Vietnam Tourism Report - Q4 2022

Q4 2022
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Vietnam
Tourism R
Report
eport
Includes 5-year forecasts to 2026
Vietnam Tourism Report | Q4 2022
Contents
Key View............................................................................................................................................................................................ 4
SWOT .................................................................................................................................................................................................. 5
Tourism SWOT................................................................................................................................................................................................................................ 5
Industry Forecast........................................................................................................................................................................... 6
Industry Risk/Reward Index ....................................................................................................................................................14

Asia-Pacific Tourism Risk/Reward Index ...........................................................................................................................................................................14
Vietnam Tourism Risk/Reward Index .................................................................................................................................................................................18
Market Overview..........................................................................................................................................................................20
Competitive Landscape.............................................................................................................................................................24
Tourism Methodology ................................................................................................................................................................27
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Key View
Key View: We project Vietnam's arrivals to grow in 2022 following contractions in 2020 and 2021 due to bans on international
arrivals in response to the Covid-19 pandemic. The growth in arrivals will be aided by the lifting of restrictions on international
arrivals in March 2022. There are downside risks to our outlook for arrivals in 2022 stemming from the emergence of new Covid-19
variants and rising consumer price inflation globally amid the Russia-Ukraine conflict that could result in consumers deferring
international travel plans. We project arrivals to fully recover in 2024 as they rise above the pre-Covid levels of 2019. Arrivals will
continue to increase over the remainder of our forecast period to 2026. The growth in arrivals will result in international tourism
receipts and hotel occupancy rates increasing over our 2022-2026 forecast period.
KEY FORECASTS (VIETNAM 2019-2026)

Indicator 2019e 2020e 2021e 2022f 2023f 2024f 2025f 2026f
International tourism receipts,

10.84 2.10 0.08 0.88 6.24 11.07 12.35 13.17
USDbn

7.6 -80.7 -96.1 969.3 612.0 77.3 11.6 6.6
USDbn, % y-o-y

249,919.65 48,638.01 1,877.59 19,989.11 143,578.60 257,146.89 289,766.35 312,039.24
VNDbn

9.7 -80.5 -96.1 964.6 618.3 79.1 12.7 7.7
VNDbn, % y-o-y
Total arrivals, '000 18,008.59 3,837.30 157.30 1,606.14 11,141.46 19,346.46 21,442.92 22,193.59
Total arrivals, '000, % y-o-y 16.2 -78.7 -95.9 921.1 593.7 73.6 10.8 3.5
e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions
Latest Updates And Key Forecasts
• We project Vietnam's arrivals to begin to recover in 2022, growing by 820.9% y-o-y to reach 1.4mn.
• On March 15 2022, Vietnam's authorities dropped all Covid-19 testing requirements for international inbound arrivals. This was
followed by all medical requirements being dropped on April 27 2022. We expect these measures to aid the recovery of the
country's tourism sector.
• Vietnam's arrivals will continue to increase in 2023, growing by 640.7% y-o-y to reach 10.7mn.
• We project arrivals to reach 21.3mn at the end of our forecast period in 2026, representing an average annual growth rate of
309.7% y-o-y.
• Vietnam has a strong hotel construction pipeline and we expect the number of hotels in the country to increase over our
2022-2026 forecast period aided by the strong growth in international arrivals and domestic tourism.
• AVANI, Mandarin Oriental, Hyatt and Singapore-based Citadines, a subsidiary of Ascot, are all expected to debut headline
resorts and hotels that were delayed due to Covid-19 over the Q422-Q123 period in time for the peak season.
• Multiple hotel chains including Accor, Minor Hotels and Centara have continued to outline ambitious, expansion plans to
boost their portfolio in Vietnam. We estimate that over 100 hotels are currently in the development pipeline, with most of them
set to open their doors by 2024.
Please Note: We have updated our methodology for the tourist arrivals forecasts. Our forecasts are now calculated with a
regression model that uses the historical time series and key macroeconomic explanatory variables from the destination market
and the source market taken from Fitch Solutions' Country Risk service.
SWOT
Tourism SWOT
SWOT Analysis
Strengths • Vietnam is in a prime position to take advantage of expanding outbound tourism throughout the Asia-Pacific
region.
• A range of Unesco historical, cultural and natural attractions gives the country lasting appeal.
• For both tourists and developers, Vietnam is seen as a more affordable destination than the other more
established regional markets.
• Diverse source markets sustain a broad spectrum of tourists.
• The Vietnamese dong is an attractive currency and supports low-income visitors compared to Thailand and
its other competitors.
• A solid accommodations development pipeline, with over 120 new projects under construction.
Weaknesses • Vietnam's tourism sector is highly exposed to arrivals from Mainland China which is maintaining stringent
measures on outbound travel at the time of writing (August 2022), as part of its zero-Covid strategy.
• Some sectors of tourism infrastructure, including accommodation, are in need of extensive modernisation
and expansion, particularly outside the capital city and popular beach resorts.
• Transport connections in rural areas are restricted, especially in the far north and inland towards the border
with Laos.
Opportunities • Reopening of borders to drive a much-needed rebound, especially during the Q422 holiday season.
• Tourism prospects to improve markedly over the 2023-2026 period, once the pandemic subsides, as is
expected.
• Extensive real estate opportunities exist for hotel development, particularly along southern coastlines and in
rural inland areas.
• Robust tourism-based construction efforts support economic activity in the country.
• Expanding low-cost airline networks across the entire region are boosting inbound arrivals.
• Vietnam has the opportunity to market itself as a meetings, incentives, conferences and exhibitions
destination.
Threats • The emergence of new Covid-19 variants could result in stringent travel measures being implemented once
again.
• Global food price inflation and commodity price surge likely to weigh on prospective income-sensitive
tourists.
• Other markets in the region, such as Thailand, are more established tourist destinations and have better
flight connections.
• Investor sentiment could weaken in H222; hotels and other infrastructure projects could face delays and
funding pressures.
Industry Forecast
Key View: Vietnam's arrivals will return to growth in 2022 following the lifting of restrictions on international inbound arrivals in
March 2022. There are downside risks to our outlook for arrivals in 2022 stemming from the emergence of new Covid-19 variants
and rising consumer price inflation globally amid the Russia-Ukraine conflict that could result in consumers deferring international
travel plans. We project arrivals to continue to increase in 2023 and fully recover in 2024 as they rise above the pre-Covid levels of
2019. Arrivals will continue to increase over the remainder of our forecast period to 2026. International tourism receipts and hotel
occupancy rates will rise in line with increasing arrivals.
Latest Updates
• We project Vietnam's arrivals to begin to recover in 2022, growing by 820.9% y-o-y to reach 1.4mn.
• On March 15 2022, Vietnam's authorities dropped all Covid-19 testing requirements for international inbound arrivals. This was
followed by all medical requirements being dropped on April 27 2022. We expect these measures to aid the recovery of the
country's tourism sector.
• Vietnam's arrivals will continue to increase in 2023, growing by 640.7% y-o-y to reach 10.7mn.
• We project arrivals to reach 21.3mn at the end of our forecast period in 2026, representing an average annual growth rate of
309.7% y-o-y.
• Vietnam has a strong hotel construction pipeline and we expect the number of hotels in the country to increase over our
2022-2026 forecast period aided by the strong growth in international arrivals and domestic tourism.
Significant Challenges To Recovery Over H222

Vietnam - Total Arrivals (000) & International Receipts (2019-2026)
e/f = Fitch Solutions estimate/forecast. Source: World Bank, national sources, Fitch Solutions
Arrivals Outlook: Recovery Envisaged As Borders Opened In March
We project Vietnam's arrivals to begin to recover in 2022, growing by 820.9% y-o-y to reach 1.4mn. On March 15 2022, Vietnam's
authorities dropped all Covid-19 testing requirements for international inbound arrivals. This was followed by all medical
requirements being dropped on April 27 2022. We expect these measures to aid the recovery of the country's tourism sector. That
said, we note that the emergence of new Covid-19 variants is a downside risk to our 2022 outlook. Furthermore, rising consumer
price inflation globally is weighing on consumer purchasing power and could result in international mid and long haul travel plans
being deferred. Vietnam's arrivals will continue to increase in 2023, growing by 640.7% y-o-y to reach 10.7mn.
2021 Recovery And Covid-19 Impact
The ban on international arrivals resulted in Vietnam's arrivals contracting by a further 95.9% y-o-y in 2021 to 157,300. Vietnam's
authorities banned international inbound arrivals in March 2020 in response to Covid-19. This resulted in arrivals contracting by
78.7% y-o-y to 3.8mn in 2020, dropping from 18.0mn in 2019.
Arrivals Will Begin To Recover In 2022

