The European market, which accounts for more than 13.3% of the total number of international visitors to Vietnam, is the target of many companies because of the great revenue it can yield. However, this market has become more elusive. Quite a few localities have reported a decline in European tourist arrivals, even though official sources claim a slight increase.

European tourists in Phan Thiet City in southern central Vietnam

Recently, tour operators specializing in the European market have made an unusual move. Even in the peak season of inbound travel (from October to March), some business leaders met to explore the reason behind the shrinking number of European customers. “Our UK market is down about 20%,” said Bui Viet Thuy Tien, managing director of Asian Trails.

Some other companies shared what Tien thought, saying they are still trying to figure out why the number of tourists from Europe is going down as recorded by many travel firms, whereas the official figure points to an increase.

The European market—including the UK, France, Germany, Italy, Spain, Russia and others—accounts for over 13.3% of the total number of international tourist arrivals, generating more than two million visitors to Vietnam last year, up 8.1% from 2017. In the first two months of this year, European visitors numbered more than 461,000, a rise of 4.6% year-on-year, according to the General Statistics Office.

However, the concern is that the growth rate of this market is falling. While the number of European tourist arrivals increased 16.6% in 2017, it only grew 8.1% in 2018. More specifically, the number of visitors from Russia sharply rose 32.3% in 2017, but only inched up 5.7% last year. Similarly, the growth rates went down from 11.3% to 5.1% with the UK, from 13.6% to 7.1% with Germany, and from 20% to 10% with Spain. Only a few markets recorded slightly higher growth—France being among them—from 6% to 9.5%.

Some tour operators have provided explanations for the fall which comprise the depreciation of foreign currencies against the U.S. dollar, the hike in the charges of on-site services, the changes in the natural environment, the fierce competition between tourist destinations around the world, and even the changes in visitors’ demand as well as service quality.

For markets like the UK, according to Thuy Tien, the main reason for the drop in tourist arrivals is the pound depreciating against the greenback. Two years ago, one pound equaled some VND35,000, while one U.S. dollar could be exchanged for VND22,000. Now, the pound has slid 15% against the U.S. dollar. Meanwhile, travel agencies often add a few percent to ensure the safety of currency exchange, making their tours 20% more expensive.

Hoang Thi Phong Thu, chairwoman of Pegas Misr Vietnam Travel, offered similar remarks. She cited the Russian ruble as an example. In early 2018, one U.S. dollar was equivalent to 55-60 rubles. By the end of the year, during the season when the Russians traveled to avoid the harsh winter, the exchange rate was US$1 to 65-68 rubles. Russians often go on a long trip that costs tens of thousands of rubles, while many service providers at their destinations such as hotels charge a price based on the greenback. As a result, tourists have to shoulder more expensive tours. “We expected more than 200,000 visitors in 2018, but the final number is only 171,000,” said Thu.

In addition to the exchange rate, many entrepreneurs believe the fact that the natural environment is changing in the bad direction and the price of services at the destination is too high also discourages tourists. In particular, the situation of tourist sites and beaches overflowed with garbage is what tourists repeatedly complain about.

In Europe, Phu Quoc is advertised as an ideal destination with an unspoiled environment, a clear blue sea and a white sandy beach, said Thuy Tien. However, when tourists come here, they feel extremely disappointed. “The feedback from the majority of visitors is advertising photos do not match reality. As Phu Quoc develops too fast and the density of construction is high, littering is so bad,” said Tien.

Higher value of products and destinations needed

It is believed that Vietnam is appealing to European tourists, given a greater number of direct flights than before, visa easing, diversity in culture, lifestyle and cuisine, and a wild nature much loved by European travelers. As many tourists have identified Vietnam as a destination of dining, culture and nature, the tourism industry must keep this advantage. If tourists are haunted by pictures of beaches and roads filled with garbage, the value and the charm of Vietnam as a tourist destination could be at stake.

In addition to discounts, businesses need to flexibly and opportunely implement marketing and promotion programs to jazz up the market. However, tour operators said it is now very hard to persuade other service providers to jointly cut prices. While the number of tourists from Europe is tumbling, the main visitor-generating markets—such as South Korea and China—are still growing well. For this reason, other service providers, particularly hotels, whose occupancy rates remain high, feel indifferent to lowering prices.

Another noteworthy point is the changes in tourists’ preferences and travel trends. The long tours across Northern, Central and Southern Vietnam and to some parts of Laos and Cambodia, which were once very popular among European visitors, are losing their appeal. Now, tourists tend to travel a shorter distance, book tours on the days close to the departure, and opt for the itineraries with a theme that can give them the experience they want.

“Tourists are now very well-informed about their destinations, and know exactly what they want,” said Pham Ha, CEO of Luxury Travel. “They even know in which room of the Metropole Hotel a celebrity once stayed or which yacht is the most beautiful in Halong Bay, so we can no longer organize one-size-fits-all tours.”

Many tourists set out very specific requirements for their itineraries, such as traveling from Hanoi to Halong by helicopter or seaplane, meeting historians, having a meal at the eatery in Hanoi where former U.S. President Barack Obama once dined, or going on an art tour and meeting Vietnamese artists like Pham Luc. “It is now easier for international visitors to enter Vietnam, but their destinations must be fun, safe and offering new experiences, so they shall bring tourists beautiful memories and attract them,” said Pham Ha. “If travel agencies can develop good products and become a provider of unique experience, they will have a chance,.”

The director in charge of the French market at a major travel company in HCMC agreed with this viewpoint and emphasized the need to dig deeper into niche markets. According to her, the greatest challenge now is that more and more multinational travel companies are present in Vietnam to “buy at the source,” and partner with online sales agents to directly approach customers, causing on-site service providers to gradually lose their advantages.

“At the recent ITB Berlin, more than 250 entities exhibited tourism technology,” said the director. “Technology has been a big influence on travel business. Last year, we struggled to retain the number of French tourists. Things are expected to be not easier this year.”

A large number of tour operators attended the international travel trade show ITB Berlin from March 6 to 10 in Germany. On this occasion, some innovative products were launched. “We welcomed the new brand of Adventura Travel, which specializes in adventure and community-based tourism. We are on our way to becoming a unique experience provider,” said Ha of Luxury Travel.

SGT