sands of Hà My Beach, 8km from Hoi An’s UNESCO World Heritage-listed town center. With 734 rooms, suites and villas, this will become the largest property in the company’s Asia Pacific portfolio.