Vietnam - Total Arrivals & Growth (2019-2026)
f = Fitch Solutions forecast. Source: General Statistics Office of Vietnam, Fitch Solutions
Vietnam's Key Source Markets In 2022
The Asia-Pacific region accounts for a large proportion of Vietnam's arrivals. We forecast the country to have 1.1mn arrivals from the
Asia-Pacific region in 2022. While this is higher than the 94,000 arrivals from the region in 2021, it is significantly lower than the
14.5mn arrivals from the region in the pre-Covid period in 2019.
Mainland China will be Vietnam's largest arrivals source market with 360,460 arrivals in 2022. This will be followed by South Korea
and Thailand with 263,800 arrivals and 107,810 arrivals respectively. Vietnam's increasing business ties with its neighbours, coupled
with an increasingly competitive regional airline industry, will support the increase in arrivals from its largest source markets in the
region.
Mainland China Is Largest Source Market

Vietnam – Top 10 Inbound Source Markets (2022f)
Note: May include territories, special administrative regions, provinces and autonomous regions. f = Fitch Solutions forecast. Source: National sources, Fitch Solutions
Medium-Term Arrivals Outlook
We expect arrivals to continue to increase over the remainder of our 2022-2026 forecast period with arrivals fully recovering in
2024 as they reach 18.4mn. We project arrivals to reach 21.3mn at the end of our forecast period in 2026, representing an average
annual growth rate of 309.7% y-o-y. We expect the government to continue championing industry recovery and to work towards
capitalising on emerging trends. The government will keep focusing investments into improving transport infrastructure hoping this
will make Vietnam even more competitive relative to more developed markets, which also possess robust transport links, making
transport easier. We believe that this will support tourism recovery and improve Vietnam's attractiveness as a tourist destination in
the post-pandemic APAC landscape.
INBOUND TOURISM (VIETNAM 2019-2026)

Indicator 2019 2020 2021 2022f 2023f 2024f 2025f 2026f
Total arrivals, '000 18,008.59 3,837.30 157.30 1,448.55 10,729.92 18,406.92 20,621.85 21,339.37
Total arrivals, '000, % y-o-y 16.2 -78.7 -95.9 820.9 640.7 71.5 12.0 3.5
Arrivals by region, North America, '000 905.29 216.30 16.32 90.83 449.82 820.51 941.77 988.71
Arrivals by region, North America, % y-o-y 8.2 -76.1 -92.5 456.6 395.3 82.4 14.8 5.0
Arrivals by region, Asia Pacific, '000 14,495.41 2,841.11 93.99 1,059.91 8,549.43 14,500.32 15,923.89 16,472.10
Arrivals by region, Asia Pacific, % y-o-y 18.5 -80.4 -96.7 1,027.7 706.6 69.6 9.8 3.4
Arrivals by region, Europe, '000 1,924.57 600.08 34.72 184.82 893.68 1,650.26 2,147.58 2,213.99
Arrivals by region, Europe, % y-o-y 5.6 -68.8 -94.2 432.3 383.5 84.7 30.1 3.1
f = Fitch Solutions forecast. Source: General Statistics Office of Vietnam, Fitch Solutions
Structural Trends
Vietnam's tourism industry posted robust growth over the past decade, as international arrivals jumped from 5mn in 2010 to over
18mn by the end of 2019. Over the same period, international tourism receipts jumped from USD4.5bn to over USD10.8bn. Strong
investments, growing international flight connections and improving transport and accommodations in APAC markets remained
potent. However, the outlook for construction over the next five years has changed drastically, owing to the Covid-19 pandemic.
Vietnam has a well-established tourism market, although it continues to rely heavily on regional source markets. We expect this
trend to persist with high-spend source markets, such as Japan, Mainland China and South Korea, all set for industry recovery. The
government has acknowledged that the diversification of inbound source markets will be important to sustaining the long-term
sustainability of the tourism sector, investing in marketing campaigns aimed at promoting destinations outside its key cities. We
note that Vietnam's history and culture, combined with its natural beauty and location, will allow the tourism industry to recover
over the next few years and beyond. Finally, we also expect the tourism industry to benefit from rising domestic tourists, due to the
increasing prevalence of short-haul flights as well as an upwardly mobile population.
International Tourism Receipts: Modest Recovery In 2022
International tourism receipts in Vietnam grew from USD4.5bn in 2010 to USD10.8bn by 2019, suggesting an average annual
uptick of 14.5% y-o-y over this period, driven by a surge in high spending and low-income visitors from both established and
emerging APAC source markets. The rapid expansion of air and land routes by budget airlines and low-cost tourism operators had
opened up channels for more budget-conscious tourists to enter and explore Vietnam. However, we expect the short-term outlook
to weaken significantly due to the Covid-19 pandemic.
We estimate that tourism-related spending contracted sharply in 2020, with international tourism receipts decreasing by 80.7% to
USD2.1bn. The downtrend was driven by reduced demand in the accommodations, tourism-related retail, travel and transport
sectors alike. The hospitality and gastronomy verticals also faced headwinds for much of 2020 as Chinese, South Korean and other
visitors remained under lockdown, or faced flight suspensions and rising economic challenges at home.
The industry remained under pressure in 2021, and we estimate revenues to have plummeted by 96.1% to USD80mn. We forecast
the sector to start recovering in 2022 with international tourism receipts coming in at USD0.88bn, up 970% y-o-y. While revenues
will remain heavily under pressure for much of the year, 2022 will mark a turning point with stronger growth expected over
2023-2026.
Medium-Term Outlook For International Tourism Receipts
We forecast an average annual uptick of 336% over 2022-2026 to take total receipts to USD13.2bn by 2026. This will be above the
pre-pandemic level of USD10.8bn seen in 2019. We expect Vietnam to continue attracting both price-sensitive, low-income APAC
tourists while also orienting itself as a luxury destination with the development of high-end hotels, which will attract a wealthy
segment of travellers. The country is gradually shifting its image of a popular budget destination to a more luxury destination, but
both income segments will find Vietnam a very attractive holiday destination over the 2023-2026 period, especially as global
economic challenges will remain on the agenda over the next three years.
TOURISM RECEIPTS (VIETNAM 2019-2026)


10.84 2.10 0.08 0.88 6.24 11.07 12.35 13.17
USDbn

7.6 -80.7 -96.1 969.3 612.0 77.3 11.6 6.6
USDbn, % y-o-y

249,919.65 48,638.01 1,877.59 19,989.11 143,578.60 257,146.89 289,766.35 312,039.24
VNDbn

9.7 -80.5 -96.1 964.6 618.3 79.1 12.7 7.7
VNDbn, % y-o-y
e/f = Fitch Solutions estimate/forecast. Source: World Bank, national sources, Fitch Solutions
Accommodation And Food Service Sector Outlook
The easing of Covid-related restrictions bodes well for Vietnam's hospitality sector. Our Country Risk team forecasts the
accommodation and food service gross value added (GVA) to grow by 11.6% y-o-y in 2022 to reach VND379.1trn (USD16.3bn). This
is an increase from the estimated VND339.7trn (USD14.7bn) in 2021. We project accommodation and food service GVA to grow by
11.7% y-o-y in 2023 to reach VND423.3trn (USD17.9bn). The accommodation and food service GVA will continue to increase over
the remainder of our 2022-2026 forecast period to reach VND573.3trn (USD23.5bn) in 2026, representing an annual average
growth rate of 11.0% y-o-y.
Increasing Arrivals Bode Well For Hospitality

