Driven by Southeast Asia’s fastest growing middle class, Vietnam’s travel industry has experienced phenomenal growth which has led Vietnamese airlines to launch direct flights to the states for the first time. -United.
According to the Financial Times, overseas air travel to Vietnam last year has grown faster than ever and overseas tourism from Vietnam has grown at an annual rate of 10-15% in recent years. years, according to a Euromonitor report in 2017. This trend can be compared to that of Vietnam’s neighbor, China, where increasing disposable income is one of the main drivers of overseas travel.
The US Federal Aviation Administration’s February announcement that the Vietnam Civil Aviation Authority now meets its personnel licensing, operations and airworthiness standards opened the door for three companies. local airlines, including the national carrier Vietnam Airlines, to launch non-stop flights to the United States as early as this year – cutting travel time by eight hours.
The other two airlines are low-cost airlines Vietjet and Bamboo Airways, which in February signed $ 20.9 billion in air deals with U.S. companies Boeing and GE for planes, engines and aircraft services. maintenance when US President Donald Trump visited Hanoi for his second summit with North Korea. Chief Kim Jong-un.
Home to two million Vietnamese expatriates, the United States is Vietnam’s main export destination and this move is sure to strengthen ties between the two countries. Vietnam’s Tourism Administration said about 690,000 people traveled from the United States to Vietnam in 2018, an increase of 12% from 2017 and 60% from 2014.
Overseas Travel Summits
According to Vietnamese media, travel agents said they received 20-30% more bookings for overseas travel in 2018 compared to 2017.
“The increase in overseas travel is the result of smooth economic development and a growing middle class. A better-off younger generation now wants to see the world. They are willing to spend more money to discover new destinations, ”said Nguyen Cong Hoan, deputy general manager of Hanoi Redtour.
Meanwhile, a report by market research firm Euromonitor shows Vietnamese travelers made 7.5 million overseas trips in 2017 alone, with China the top destination followed by Cambodia and the United States. Thailand. According to the Vietnam Tourism Association, Vietnamese tourists spent US $ 8 billion in 2016 (the latest year for which data is available), more than double the US $ 3.5 billion spent in 2012.
Besides travel abroad, domestic travel has also seen an increase in the country. This is due to the increase in the number and availability of low cost carriers such as VietJet, Bamboo Airways and AirAsia.
The growing middle class
Stronger domestic demand and robust export-oriented manufacturing have helped Vietnam maintain steady growth momentum, with market research firm Nielsen estimating the number of middle-class Vietnamese to reach 44 million by now 2020 and 95 million by 2030.
Thanks to these economic opportunities, job growth continues, with 1.6 million new jobs added in the manufacturing sector from 2015 to 2018, and 700,000 additional jobs in the construction and retail sectors. and hospitality, leading to an overall increase in labor productivity. Increased demand for labor has also contributed to rapid wage growth, with wages rising 15% cumulatively between 2014 and 2016.
According to Nielsen, “Travel is one of the top three hobbies of rich Vietnamese, before eating out and buying new clothes.” These results are based on a survey of 300 consumers aged 30 to 55 in Hanoi and Ho Chi Minh City, Vietnam’s two largest cities.
Vietnam’s middle class, which largely consists of a younger population, also powers retail and consumer sectors like real estate and automobiles.
Vietnamese travel and retail companies can certainly take advantage of this growth spurt of the middle class by ensuring that their brands are disseminated through all relevant channels.
Companies should explore beneath the surface economic data to understand where the best opportunities lie and use this analysis to guide their decisions and strategies to encourage market growth in all regions of the country.
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