Vietnam Tourism Faces New Situations as Independent Travel Surges

Vietnam’s tourism has so far marked an impressive breakthrough as it welcomed more than 19 million international visitors in the first eleven months of the year. The sudden surge in inbound arrivals brought high hopes for a booming tourism industry, but most of the country’s tour operators face a worrying paradox : declining revenues when the number of visitors is going up.

Struggles of Vietnam’s Tour Operators

The booming number of international tourists hasn’t translated into greater financial success for the country’s travel businesses. Despite the high volume of arrivals, many tour operators are reporting disappointing financial results. A key reason for this disconnect is the evolving preferences of tourists, particularly the rise in independent, self-guided travel.

Pham Quy Huy, director of Kiwi Travel Company, highlighted that while group travel traditionally generated substantial revenue, the demand for large MICE (Meetings, Incentives, Conferences, and Exhibitions) groups has diminished sharply. Previously, groups of 100 to 200 people were common, providing substantial business for hotels, cruise services, and event organizers. However, securing even a group of 100 MICE tourists is now considered a rare and exceptional achievement.

The Rise of Independent Travel

With the rise of independent travel, many visitors are bypassing traditional tour services altogether. These travelers typically book their flights and accommodations through international platforms like Traveloka, Agoda, or Booking.com and design their own itineraries instead of relying on pre-organized tours offered by local operators. The trend is further fueled by Vietnam’s relaxed visa policies, which have made it easier for international tourists to visit without the need for comprehensive tour packages.

Tony Hung Tran, a representative from Golden Smile Travel, noted that many travelers now prefer customized trips that offer flexibility and freedom, as opposed to the rigidity of traditional, all-inclusive tours. This shift is especially noticeable among younger, tech-savvy tourists who value the ability to personalize their experiences. In addition, the pressures of the global economy mean that tourists are more price-conscious, with even small price increases of $1 or $2 sometimes leading to cancellations.

Navigating the Competitive Pricing Landscape

The demand for more flexible travel experiences has led to fierce competition among tour operators, who are increasingly caught in a price war. While many companies have implemented strict cost controls, the pressure to lower prices continues to mount, even as costs for services rise. The battle for lower prices risks undermining the quality of service provided by these operators, a trend that could harm Vietnam’s image as a travel destination and erode its competitiveness in the global tourism market.

Tony Hung Tran warned that an aggressive price war could jeopardize the integrity of the industry, potentially harming the overall tourist experience and Vietnam’s standing as a premium destination.

Adapting to the ‘Free & Easy’ Travel Trend

Recognizing the irreversible rise of independent travel, many tour operators are adapting their strategies. Thi Quoc Duy from BenThanh Tourist, one of the leading tour operators, emphasized the importance of embracing flexible “Free & Easy” packages in addition to traditional group tours. These packages allow travelers to enjoy guided experiences while maintaining the autonomy to explore at their own pace. This shift in business model has paid off, with BenThanh Tourist seeing over 100 percent growth in international arrivals to Ho Chi Minh City, a key destination for international tourists.

This successful pivot can be attributed to BenThanh Tourist’s focus on unique, authentic cultural experiences. The company has focused on offering personalized experiences such as farming tours in Tra Que, Hoi An, local cooking classes, and homestays in the northern highlands of Vietnam. These experiences cater to the interests of independent travelers looking for a deeper, more immersive connection with local culture.

Shifting Spending Patterns Among Tourists

While the total number of international visitors has reached record levels, their spending patterns have shifted significantly, creating a mismatch between visitor numbers and revenue generation. The average spending per international tourist in Vietnam rose to $1,449.70 in 2023, a nearly 27 percent increase from pre-pandemic levels. However, the allocation of spending has changed, with tourists now spending less on accommodation, dining, and shopping, while expenditures on individual experiences and services have doubled.

Notably, the proportion of spending on shopping has dropped dramatically, accounting for just 8.4 percent of total spending—its lowest point in years. This trend can be attributed to the lack of high-quality shopping experiences in Vietnam. While tourists visiting destinations like South Korea are known to spend generously on shopping, Vietnam struggles to offer compelling reasons for tourists to indulge in retail therapy. The country lacks world-class malls, and the shopping experience is hindered by inconvenient tax refund procedures and a dearth of unique, locally made products.

Finding Solutions to Boost Tourism Revenue

To address the challenges posed by changing visitor preferences, many tour operators are reevaluating their business models. Some are offering flexible, customizable packages that can cater to a wide range of budgets and travel styles. Others are focusing on niche segments, such as eco-tourism, adventure tourism, and wellness tourism, which appeal to high-spending, experience-driven travelers.

Moreover, many operators are increasing partnerships with online travel platforms and local suppliers to streamline bookings and improve the customer experience. By offering more tailored, flexible options, they hope to attract independent travelers while maintaining a steady stream of revenue from traditional tour groups.

The Future of Vietnam’s Tourism Industry

While Vietnam’s tourism industry has set new records for inbound arrivals, the challenges facing local tour operators are substantial. The shift toward independent travel, changing spending habits, and the pressure to lower prices have created a complex landscape for the country’s travel businesses. However, by adapting to these trends and embracing more flexible, personalized experiences, Vietnam’s tourism sector may still find a way to thrive in the evolving global travel market.

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