Vietnam - Overnight Stays & Industry Value, 2019-2026
Hotels: Increased Travel Will Boost Hotel Stays
We project Vietnam's total overnight stays to return to grow in 2022, expanding by 813.1% y-o-y to reach 12.6mn, increasing from
1.4mn in 2021. The increase in overnight stays will be due to the lifting of Covid-19 restrictions following two years of stringent
measures. However, we note that this will be lower than the 160.4mn total overnight stays in the pre-Covid (2019) period. Vietnam's
total overnight stays will further increase to 92.4mn in 2023, growing by 634.5% y-o-y. We forecast the country's total overnight
stays to fully recover in 2025 as they reach 173.2mn, rising above the pre-Covid level. Total overnight stays will reach 177.1mn at
the end of our forecast period in 2026, growing by an average annual growth rate of 306% y-o-y over our 2022-2026 forecast
period.
Increased travel over our 2022-2026 forecast period will result in hotel occupancy rates rising. We project hotel occupancy rates to
rise to 43.1% in 2022 from 30.4% in 2021 and to reach 58.1% at the end of our forecast period in 2026.
The government's push for greater relaxation of foreign direct investment laws, coupled with active efforts to attract higher levels of
foreign capital has been positive in developing the wider hotel industry. We forecast that Vietnam has around 100 hotels under
construction as of Q222, and we further expect the total number of hotels to increase from 19,440 in 2022 to over 20,400 by
2026. The Covid-related shocks of 2020 had weighed on investor sentiment for part of 2021 but a number of major groups, such
as Accor, InterContinental Hotels and Marriott, have begun showcasing their new portfolio expansion plans, including hotels in
the Mövenpick, MGallery, Mercure and Novotel brands among others. Investor sentiment should once again receive a boost once
the sector revenues recover from Q422-Q123 onwards.
Our core view is that there is significant potential for growth in the hotels sector, and the government will continue to prioritise
accommodations infrastructure in a bid to spur economic growth and develop the tourism vertical, especially in the aftermath of
the Covid-19 slowdown. While new hotels originally slated to open in 2020/2021 are seeing their inauguration dates postponed, we
are cautiously optimistic that the Vietnamese accommodations sector will rebound once the global situation brightens during
the 2023-2026 period.
Major hotel groups have invested significant sums into the country's established tourist destinations while also shifting focus
towards upcoming sites. Local hotel chains are also seeking to expand their presence in these areas. At the same time, there has
been the emergence of many boutique hotels, which focus largely on middle class travellers who seek premium accommodation
but are unwilling to pay prices commanded by major international hotel chains. These boutique hotels offer clean and upscale
accommodation with high levels of service, but do not offer amenities such as gyms or swimming pools. These hotels are often
centrally located with good transport links but offer few rooms and are generally operated by a proprietorship or small businesses.
HOTEL ACCOMMODATION (VIETNAM 2019-2026)

Accommodation & food

229,999.57 233,873.09 339,701.16 379,145.38 423,336.94 468,620.00 520,388.79 573,718.32
service nominal GVA, VNDbn

service VND nominal GVA 9.8 1.7 45.3 11.6 11.7 10.7 11.0 10.2
growth, % y-o-y

9.98 10.08 14.67 16.34 17.94 19.58 21.52 23.50
service nominal GVA, USDbn

service USD nominal growth, 7.7 1.0 45.6 11.4 9.8 9.1 9.9 9.2
% y-o-y
Number of hotels and

20.01 19.66 19.11 19.44 19.95 20.19 20.39 20.50
establishments, '000
Number of hotels and

0.3 -1.8 -2.8 1.7 2.6 1.2 1.0 0.6
establishments, '000, % y-o-y
Total overnight stays, '000 160,430.2 34,515.0 1,378.4 12,585.9 92,441.5 156,253.8 173,173.9 177,129.3
Total overnight stays, '000, %

15.2 -78.5 -96.0 813.1 634.5 69.0 10.8 2.3
y-o-y
Average length of stay, nights 5.3 5.4 5.3 5.2 5.2 5.1 5.0 5.0
Average length of stay, nights,

-0.8 1.0 -2.6 -0.8 -0.8 -1.5 -1.1 -1.2
% y-o-y
Hotel rooms, '000 379.94 389.50 377.92 385.36 395.07 399.76 403.98 406.14
Hotel rooms, '000, % y-o-y 1.7 2.5 -3.0 2.0 2.5 1.2 1.1 0.5
Occupancy rate, % 58.8 29.4 30.4 43.1 51.6 55.6 58.0 58.1
Domestic Tourism Market: Slated For Expansion
Vietnam's domestic tourism has been strong following the lifting of Covid-19 restrictions. In August 2022, the Vietnam National
Tourism Administration an agency of the Ministry of Culture, Sports and Tourism reported that 72mn domestic tourists have been
served since March 15 2022 compared to 733,000 foreign tourists. However, the minister reported that the domestic tourism
sector has been experiencing challenges stemming from rising service prices and staff shortages for lodging facilities and services.
We expect the government to continue supporting domestic tourism as a crucial means to restart the industry. Increasing
economic activity over the medium term, coupled with rising wages, will support the demand for domestic travel. Vietnam also
benefits from favourable demographics in terms of a young and growing population. The domestic travel market is strong,
particularly over the summer period, and will continue to grow as wages rise and the relative cost of short-haul air travel
falls. Vietnam's consumer-oriented services sectors have benefited greatly from the rising income level of its citizens and the
government's concerted efforts to boost tourism, allowing it to expand at very healthy rates.
The rise in domestic tourism is being reflected in a rising demand for and investment in tourism-related infrastructure, particularly
air and rail, which is reflected in the recent licensing of Vietstar Airlines, the country's fourth airline, which intends to fly both
domestic routes and increase connections to South East and East Asia by 2026. The airline will compete with the country's
preeminent national carriers, Vietnam Airways and Vietjet Air, which account for around three-quarters of the domestic
passenger market while also facing competition from start-up carrier Bamboo Airways. The growing competition among domestic
carriers will help to lower costs further and provide added impetus for the domestic tourism market, especially once the pandemic
shocks subside and latent organic demand for domestic tourism springs back up.
Departures: Outlook Recovering As Pandemic Shocks Fade
Vietnam's total outbound departures will reach 756,160 in 2022, growing by 252.1% y-o-y. This will be an increase from the
estimated 214,760 total outbound departures in 2021. We forecast total outbound departures to fully recover in 2025 as they reach
6.4mn, rising above the pre-Covid total outbound departures of 5.9mn in 2019. The country's total outbound departures will reach
6.9m in 2026, an average annual growth rate of 127.6% y-o-y over our 2022-2026 forecast period.
We observe that a significant number of outbound trips taken by Vietnamese residents are to other Asia Pacific markets. This is due
to the geographic proximity and relative affordability of these destinations, making regional travel by far the most popular option for
Vietnamese travellers. The high cost of long-haul travel is a deterrent to trips abroad. However, this dynamic will change towards in
long term given the expansion of Gulf carriers, such as Qatar Airways and Emirates, into the region. Growth in the outbound
travel market is expected throughout our forecast period; however, the average number of tourist departures per 1,000 of the
population will remain low (7.6 in 2022 and 67.5 in 2026), suggesting that for many households, domestic travel remains the more
affordable option.
TOURISM DEPARTURES AND CONSUMPTION (VIETNAM 2019-2026)

Outbound, total departures, '000 5,900.87 1,178.87 214.76 756.16 2,779.88 5,239.15 6,437.85 6,866.13
Outbound, total departures, % y-o-y 5.7 -80.0 -81.8 252.1 267.6 88.5 22.9 6.7
Average Tourist departure per 1000 of the population 61.17 12.11 2.19 7.64 27.88 52.18 63.67 67.46
e/f = Fitch Solutions estimate/forecast. Source: General Statistics Office of Vietnam, Fitch Solutions
Marketing Strategies: Social Media Presence To Rekindle Interest
The tourism industry has consistently been highlighted in the government's growth plans. As part of its tourism marketing strategy,
the 'Strategy of Vietnam's Tourism Development Until 2020, Vision 2030', the government aims to develop 'quality products' based
on the natural strengths of Vietnam’s seven tourism zones with a focus on marine/beach tourism, cultural tourism, and nature-
based tourism. Part of its success can be attributed to its ongoing open policy 'Doi Moi' and its political stability, which has enabled
an influx of foreign investment. Its objective was to attract 10.0-10.5mn international tourists by 2020 - data suggest that the
country had already successfully achieved this goal by 2016.
We expect the government to work actively towards a recovery plan after the impact of the Covid-19 pandemic given the growing
importance of tourism as a contributor to GDP. In 2021, the Vietnam Tourism Advisory Board began airing commercials on major
TV outlets such as CNN encouraging visitors to choose Vietnam as their first major post-pandemic holiday destination. In Q221,
the Vietnam National Administration of Tourism launched the 'Vietnam: Travel to Love' campaign on YouTube an enlisted the
assistance of young talented stars across the country to promote tourism. The Vietnamese government has been successful at
containing major local outbreaks but the reopening of borders exposes the country to new imported cases. We also expect the
government to actively implement new health and safety policies and certifications for the hospitality and tourism sector over the
coming months to ensure that a long-term framework to support bio safety has been put into place as borders are opened.
The government's efforts on investing in the tourism sector are therefore set to continue with increasing bilateral and
multilateral partnerships. Government leaders have been strengthening Vietnam's bilateral relations with other markets, and have
signed agreements aimed at developing each other's tourism industries.
Vietnam also has the increasing potential to become a meetings, incentives, conferences and exhibitions destination, especially in
places such as Da Nang. We expect this trend to continue over our forecast period to 2026.
Please Note: We have updated our methodology for the tourist arrivals forecasts. Our forecasts are now calculated with a
regression model that uses the historical time series and key macroeconomic explanatory variables from the destination market
and the source market taken from Fitch Solutions' Country Risk service.
Industry Risk/Reward Index

