Is Tourism Back?

Where is Vietnam's tourism industry going and why is it still so hard to get a visa?

Photo Source: Tuoi Tre News, February 7, 2025

The News

Five years ago, in January 2020, Vietnamese tourism authorities must have been jubilant. For the first time ever, they boastfully reported a record two million foreign visitors for the month. Vietnam National Authority of Tourism (VNAT) officials anticipated a great year for tourism with 24 million visitors as the goal for 2020, compared to 18 million in 2019 (and just two million for the entire year in 2000). This rate of growth would get them a bit closer to Thailand which had hosted 38 million in 2018 and 39 million in 2019. Within Southeast Asia, Thailand is the best country for countries like Vietnam to benchmark itself against. If Thailand’s vaunted tourism industry was beginning to level out, there were a lot of opportunities for Vietnam to catch up.

But, of course, Covid-19 changed everything beginning in February 2020. By March 2020, the entire country of Vietnam was closed off to incoming visitors. So much for catching up.

Five years later, the story is different and quite interesting. In January 2025, VNAT authorities reported a record 2.1 million visitors for the month. This was 37 percent more than January 2024 and nearly 20 percent more than just the previous month of December 2024. In terms of growth projections, it appears that the start of a good trend might be in development. VNAT has announced an optimistic goal of hosting 23 million visitors in 2025. In Thailand, the forecasts range from 39 to 41 million for the year.

Back in 2019, one-third of the 18 million foreign visitors to Vietnam were from China. For the month of January, 28 percent of the 2.1 million visitors were from China. This was 137 percent more than the same month last year and it is evidence that Chinese tourists are starting to return to Vietnam. In general, the post-Covid return of tourism is apparent in both Vietnam and Thailand. The bounce back growth in tourism arrivals from 2022 to 2024 has been remarkable for both countries.

Vietnam now ranks third in Southeast Asia for international arrivals, surpassing Singapore’s 16.5 million visitors in 2024. It trails only Thailand (35.5 million) and Malaysia (24.5 million). On the domestic front, Vietnam recorded around 110 million domestic travelers in 2024 who contributed an estimated $33.3 billion in tourism revenue to the economy.

Tourism's share of GDP has been significant for both countries. In Thailand, tourism’s share of GDP was 12 percent prior to Covid and it is now back to 12 percent. In Vietnam, it had just reached 12 percent of GDP prior to Covid (this combines eight percent from foreign tourism and four percent from domestic tourism) and it has now grown back to around seven percent as of the end of 2024 according to a report in the Vietnam Investment Review and data from Statista.

The post-Covid blues appears to be over for Vietnam’s tourism industry as well as for its competitors within Southeast Asia. Foreigners are coming in and locals are traveling around. Hopefully, the start of a good trend has begun. However, there is a significant obstacle that needs to be taken care of on the foreign market side if Vietnam wants to match Thailand, visitor for visitor and tourism dollar for tourism dollar. The status quo on this issue will not suffice.

Please read on. 

Photo Source: Henley Passport Index

Current Context

In the 1980s, Thailand launched its ‘Land of Smiles’ tourism campaign to promote the culture, food, and friendly nature of Thailand and its people. The Tourism Authority of Thailand (TAT) promoted it globally and it became one of the most recognizable tourism campaigns in the world. Thailand was already popular, but the campaign made it more so and also expanded the diversity of tourists from mostly westerners to a significant growth of East Asian and South Asian tourists. Thailand became a global destination for travelers and, Covid aside, it has never looked back.

For this reason, Thailand offers an excellent case study for Vietnamese tourism leaders and stakeholders. From family-owned homestay businesses to high level VNAT authorities, Thailand offers several lessons. This includes strong branding and marketing of the country (e.g., the Land of Smiles followed by Amazing Thailand), diverse tourism options for budget travelers to high-end tourists, digital advertising on platforms like TikTok, Instagram, and YouTube, sustainable tourism and crisis management (e.g., the government is ready to step in and be pro-active such as the closing of Maya Bay for four years due to overuse), and effective public-private partnerships with airlines, city governments, and private vendors. These are issues that take time and resources to develop. For the most part, Vietnam is building each of these facets into its tourism planning.

The lowest hanging fruit is visas. Currently, there are just 25 countries that are allowed into Vietnam without a visa. Passport holders from the rest of the world must apply for and obtain a visa. This means going online, working with a vendor, and/or waiting in line at the airport to get the visa on arrival stamp to enter the country and also paying money whether the tourists want to stay in Vietnam for one day or 90 days. By contrast, Thailand allows citizens from 93 countries to enter visa free. This means that the only queue to enter Thailand is the immigration queue to get a stamp that is generally good for at least 30 days and it is free. This allows for tourists to immediately do what tourists do which is to spend money.

