Tourism boom a boost to economy: VinaCapital
The recovery in tourist arrivals is expected to continue, adding more than 1 percentage point to Việt Nam’s GDP growth this year, Michael Kokalari, a chartered financial analyst and chief economist at VinaCapital, has said.
The recovery in tourist arrivals is expected to continue, adding more than 1 percentage point to Việt Nam’s GDP growth this year, Michael Kokalari, a chartered financial analyst and chief economist at VinaCapital, has said.
He said in a report that the number of foreign tourists visiting Việt Nam is expected to increase by 40 per cent this year – after having leapt by nearly 250 per cent last year – driven by the continued recovery in outbound Chinese tourism.
“Foreign tourism accounted for about 8 per cent of Việt Nam’s GDP pre-COVID (versus 12 per cent in Thailand), so Việt Nam’s continued tourism recovery in 2024 should add over 1 percentage point to Việt Nam’s GDP growth this year, after having boosted GDP growth by more than 4 percentage points last year.”
The number of tourists visiting Việt Nam had soared by 65 per cent year-on-year in the first five months of the year to reach slightly above pre-COVID levels despite the fact that Chinese arrivals in Việt Nam - and the rest of Asia - remained well below 2019 levels.
Chinese tourists had used to account for a third of Việt Nam’s arrivals and China only reclaimed the position for the first time since COVID last month.
The ongoing recovery in Chinese tourist arrivals coupled with the current “extraordinary desire” of Americans to travel meant that the total number would likely exceed pre-COVID levels by more than 5 per cent this year.
Domestic tourism accounted for 4 per cent of the country’s GDP, but since it had already fully recovered last year increased spending by domestic tourists would not be a major factor in GDP growth this year.
Taken together, foreign and domestic tourism had accounted for 12 per cent of GDP before COVID.
The recovery in foreign tourist numbers after Việt Nam reopened its borders had initially been driven by Korean and American tourists, and then China lifted its “Zero COVID” restrictions in 2023.
Việt Nam had also eased its tourist visa requirements, helping boost tour operators’ revenues by nearly 50 per cent in the first five months.
The stock prices of Vietnam Airlines (HVN) and the Airports Corporation of Vietnam (ACV), the country’s main airport operator, had gained 200 per cent and 100 per cent this year though budget airline Vietjet remained flat, partly because its share price had risen along with Việt Nam’s COVID reopening.
But hotel room occupancy remained 20 per cent below pre-COVID levels primarily because Chinese tourist arrivals were still 25 per cent below those levels.
“Chinese and Russian tourists account for a significant proportion of the ‘mid-market’ traveller cohort, a segment of the market that has not fully recovered, in our understanding.
“However, higher-end properties such as the Hanoi Metropole, the Fusion Resorts and other premium properties owned and operated by Lodgis are at or above pre-COVID levels.”
Directly and indirectly boosting the economy
The number of foreign tourists visiting Việt Nam jumped by more than 200 per cent last year to nearly 13 million, or 70 per cent from 20 per cent of pre-COVID levels in 2022.
“That surge directly boosted GDP growth, but we estimate that purchases by foreign tourists account for about 10 per cent of retail sales in Việt Nam and we observe that foreign tourism puts money into the hands of a wide range of local merchants, further boosting the economy, albeit indirectly.
“We estimate that the total contribution of tourism to Việt Nam’s economy is over 15 per cent of GDP.” — VNS