Asia-Pacific Tourism Risk/Reward Index
Key View: This quarter, the Asia-Pacific region has an overall score of 63.4 out 100 with the region's score aided by its strong
Rewards and Risks profiles. Singapore is the regional leader, placing first out of the 23 markets in the region with an overall Risk/
Reward Index score of 84.8 out of 100. Its Rewards score of 80.3 is the fourth highest in the Asia-Pacific region while its Risks score
of 91.5 out 100 is the highest in the region. This means that Singapore offers tourism businesses low risks and high rewards. Markets
across the Asia-Pacific region have been easing their entry requirements for travellers in a bid to support the recovery of the tourism
industry and we expect this to result in increased arrivals in 2022. We note some downside risks to our outlook stemming from rising
inflation globally amid the Russia-Ukraine conflict which is weighing on consumer purchasing power. The emergence of new
Covid-19 variants could result in authorities in the region implementing stringent entry requirements for containment measures.
Markets in the Asia-Pacific region have been easing entry requirements for travellers in a bid to stimulate the recovery of the
tourism sector. We note that some measures such as requiring a valid Covid-19 vaccination certificate, a negative PCR test or a
medical certificate proving that a traveller has recently recovered from Covid-19 remain in place in some markets. Mainland China;
Hong Kong, China; and Macao, China have more stringent measures in place which will hamper the recovery of the tourism sector
in these markets as authorities seek to limit the spread of Covid-19 by pursuing a Zero-Covid strategy.
The Russia-Ukraine conflict poses a short-term risk to the Asia-Pacific region’s tourism sector recovery. This is due to rising inflation
in many markets caused by rising commodity prices. This could result in fewer arrivals from the region’s key source markets in 2022
as travellers postpone their international travel plans.
This quarter, we shine the spotlight on Vietnam which ranks 12th out of the 23 markets in the region with an overall score of 68.0
out of 100. Vietnam has a highly developed tourism sector and has key attractions such as beaches, culture and cuisine. Tourists
visit Vietnam’s white sand beaches that include Hoi An, Mui Ne and Nha trang for relaxation and water sports. They are also able to
learn about Buddhism in Ninh Binh and have the appeal of trying traditional foods when visiting the country. Vietnam has strong air
links with its major source markets which increases the ease of travel. Authorities fully reopened for international tourism in March
2022 after almost two years of being shuttered due to the Covid-19 pandemic.
Our proprietary Risk/Reward Index provides a comparative regional ranking system that evaluates the ease of doing business and
industry-specific opportunities and limitations for potential investors in a given market. It is broken down into Rewards, indicating
the level of potential returns on investment, and Risks, an analysis of factors that may prevent the realisation of these potential
returns.
ASIA-PACIFIC - TOURISM RISK/REWARD INDEX

Industry Country Industry Country Regional Global
REWARDS RISKS RRI
Rewards Rewards Risks Risks Rank Rank
Singapore 92.9 61.4 80.3 90.6 92.4 91.5 84.8 1 1
Hong Kong, 97.7 60.9 83.0 83.2 81.2 82.2 82.7 2 2

China
Japan 85.8 62.1 76.3 92.6 84.9 88.8 81.3 3 3
Malaysia 85.9 71.2 80.0 78.8 74.2 76.5 78.6 4 5
Taiwan, China 80.5 56.1 70.7 91.1 87.9 89.5 78.2 5 6
Australia 87.4 49.8 72.4 80.1 88.3 84.2 77.1 6 8
Macao, China 85.6 77.2 82.2 63.2 69.8 66.5 75.9 7 9
South Korea 85.3 43.9 68.8 82.6 89.1 85.8 75.6 8 10
China 85.8 71.0 79.9 58.4 75.2 66.8 74.7 9 11

(Mainland)
New Zealand 65.4 55.5 61.4 83.9 90.1 87.0 71.7 10 15
Thailand 91.7 56.0 77.5 59.5 59.2 59.3 70.2 11 18
Vietnam 81.0 66.9 75.3 47.8 66.2 57.0 68.0 12 23
Indonesia 72.7 73.7 73.1 53.8 61.6 57.7 66.9 13 26
Philippines 84.2 74.7 80.4 36.5 56.0 46.3 66.7 14 27
India 79.6 72.4 76.7 42.1 59.4 50.7 66.3 15 29
Cambodia 74.5 50.2 64.8 33.1 30.9 32.0 51.7 16 66
Sri Lanka 59.9 51.2 56.4 35.9 33.9 34.9 47.8 17 81
Laos 62.1 55.6 59.5 23.5 24.3 23.9 45.3 18 90
Bangladesh 49.4 55.1 51.7 23.3 40.3 31.8 43.7 19 99
Pakistan 57.7 49.2 54.3 20.3 20.9 20.6 40.8 20 110
Maldives 53.1 43.9 49.4 25.9 25.4 25.7 39.9 21 116
Myanmar 75.9 37.4 60.5 8.4 4.2 6.3 38.8 22 118
Nepal 36.9 43.9 39.7 21.7 21.2 21.5 32.4 23 133
Global 53.5 51.7 52.8 50.8 50.9 50.8 52.0 ~ ~

Average
Regional 75.3 58.2 68.4 53.8 58.1 55.9 63.4 ~ ~

Average
Note: May include territories, special administrative regions, provinces and autonomous regions. Scores out of 100; higher score = more attractive market. Source: Fitch
Solutions
The Rewards section assesses the sector's size and growth potential in each market, along with broader industry and market
characteristics that may inhibit its development. It takes the numbers and percentage growth of tourist arrivals over the past year
into account as well as our forecasts for growth in 2022 and beyond. The Industry Rewards score takes into account total arrivals,
arrivals growth, tourism receipts growth and hotel occupancy. The Country Rewards score takes into account the exchange rate
(RUB/USD, % chg y-o-y), labour costs, investment openness and real GDP per capita.
Hong Kong, Macao, the Philippines and Singapore score favourably in our Rewards section, mainly as a result of either being able to
rely on business and leisure travel or through increased domestic tourism. Singapore is one of the most established business hubs
in Asia, and therefore benefits from business tourism. Furthermore, Singapore has recreational and cultural tourist attractions that
appeal to leisure travellers, such as the Singapore Zoo, the ArtScience Museum, Gardens by the Bay and Esplanade, as well as
Spectra - A Light & Water Show. Singapore also frequently hosts high-profile sporting events such as the Grand Prix and Rugby
Sevens. The resort island of Sentosa is another popular attraction for domestic and international tourists; it has theme parks such as
Universal Studios Singapore. Singapore also offers other attractions outside the inner city, including its lesser-known beachside
resorts and parks locations such as Pulau Ubin, Bukit Timah Nature Reserve and Sungei Buloh Nature Park.
The Philippines will be a key tourism market for 2022. Authorities reopened for international tourists in February 2022 and as of April
2022 travellers were no longer required to quarantine on arrival. The medium-term outlook is somewhat more positive, as the
ambitious National Tourism Development Plan 2016-2022 continues to incentivise investments and support the sector. There is
strong tourism potential in the Philippines, and considerable growth can be gained from large regional source markets, such as
China and India. As such, the Philippines scores a strong 80.4 out of 100 for our Rewards pillar, bolstered by a score of 84.2 out of
100 for our Industry Rewards pillar.
Hong Kong, Macao And The Philippines Performing Better In Rewards Scores
Asia-Pacific - Tourism Rewards Scores
Solutions
The Risks section evaluates industry-specific dangers as well as those emanating from the political and economic profile that
question the likelihood of anticipated returns being realised over the forecast period. The Industry Risks score takes into account
security risks, logistics risk and the consumer price index. Our proprietary Country Risks score covers long- and short-term political
risk, long- and short-term economic risk and operational risk.
Singapore boasts the top Risks score in the Asia-Pacific region this quarter, with an overall Risks score of 91.5 out of 100. Singapore
is very well-developed in relation to the Asia-Pacific region, which currently provides its tourism industry with a good advantage
through its developed infrastructure and its stable and secure environment. It is a major transit point in many long-haul flights,
connecting the world to the Asia-Pacific region, and is a popular short-stay destination. Singapore's tourism industry is embracing
digital transformation to efficiently target and attract the right market.
Japan offers an attractive Risks tourism market with the ability to attract a large number of tourists. Japan's tourism industry is
already well developed with a wide variety of cultural attractions across many cities. The market has the advantage of being well
connected and there are continual improvements to its rail and air transport connections. As such, Japan scores 88.8 out of 100 for
our Risks pillar.
Singapore Offers Stable Economic Environment

Asia-Pacific - Tourism Risks Scores
Solutions
Please Note: Our Risk/Reward Indices are updated frequently; as a result, scores in this section may not match scores in the rest of
the report.
Vietnam Tourism Risk/Reward Index