The world is full of countries that totally get this dynamic. They have policies in place to allow for passport holders of certain countries to enter their country visa free for durations as long as six months. The country that has earned the most ‘visa free access countries’ for its citizens wins the title of ‘Most Powerful Passport.’ This means a passport for which the bearer can enter a country without the hassle of obtaining a visa beforehand. For the past few years, it has been Singapore which can claim that its citizens can enter 195 countries without a visa. Just one country behind the Singaporeans are the Japanese who can enter 194 countries without a visa. In fact, the ‘Top 10 Most Powerful Passports’ range from 185 countries (the #10 spot) to 195 countries (the #1 spot currently taken by Singapore) and there are 33 countries that are on this list according to Henley Passport Index (January 2025). Most of these 33 countries are high-income so it makes sense that they are on the list.

Why the Vietnamese delay in at least matching Thailand at 93 countries to be allowed in visa free? Bureaucracy, politics, security, social issues, rent seeking behaviour by officials, etc...are just a few of the reasons. It’s not a problem unique to Vietnam. The United States only allows 43 countries to enter visa free. Bhutan requires citizens from most countries to obtain a visa and then the trip must be booked through an approved Bhutan tourism operator. Its concern is the impact tourism may have on the environment and culture of Bhutan. China and Japan, two highly popular tourist destinations in Asia, are not all that easy either. As noted in the table below, they allow in, visa free, just 38 and 71 countries respectively. Thailand’s policy of visa free access to passport holders from 93 countries who can waltz through Bangkok’s airports or stroll across the Thai border is working for Thailand. Let’s hope Vietnam can rise to at least the threshold set by the Land of Smiles.

Tan Son Nhat Airport during the Tet holidays

Photo Source: Vietnam News, January 22, 2025

Future Impact

According to research in 2019 by the World Travel and Tourism Council (WTTC), travel and tourism (including its direct, indirect, and induced impacts) accounted for 10.5 percent of all global jobs (334 million) and 10.4 percent of global GDP ($10.3 trillion). International visitor spending totaled $1.91 trillion in 2019.

This was the status of tourism prior to Covid. For the post-Covid era, some of these trends have returned. In 2023, the travel and tourism sector contributed 9.1 percent to global GDP which was an increase of 23.2 percent from 2022. There were 27 million new tourism jobs in 2023 which was 9.1 percent more than in 2022. International visitor spending increased, but it is still 14.4 percent below its pre-Covid level. The WTTC is optimistic about the future of tourism. It is still compiling its 2024 report, but Julia Simpson, the WTTC President and CEO, has stated,

“The future is very bright. We can predict a record-breaking 2024. The sector’s global economic contribution is set to reach an all-time high of $11.1 trillion, which will generate one in every ten dollars worldwide. The sector is also expected to support nearly 348 million jobs, an increase of 13.6 million jobs on its 2019 record.”

As noted above, tourism plays an integral role for Vietnam’s economy. Once the tourists get into the country, they have an impact. The tourism industry overall recorded nearly $33 billion in revenue in 2024 which was 23 percent more than the previous year. For 2025, VNAT expects Vietnam will have 22 to 23 million international visitors and 120 to 130 domestic tourists. Its additional goal is that tourism will contribute six to eight percent of GDP and create 5.5 million jobs.

So, if the world’s tourism sector is back on track, how can Vietnam capitalize on this recovery? Aside from the visa issue, what needs to be done?

There’s a lot to do.

In the MICE sector (Meetings, Incentives, Conferences, and Exhibitions), the door is wide open for development. This will require infrastructure investment for transportation as well as high-end conference facilities. It’s a good investment though as MICE visitors are not traditional tourists. While they may not reside in Vietnam for a long time, they spend a lot of money.

There has been some progress with transport infrastructure. For example, the ride from Ho Chi Minh City to the beaches of Mui Ne in Phan Thiet used to take four or more hours. It is down to around two thanks to a completed express way. The drive from Hanoi to the cruise ships of Ha Long Bay has also improved dramatically. It’s now possible to make a Ha Long Bay cruise a day trip (albeit quite a long day). Fingers crossed the new international airport at Long Thanh in Dong Nai Province outside of Ho Chi Minh City, which has been under construction since its groundbreaking in January 2021, will meet one of its deadlines which currently calls for the first commercial flight to land in September 2026. A new international airport is desperately needed as Tan Son Nhut Airport has been at capacity for several years.

The need for infrastructure development is not new. Vietnam has been playing catch up for the past two decades. For the tourism industry, the timing is opportune. Vietnam is a “hot destination” for many outsiders. Travelers around the world are putting Vietnam on their Bucket Lists. Again, visas aside, it is relatively easy to travel around, its inexpensive, there are a lot of options, and people rave about the food because it is totally worth raving about. All the sound bites are basically true. At the same time, there is a bit of a tourism backlash in Europe. Local newspapers in Vietnam have published numerous stories and video clips of locals, who are tired of having so many visitors in their cities, throwing water at tourists in prime European destinations.

That is not yet a problem in Vietnam. If and when such a problem does arise, it should be listed in the ‘good problem to have’ category. January’s record number of international visitors of 2.1 million is noteworthy. If it continues, Vietnam and its tourism operators will have a lot to do.

Good luck to them all.