Key View: This quarter, Vietnam ranks 12th out 23 markets in the Asia-Pacific region with an overall score of 68.0 out of 100 in our
Tourism Risk/Reward Index for Q422. The country scores 75.3 under our Rewards pillar and 57.0 under our Risks pillar and this is
higher than the regional averages of 68.5 and 55.9 respectively. We expect Vietnam's Rewards profile to be strengthened by
increasing arrivals following the lifting of restrictions on international inbound travellers. Furthermore, increasing economic activity
and a stable political environment means that foreign businesses face relatively lower risks by regional standards, making the
country attractive for investment in tourism-related businesses.
Risks And Rewards Scores Are Above Regional Average

Vietnam & Asia-Pacific - Tourism Risk/Reward Index (Q422)
Note: Scores out of 100; higher score = lower risk. Source: Fitch Solutions
Rewards
This section provides an evaluation of the sector's size and growth potential in each market, along with broader industry
characteristics that may enhance or inhibit its development. The Rewards scores for tourism take into account the numbers and
percentage growth of tourist arrivals over the past years and our forecasts for the future. Vietnam's Rewards score of 75.3 out of
100 in our Q422 update is higher than the regional average of 68.5.
Industry Rewards
The Industry Rewards score takes into account total arrivals, arrivals growth, tourism receipts growth and hotel occupancy.
Vietnam's arrivals will return to growth in 2022, following the easing of restrictions on international inbound arrivals in March 2022.
We forecast the country's arrivals will grow continue to grow over the remainder of our 2022-2026 forecast period with arrivals fully
recovering in 2024 as they rise above the pre-Covid levels of 2019. We forecast international tourism receipts and hotel occupancy
rates to increase in line with increasing arrivals. As a result, Vietnam has an Industry Rewards score of 81.0 out of 100, higher than
the regional average of 75.3.
Country Rewards
The Country Rewards score takes into account the exchange rate (VND/USD, % chg y-o-y), labour costs, investment openness and
real GDP per capita. Vietnam's labour costs are relatively low by regional standards. Furthermore, the country is open for investment
by foreign investment in tourism-related sectors. As a result, we expect to see an increase in investments over our 2022-2026
forecast period. Vietnam has a Country Rewards score of 66.9 out of 100. This is higher than the regional average of 58.2 out of
100.
Risks
This section offers an evaluation of industry-specific dangers and those that come from the political and economic profile, which
call into question the likelihood of anticipated returns being realised over the assessed time period. Vietnam has a Risks score of
57.0, compared with the regional average of 55.9.
Industry Risks
The Industry Risks score takes into account security risks, logistics risk and the consumer price index. The government's efforts to
invest key logistics infrastructure such as roads, rail and airports has resulted in the country being easily accessible for travellers. We
expect to see further investments in logistics infrastructure over the medium term. Vietnam has an Industry Risks score of 47.8 out
100 in our update this quarter. However, it is lower than the regional average of 53.8.
Country Risks
Our proprietary Country Risks score covers long- and short-term political risk, long- and short-term economic risk and operational
risk. The reopening of Vietnam's tourism sector bodes well for the country's economic growth over the short-to-medium term. We
expect Vietnam's political environment to remain stable over the the short-to-medium term. The country's growing economy and
stable political environment is supportive of foreign investment in tourism-related sectors. As a result, Vietnam has a Country Risks
score of 66.2 out of 100, higher than the regional average of 58.1.
Market Overview
Vietnam opened international borders for leisure tourism in March 2022 after being closed for nearly two years due to the Covid-19
pandemic and its aftershocks. The tourism sector started to recover over H221-Q122 but was then further derailed due to the Delta
and Omicron variants of the coronavirus and we expect very little momentum over the remained of 2022 due to the depressed
levels of demand across the Asia-Pacific (APAC) region. Multiple markets maintain some type of overseas travel advisories and
outbound organised travel groups from Mainland China will also remain out of the regional market for much of 2022. We expect
significant headwinds to remain pronounced over the next six months before the outlook improves, albeit gradually. Over
2023-2026, we forecast that tourism in Vietnam will regain its former strength among its APAC peers, as a significant amount of
pent-up demand and untapped organic growth potential remain latent in the market.
Major Trends And New Developments
We retain a cautiously optimistic outlook for the tourism sector's recovery trajectory over the Q422-Q123 period, as we are of the
view that Vietnam's attractiveness for tourism will remain pronounced in the post-pandemic environment. Supported by a
committed government, there has been a great deal of infrastructure spending and incentivising of investment in the industry.
Vietnam has also benefited from an impressive rise in interregional travel over the last few years, which is set to encourage a notable
recovery once the pandemic shocks subside.
In March 2022, the government opened international borders for leisure travel after almost two years of tourism shutdown.
Furthermore, all restrictions on domestic tourism were also lifted by Q421. The government has been relatively successful at
containing the virus domestically and now intends to restart the tourism sector.
Vietnam will likely trail behind Thailand in terms of tourism recovery over the 2022-2023 rebound period, owing to the regulatory
lag and slower policy development repose. However, there are signs that the tourism-related projects are beginning to bounce
back. Over the past 12 months, a number of global hospitality and tourism majors have outlined ambitious portfolios of properties
under development, which will support their long-term strategic growth objectives. France-based hotel giant Accor stated in 2021
that it had over 10 hotels under construction in Vietnam, including seven new properties in the Mövenpick and Novotel brands and
a MGallery resort and spa in Phuket Quoc. Accor aims to complete the pipeline by 2023. Furthermore, a number of properties that
were delayed due to Covid-19 are expected to open in 2022 including the Mandarin Oriental Saigon in Ho Chi Minh City, two
AVANI beachside resorts, a Citadines hotel along the Ha Long Bay and the long delayed Hyatt Saigon Phu Nhuan. We expect
additional investor interest once demand levels recover in tandem with tourism arrivals.
Popular Destinations
Vietnam's history and culture, together with its natural beauty and location, will allow the tourism industry to recover steadily as
pandemic-related headwinds subside. Vietnam's tourism potential is rooted in its wide variety of attractions, which range from rural,
eco and wildlife parks to vibrant metropolitan cities, such as Ho Chi Minh City and Hanoi. The country boasts a range of Unesco
World Heritage sites, including Ha Long Bay, Hoi An Ancient Town, My Son Sanctuary, the Complex of Huế Monuments and
the Citadel of the Ho Dynasty. The government will need to take steps to ensure these sites are protected from over-exploitation.
Vietnam also offers pristine, white, sandy beaches, as well as jungle and mountain retreats. The range of attractions, and the
country's geographic scope allows for year-round travel options, negating the effects of seasonal-spend fluctuations. Vietnam's
location in South East Asia is another benefit, as it enjoys proximity to key regional economies, such as China, Singapore, Malaysia
and Japan.
Chinese visitors are high spenders and have been a potent force in the development of the industry over the past decade. The fact
that Beijing implemented some of the harshest travel restrictions in 2020 resulted in a downtrend for tourism revenue in Vietnam
over 2020-2021. That said, we expect pent-up demand from Chinese tourists to be unlocked over the medium term, which will
encourage a recovery in key destinations, such as Hanoi, Hoi An, Ho Chi Minh City and Phu Quoc island. The Vietnamese
government has targeted the Chinese market as a key part of its tourism strategy, and we expect these trends to remain
pronounced out to 2025 and beyond.
Hanoi, Vietnam's capital, is home to a wide range of cultural and historical attractions, including the Hanoi Old Quarter, Ho Chi Minh
Mausoleum Complex, as well as the Ngoc Son Temple and the Water Puppet Show at the Hoan Kiem Lake. The city is connected
regionally and globally by Noi Bai International Airport, and a range of airlines provide flights, including Vietnam Airlines, AirAsia,
Cathay Pacific, Hong Kong Airlines, Thai Airways, Lao Airlines and Tiger Airways. Connections to major travel hubs, such as
Hong Kong, China and Singapore, help to make Hanoi highly accessible. Hanoi is also connected via rail links along the eastern
coast to the south of the country and north to China. The city of Hanoi is home to a wide range of accommodation options,
including high-end international brand hotels, such as Sofitel Legend Metropole. Hanoi also has a wide range of budget
guesthouses and backpacker-style hostel accommodation.
Another key tourism destination in Vietnam is the Unesco World Heritage site of Ha Long Bay in the north of the country. Ha Long
Bay can be reached via the airport in Hanoi or via Cat Bi International Airport in Hai Phong. Several international cruise liners also
dock nearby, which provides an alternative means of travel to the region. Ha Long City, while small, offers a range of hotel options,
including several international brands, such as Novotel, and upscale hotels, such as Wyndham.
Ho Chi Minh City in the south of the country is another top tourism location. There are a wide range of historical attractions
including the Reunification Palace, the War Remnants Museum, the Notre Dame Cathedral and the Cu Chi Tunnels. The city offers a
wide range of accommodation options catering to all budget levels, including several well-known historical hotels, such as the
Hotel Majestic, which is considered a tourism attraction in its own right. Ho Chi Minh City is connected via Tan Son Nhat
International Airport, the largest and busiest airport in Vietnam, with a capacity for between 15.0mn and 17.0mn passengers
annually. Ho Chi Minh City is also connected via the North-South Railway. Ho Chi Minh City and Hanoi are developing metro systems
to improve travel around the city and to suburbs. This will help ease congestion over the long term.
Several cities along Vietnam's extensive coastline are also key tourism locations. These include other Unesco World Heritage sites
such as the Complex of Monuments in Huế and the Ancient Town of Hoi An. Another Unesco site, which is located just over an
hour's drive from Hoi An, is the My Son Sanctuary. In most locations hotel options are extensive, although the mid-level market is
underdeveloped and could provide opportunities for investors in a market where low-cost hostels and high-end resorts are already
well supplied. With the exception of Hoi An, each of these cities is connected to Hanoi and Ho Chi Minh City via the North-South
Railway. Hoi An is also just around an hour's drive from Da Nang which, along with Hue and Nha Trang, is connected via an airport
that provides domestic and international flight connections, making these destinations easily accessible.
Da Nang is set to be a prime hub in Vietnam's tourism industry. The area coastline is set for a significant boost given the recent
expansion of Da Nang International Airport. The airport expansion efforts were completed in 2017, and have provided a capacity of
over 6.5mn passengers annually.
Outside of these areas there remain extensive tourism attractions, including the Mekong River Delta in the far south of the country,
primarily accessible via Ho Chi Minh City, the town of Sa Pa in the northwest and the surrounding rice fields, and the island of Phu
Quoc. Many areas remain underdeveloped from a tourism point of view, with accessibility limited by a poor-quality road network and
fewer hotel and accommodation options.
Tourism Infrastructure
Vietnam has attracted many international hotel groups in recent years. However, barriers to foreign investment mean its hotel
sector is not as well developed as it is in Thailand. Much of the development has been concentrated in Hanoi and Ho Chi Minh City,
where most of the top international hotel groups have some presence. The key tourism cities noted above have also attracted
investors; however, some such as Huế have fewer international brand hotels. Nha Trang is a major beach resort destination.
Vietnam has long been popular with backpackers, and the low-budget travel sector is well catered for by hostels, individually owned
guesthouses, homestays and domestic motel groups. Vietnam also has a legacy of state-owned hotels, but these are increasingly
being privatised to attract investment to compete with international hotel groups. Therefore, we see opportunities in the mid-
market sector, which is less developed. We also see opportunities over the long term for destinations outside of established tourism
locations.
Vietnam is increasingly developing its reputation as a luxury travel destination. One trend is the development of high-end, luxury
resorts under internationally recognised hotel chains. As of Q421, we forecast that Vietnam has around 120 hotels in the its
development pipeline. The opportunity presented by Vietnam's tourism market has gained recognition from many of the top 10
global hotel chains, in particular Accor, Best Western International, Hilton, Hyatt, Marriott (including its Starwood collection)
and InterContinental Hotels Group. Accor and Marriott have ambitious plans for growth out to 2025.
The favourable tourism industry in Vietnam has also encouraged regional hotel groups Avani Hotels & Resorts
and Centara Hotels & Resorts to make ambitious expansion plans in the country. Avani, which already owns two hotels in the
country, has four more hotels in the pipeline. Centara, which has one hotel in the country, has 22 hotels planned for construction by
2025.
Vietnam's inbound tourism market is generally dominated by APAC markets. Many of the larger hotels and resorts have developed
packages that cater specifically to the package-holiday market in Asia. With visitor numbers from key markets, such as China, South
Korea and Japan, expected to rise over the next few years, we are likely to see more development by regional hotel groups that enjoy
brand recognition in these markets, such as Japan-based Nikko Hotels, which already has several properties in the country.
The development of the tourism industry will also benefit key investment projects in transport infrastructure, including railways and
airports. The country will need extensive expansion and modernisation if it is to keep up with the expected increases in demand
placed on the system by higher volumes of inbound, outbound and domestic travellers. Vietnam currently has eight international
airports, and a further 15 domestic (non-military) airports provide relatively good internal connectivity. Air travel is a focus of
government investment, with plans being developed to build airports and expand existing ones.
The main airport project is Long Thanh International Airport, which will be Ho Chi Minh City's second international airport.
Construction began in Q220 and the airport will be operational by 2025. It is estimated that it will have the capacity for 100mn
passengers per year by the time all stages of construction are completed. Ho Chi Minh City's current international airport, Tan Son
Nhat International Airport, is also undergoing an expansion project led by France-based engineering company ADP
Ingénierie which also won the bid for the Long Thanh International Airport project. Plans include an additional terminal to
handle an added 50mn passengers a year. The province of Dong Nai is seeking government investment for roads, which will
connect its airport to Ho Chi Minh City and other regions.
ADP Ingénierie is also undergoing an assessment for the expansion of Noi Bai International Airport in Hanoi which aims to cater for
35mn passengers by 2030 and 50mn by 2050. There are also plans for the development of numerous other airports across the
country. These include the development of Lao Cai International Airport in Sapa, whereby construction began in 2020. Phu Cat
Airport opened a new terminal in the Binh Dịnh province in May 2018. Van Don International Airport opened near Ha Long Bay in
December 2018, and handles around 2.5mn passengers.
These expansions have helped Vietnam to improve its air travel capacity and expand the number of routes serving the country.
Dragon Airlines now offer flights to Da Nang from Hong Kong, with Korean Air, Asiana Airlines and Silk Air also increasing the
number of their flights to Vietnam. Jetstar has introduced a number of new flights domestically as well as international low-cost
flights connecting Hanoi and Da Nang to Osaka. Air New Zealand has a route between Auckland and Ho Chi Minh City,
while South Korea-based Easter Air has flights from Seoul to Da Nang. In 2018, Jetstar Pacific increased the frequency of its
flights between Da Nang and Taipei, while in 2019 Bangkok Airlines announced regular flights from Bangkok to Cam Ranh.
These improvements in air travel connectivity will allow Vietnam to tap into potentially lucrative markets. Launched in 2019,
Vietnamese Bamboo Airways has boosted domestic connectivity, and it is looking to expand its operations to include overseas
travel routes.
The airline sector has been hit extremely hard over the last 18 months, due to ongoing border closures and an unprecedented
collapse in demand. However, while borders between Vietnam and the rest of the world remain closed as of November 2021, there
are signs that the outlook will improve. In November 2021, Bamboo Airways signed a USD2bn deal with Gener General
al Electric to acquire
new aircraft engines for its Airbus and Boeing jets. Th airline also stated in November 2021 that it will commence direct flights
between Heathrow, London and the cities of Hanoi and Ho Chi Minch by 2022, as it anticipates a steady demand recovery. Vietnam
Airlines is also finalising plans to resume direct flights from Vietnam to the US, after receiving US Transportation Security
Administration clearance in October 2021.
The government is making extensive investments in improving road and rail networks, such as the current construction of North-
South Expressway, which aims to connect Hanoi to Can Tho. The state-owned Vietnam Railways has expressed interest in attracting
foreign investment to help modernise and develop Vietnam's railway system by providing corporate income tax incentives and
exemption of land use incentives. While privatisation has been slow, there has been an effort to accelerate the pace, with a number
of state-owned enterprises gradually divesting, such as Vietnam Airlines, and attracting more foreign investment.
Vietnam has the potential to develop the tourism cruise industry fuelled by the demand of the China market. According to the
Cruise Lines International Association, China is the second most important source market globally after the US. The increasing
attractiveness of the industry could become a key focus, especially in the development of Da Nang's tourism industry. In April 2019,
Sun Group opened Halong International Cruise Port next to Quang Ninh Museum and a Sun World Halong Entertainment
Complex. This will boost tourist arrivals coming by sea and present an opportunity to boost tourism spending at nearby shops
and sites.
Security
From a security perspective, tourists are not at a high risk from physical safety threats, such as violence or kidnapping. However, the
local community is at risk from petty crime. There is little to no terrorism risk in Vietnam.
Competitive Landscape
Vietnam will continue to benefit from a robust ongoing infrastructure development pipeline, which is geared towards bolstering
accommodation across the various budget segments. As of May 2022, we estimate that there are over 100 new projects at various
stages of the construction pipeline. We expect sentiment to brighten significantly from 2023 onwards as demand for hospitality and
accommodation recovers from the negative impact of the Covid-19 pandemic.
DOMESTIC HOTEL GROUPS

Hotel Group Presence
Fusion Resorts Fusion Resorts is owned by Serenity Holding, a Vietnamese real estate company with a range of holdings.
Their resorts include Fusion Alya La Gi (154 rooms), Fusion Maia Da Nang (87 rooms), Fusion Alya Hội An
(106 rooms), Fusion Alya Da Lat (72 rooms) and Fusion Resort Phu Quoc (60 rooms). The latest addition is
the Fusion Resort Cam Ranh (72 rooms). The resorts cater to the luxury travel market. The group also owns
Mango Bay resort (40 rooms). In 2020, the Fusion Resort Quang Binh, which has 60 villas, and the Fusion
Suites Vung Tau, which features 100 apartments and 71 suites, was added to the portfolio. In November
2019, Fusion Resorts announced plans to triple the number of properties it operates by launching 10 new
hotels and resorts, constituting of 1,385 rooms, private villas, suites and apartments by 2023.
Elegance Hospitality Group The group has been operating in the market since the early 2000s, offering boutique five-star luxury hotels,
catering to the high-end travel market. The first hotel was established in Hanoi. The group has further
expanded and now owns six hotels in Hanoi, and one property in Hội An. The group also operates
restaurants and spas.
Huong Giang Tourist Huong Giang Tourist Company was established in 1976 in Huế. It focuses on hotels, restaurants and other
Company travel services and specialises in high-end luxury travel. It has expanded considerably since 1976 and now
has a nationwide network of offices and support facilities. The group has seven hotels in Vietnam, which are
located in Huế, Ho Chi Minh City and Lăng Cô, while also running a tourist train service, a restaurant and
organised tours in Vietnam, Cambodia, Laos and Myanmar.
Odyssea Hospitality Odyssea Hospitality owns the Liberty Hotel and Liberty Central brands. It has seven hotels in total, offering
more than 600 rooms. The hotels are located in Ho Chi Minh City, with the exception of the Liberty Central
Hotel in Nha Trang. The group also has several restaurants and offers conference and meeting spaces.
Saigontourist Travel Service Saigontourist Travel Service Company was established in 1975, and is now part of the Saigontourist
Company Holding Company. The group's activities include accommodation, food and beverages, recreation, travel
services and food processing, but its primary focus is hotels. The group manages eight travel service
companies, around 45 hotels and resorts and 15 restaurants.
Splendid Star Hotel Splendid Star Hotel is a small Vietnamese hotel group mainly operating in the Old Quarter, Hanoi, catering
primarily to the mid-range market. The group operates five hotels. The group has re-branded the Splendid
Star 2 Hotel to the Splendid Star Grand Hotel, as well as the Riverside Palace Hotel to the Splendid Jupiter
Hotel.
Thien Minh Group Thien Minh Group entered the tourism industry in 2004, with the purchase of Festival Hue Hotel. It
expanded rapidly with the acquisition of the Victoria Hotels & Resorts chain. It now has 11 hotels offering
around 780 rooms, primarily in the three-star sector, under the Victoria and ÊMM brands. The group also
has a number of cruise ships that are part of its core business offering in Vietnam.
Source: Company websites, Fitch Solutions
INTERNATIONAL HOTEL GROUPS

Accor Accor has one of the largest shares of the accommodation market in Vietnam, with around 40 hotels
across the country, that range from budget to luxury. Accor operates hotels in Vietnam under a range
of brands, including Sofitel, Pullman, La Residence, MGallery, Movenpick, Novotel, Mercure, Grand
Mercure, ibis, Lifestyle and Premier Village. Locations include Phú Quốc Island, Huế, Da Nang, Ho Chi
Minh City and Hanoi. It also owns the iconic Sofitel Legend Metropole Hanoi in the old colonial French
Quarters. Accor has a robust pipeline in Vietnam, with more than 10 hotels under construction,
including seven new Movenpick and Novotels by 2023, and an MGallery in Phú Quốc Island by 2023.
Avani Hotels & Resorts Avani has two hotels in Vietnam, one in Bình Định and one in Hải Phòng. Avani's parent company,
Minor Hotels, has four new properties in the development pipeline in the country. Two of Avon's hotels
are expected to open by Q123 which includes a resort ion Doc Let and a mixed villas and resort
property in am Ranh. Minor Hotels has a robust development outlook, with 22 new projects in the
works across the Asia-Pacific region.
Best Western Best Western has a small presence in Vietnam, with main hotels being the Best Western Dalat Plaza
Hotel, Best Western Premier Havana Nha Trang and Indochine Palace Hotel in Huế. In Q321, Best
Western opened its latest property, a 327 room upscale hotel, in Ha Long Bay, after a year's delay. The
company also announced plans to open hotels in Cam Ranh and Quảng Bình, due to welcome guests
by 2023.
Centara Hotels & Resorts Owned by the Central Group, Centara is an award-winning international hotel group in South East Asia.
Centara own six brands of hotels. Centara has one hotel in Vietnam, the Centara Sandy Beach Resort
Danang, and operates a range of top retails brands - such as LanChi Mart, B2S and Home Mart. Given
their extensive local knowledge and favourable tourism industry in Vietnam, the group has announced
ambitious expansion plans for Vietnam, with 20-22 properties planned for the end of 2024.
Hilton Worldwide Hilton has three hotels in Vietnam - two located in Hanoi and one in Da Nang. The Hilton Hanoi Opera
is located in the French Quarter and has five star spa facilities, while the Hilton Garden Hanoi is a four
star property near the Old Quarter.
Hyatt Hotels Hyatt has three hotels in Vietnam - one in Da Nang, one in Ho Chi Minh City and one in Hanoi. However,
the group is expanding extensively. There are plans for a new Park Hyatt Phu Quoc hotel, with affiliate
BIM Group, set to open in 2022. There are also plans to open a second hotel, Hyatt Place Saigon Phu
Nhuan, in Ho Chi Minh City in 2023. The latter will be opened with affiliate Ben Thanh Holdings. The
group will also open a Hyatt Regency in Nha Trang, with affiliate A&B Group, in 2022 or 2023 (after
opening was delayed due to Covid-19).
InterContinental Hotels Group IHG has been bolstering its presence in Vietnam over the past few years, and now has around 12
(IHG) properties in the country. The group operates under three brands - seven properties under IHG, four
under Crowne Plaza and one under Holiday Inn. IHG properties are located across the metropolitan
centres and established beach and holiday destinations alike. In Q320, IHG announced that an
InterContinental hotel and residence would open in Ha Long Bay by 2023.
Marriott Marriott has four hotels in Vietnam. These are located in Ho Chi Minh City and Hanoi. The brands
operating under the group in Vietnam are JW Marriott, Fairfield by Marriott and Renaissance Riverside.
One JW is located in Phu Quoc and another in Hanoi, while the Renaissance and Fairfield are both in Ho
Chi Minh city.
Starwood (part of Marriott) Starwood is fairly established in Vietnam and is expanding rapidly. The Marriott subsidiary has seven
hotels in the country: six under the Sheraton brand and a seventh under Le Méridien. The group plans
to open three new hotels by 2023.
Wyndham Wyndham continues to grow its presence in Vietnam. The company has nine hotels in the country. The
group continues to see further growth prospects in Vietnam.
Source: Company websites, Fitch Solutions
Tourism Methodology
Connected Thinking
We use a simple and transparent forecasting model as a base for our industry forecasts, but rely heavily on our analysts' expert
judgement to ensure our forecasts capture all of the insights we derive using our unique Connected Thinking approach. We believe
analyst expertise and judgement is the best way to provide the most accurate, up-to-date and comprehensive insight to our
customers.
Our Connected Thinking approach to forecasting and analysis integrates macroeconomic variables from Fitch Solutions Country
Risk to provide our customers with unique and valuable insight on all relevant macroeconomic, political and industry risk factors
that will impact their operations and revenue-generating potential in the industry/industries they operate in.
Tourism Methodology
For the Tourism industry, we have historical data and five-year forecasts for 412 core industry variables, including tourist arrivals and
international tourism receipts/expenditures.
Our forecasts are a combination of regression modelling and analyst intervention. Our Tourism analysts interact with other analytical
teams, including Country Risk. By taking into account related industries, the Tourism team ensures that factors such as
macroeconomic trends are included within our forecasts.
There is a constant rolling cycle of data monitoring, with 156 market datasets being updated at a quarterly interval. Analysts will
intervene to implement changes when necessary outside the regular update cycle.
Tourist Arrivals
Total arrivals is defined as the number of people entering a market. It excludes permanent stays, those returning home, people on
visas or special provisions and refugees and asylum seekers. Entry can be for any purpose of visit: tourism/leisure, business or other.
It can also include same-day visitors. All methods of travel (air, road, rail, etc) are included, except cruise arrivals, which are treated
separately.
Tourist arrivals are broken down by country/territory and by region. Total and regional series are aggregated from market data using
a bottom-up approach, where data is available. The total arrivals series are based on the arrivals forecasts.
Historical figures for total arrivals are sourced from national statistics offices, national tourism ministries, World Bank Data and other
relevant and appropriate official sources.
Our tourist arrivals forecasts are based on a regression model using the historical time series and key macroeconomic explanatory
variables from the destination market and the source market taken from Fitch Solutions' Country Risk service. We also apply analyst
expert judgement to refine and finalise the tourist arrivals forecasts based on exogenous and endogenous variables or events not
captured by our regression model.
International Tourism Receipts
International tourism receipts is defined as the sum of receipts or spending by inbound visitors. This is the sum of receipts on two
categories: transport services and travel items. Same-day and cruise visitors’ expenditure can also be included. Travel items are
defined as all goods and services bought in the domestic tourism market by visitors. Transport items represent the receipts of travel
and associated receipts by domestic-registered carriers, including air, rail and vehicles but excluding cruises.
Historical figures for international tourism receipts are sourced from the World Bank and national central banks.
Our international tourism receipts forecasts are based on a regression model using the market’s own historical time series, the
International Tourist Arrivals series and key macroeconomic explanatory variables from Fitch Solutions' Country Risk service. We also
apply analyst expert judgement to refine and finalise the international tourism receipts forecasts based on exogenous and
endogenous variables or events not captured by our regression model.
International Tourism Expenditure
International tourism expenditure is defined as the sum of expenditure by domestic residents abroad. This is the sum of expenditure
on two categories: transport services and travel items. Same-day and cruise passengers’ expenditure can also be included. Travel
items are defined as goods and services bought in the destination being visited. Transport items represent the cost of travel and
associated costs by foreign-registered carriers, including air, rail and vehicles and excluding cruises.
Historical figures for international tourism expenditure are sourced from the World Bank and national central banks.
Our international tourism expenditure forecasts are based on a regression model using the market’s own historical time series, the
Outbound Tourist Departures series and key macroeconomic explanatory variables from Fitch Solutions’ Country Risk service. We
also apply analyst expert judgement to refine and finalise the international tourism expenditure forecasts based on exogenous and
endogenous variables or events not captured by our regression model.
Risk/Reward Index Methodology
Our Risk/Reward Indices provide a comparative regional ranking system evaluating the ease of doing business, and the industry-
specific opportunities and limitations for potential investors in a given market. The system divides into two distinct areas:
Rewards: Evaluation of the industry's size and growth potential in each market, and broader industry/market characteristics that
may inhibit its development. This is further broken down into two sub-categories:
• Industry Rewards. This is an industry-specific category that takes into account current industry size and growth forecasts, and
the openness of a market to new entrants and foreign investors, to provide an overall score for potential returns for investors.
• Country Rewards. This score factors in favourable political and economic conditions for the industry.
Risks: Evaluation of industry-specific dangers and those emanating from the market's political/economic profile that call into
question the likelihood of anticipated returns being realised over the assessed time period. This is further broken down into two
sub-categories:
• Industry Risks. This is an industry-specific category whose score covers potential operational risks to investors, regulatory issues
inhibiting the industry and the relative maturity of a market.
• Country Risks. In this category the political and economic instability, unfavourable legislation and poor overall business
environment are evaluated to provide an overall score.
We take a weighted average, combining risk and reward scores. These two results in turn provide an overall Risk/Reward score,
which is used to create our regional ranking system for the risks and rewards of involvement in a specific industry in a particular
market.
For each category and sub-category, a market is scored out of 100 (100 being the best), with the overall Risk/Reward score a
weighted average of the total score. As most of the markets evaluated are considered to be 'emerging markets', our indices are
revised on a quarterly basis. This ensures that they draw on the latest information and data across our broad range of sources and
the expertise of our analysts.
Our approach in assessing the risk/reward balance for industry investors globally is fourfold:
• First, we identify factors (in terms of current industry/market trends and forecast industry/market growth) that represent
opportunities to would-be investors.
• Second, we identify-specific traits that pose or could pose operational risks to would-be investors.
• Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/trends to avoid subjectivity.
• Finally, we use our proprietary Country Risk Index in a nuanced manner to ensure that only the aspects most relevant to the
industry are incorporated. Overall, the system offers an industry-leading, comparative insight into the opportunities/risks for
companies across the globe.
Industry-Specific Methodology And Weighting
In constructing these indices, the following indicators have been used. Almost all indicators are objectively based. Given the number
of indicators/datasets used, it would be inappropriate to give all sub-components equal weight. Consequently, the following
weighting has been adopted:
WEIGHTING OF INDICATORS
Weighting, %
Rewards 60, of which
Industry Rewards 60, of which
Tourist arrivals, '000 25
Arrivals growth, % 25
Tourism receipts growth, % 25
Hotel occupancy, % 20
Country Rewards 40, of which
Exchange rates, LCU/USD % chg y-o-y 25
Labour costs 25
Investment openness 25
Real GDP per capita 25
Risks 40, of which
Industry Risks 50, of which
Security Risk 33.3
Logistics Risk 33.3
Consumer price index, % y-o-y 33.3
Country Risks 50, of which
Long-Term Economic Risk 20
Short-Term Economic Risk 20
Long-Term Political Risk 20
Short-Term Political Risk 20
Operational Risk Index 20
Source: Fitch Solutions
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
London.
ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 1747-9061
ISSN:
Copy Deadline: August 2022

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Fitch
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Group
oup Limit
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using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2022 Fitch
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Q4 2022

Industry Risk/Reward Index ....................................................................................................................................................14

Tourism Methodology ................................................................................................................................................................27

KEY FORECASTS (VIETNAM 2019-2026)

International tourism receipts,

International tourism receipts,

International tourism receipts,

International tourism receipts,

Latest Updates And Key Forecasts

Significant Challenges To Recovery Over H222

Arrivals Outlook: Recovery Envisaged As Borders Opened In March

2021 Recovery And Covid-19 Impact

Arrivals Will Begin To Recover In 2022

Vietnam's Key Source Markets In 2022

Mainland China Is Largest Source Market

Medium-Term Arrivals Outlook

INBOUND TOURISM (VIETNAM 2019-2026)

International Tourism Receipts: Modest Recovery In 2022

Medium-Term Outlook For International Tourism Receipts

TOURISM RECEIPTS (VIETNAM 2019-2026)

International tourism receipts,

International tourism receipts,

International tourism receipts,

International tourism receipts,

Accommodation And Food Service Sector Outlook

Increasing Arrivals Bode Well For Hospitality

e/f = Fitch Solutions estimate/forecast. Source: National sources, Fitch Solutions

Hotels: Increased Travel Will Boost Hotel Stays

HOTEL ACCOMMODATION (VIETNAM 2019-2026)

Accommodation & food

Accommodation & food

Accommodation & food

Accommodation & food

Number of hotels and

Number of hotels and

Total overnight stays, '000, %

Indicator 2019e 2020e 2021e 2022f 2023f 2024f 2025f 2026f

Average length of stay, nights,

Domestic Tourism Market: Slated For Expansion

Departures: Outlook Recovering As Pandemic Shocks Fade

TOURISM DEPARTURES AND CONSUMPTION (VIETNAM 2019-2026)

Marketing Strategies: Social Media Presence To Rekindle Interest

Industry Risk/Reward Index

ASIA-PACIFIC - TOURISM RISK/REWARD INDEX

Singapore 92.9 61.4 80.3 90.6 92.4 91.5 84.8 1 1

Hong Kong, 97.7 60.9 83.0 83.2 81.2 82.2 82.7 2 2

Japan 85.8 62.1 76.3 92.6 84.9 88.8 81.3 3 3

Malaysia 85.9 71.2 80.0 78.8 74.2 76.5 78.6 4 5

Taiwan, China 80.5 56.1 70.7 91.1 87.9 89.5 78.2 5 6

Australia 87.4 49.8 72.4 80.1 88.3 84.2 77.1 6 8

Macao, China 85.6 77.2 82.2 63.2 69.8 66.5 75.9 7 9

South Korea 85.3 43.9 68.8 82.6 89.1 85.8 75.6 8 10

China 85.8 71.0 79.9 58.4 75.2 66.8 74.7 9 11

New Zealand 65.4 55.5 61.4 83.9 90.1 87.0 71.7 10 15

Thailand 91.7 56.0 77.5 59.5 59.2 59.3 70.2 11 18

Vietnam 81.0 66.9 75.3 47.8 66.2 57.0 68.0 12 23

Indonesia 72.7 73.7 73.1 53.8 61.6 57.7 66.9 13 26

Philippines 84.2 74.7 80.4 36.5 56.0 46.3 66.7 14 27

India 79.6 72.4 76.7 42.1 59.4 50.7 66.3 15 29

Cambodia 74.5 50.2 64.8 33.1 30.9 32.0 51.7 16 66