Can Domestic Tourism Demand Play a Main Driver

for the Post-pandemic Recovery Strategy? Evidence from Vietnam

Le Thanh TUNG*
Ho Chi Minh City Open University, Ho Chi Minh City, Vietnam
*Corresponding author, tung.lt@ou.edu.vn

Le Anh DUC
Ho Chi Minh City Open University, Ho Chi Minh City, Vietnam
duc.la@ou.edu.vn

Abstract. Over the past two decades, tourism in Vietnam has seen unprecedented growth, and it is now one
of the country's most important economic drivers. However, the COVID-19 pandemic has halted this growth
trend, and between 2020 and 2021, Vietnam's tourism industry suffered significant losses. Nonetheless,
there are encouraging signs as the domestic tourism market played a significant role in Vietnam's tourism
industry's recovery in 2022. Now that the pandemic has ended, the tourism industry must adjust its
development strategy to enter a new phase. The purpose of this article is to perform an analysis of the
development scenario of Vietnam's tourism industry over the past few years, perform an analysis of
possibilities and obstacles, and provide some solutions for Vietnam's tourism industry in the post-pandemic
period in the near future. The novel contribution that this paper makes is to present evidence that the demand
for domestic tourism can be leveraged as a significant driver for the tourism industry to rebound after it
has been affected by the crisis.

Keywords: Tourism, development strategy, post-pandemic, domestic tourism

Introduction
The COVID-19 pandemic has devastated the global tourism business (Gössling et al., 2021; Škare
et al., 2021; Tung, 2021). As a result of the severe lockdown regulations implemented to prevent
COVID-19 in 2020 and 2021, Vietnam's flagship economic sector has been left in a crisis and
almost frozen (Do et al., 2022; Vu et al., 2022). In 2022, the number of international visitors to
Vietnam increased thanks to the country's newly opened doors policy for the tourism sector
(Vietnam National Administration of Tourism, 2023). Surprisingly, the number of domestic
tourists increased by more than they had in 2019 (the year before the pandemic). The tourism
industry in Vietnam has made a remarkable recovery and it has gone well beyond the government's
initial expectations. However, there is an urgent need to update and renew the tourism industry's
development plan in the context of the post-COVID-19 pandemic if Vietnam is to experience quick
and sustainable growth in the tourism industry.
Tourism plays a significant role in the Vietnamese economy, helping to drive growth,
narrow inequality, and alleviate poverty (Phan & Schott, 2019; Chen et al., 2021). In the recent
few years, Vietnam has been working on formulating a tourism development strategy to achieve
appropriate growth (Tung, 2020). In the post-pandemic period, Vietnam's tourism industry must
also effectively implement the major orientations of the government. These include continuing to
mobilize social resources in development, promoting internationalization, and connecting global
value chains. This is necessary to make the best possible use of available resources for the
continued growth of the industry in the years to come (Hoang et al., 2023). On the other hand, in

DOI: 10.2478/picbe-2023-0062
© 2023 L. T. Tung; L. A. Duc, published by Sciendo.
This work is licensed under the Creative Commons Attribution 4.0 License.
accordance with the notion that states that it is vital to consider modifying strategic solutions
whenever either external or internal circumstances change (Su et al., 2021).
While many nations continue to experience rising waves of COVID-19 infections, fostering
an increase in foreign visitor arrivals has proven difficult for them in the current period (Wong et
al., 2022). Therefore, domestic demand is very important for an initial recovery of the tourism
industry (Bhatia et al., 2022). Vietnam's tourism industry recovered based on the demand from PICBE |
domestic travelers, which could serve as a beneficial example for other countries in the near future. 661
The objective of the article consists of three main issues: (1) Analysis of the current
development state of Vietnam's tourism industry during the past few years, with a focus on
comparing the periods before and after COVID-19, (2) Clarification of the domestic tourism
demand role and re-evaluation of the strengths, weaknesses, opportunities, and threats of Vietnam's
tourism industry in the light of the post-pandemic context, (3) Proposal of some strategic solutions
for the development of the tourism industry in the years to come.
The contribution of this article is to provide clarity regarding the role of domestic tourism
demand as the primary driver for the recovery of Vietnam's tourism industry in the post-pandemic.
This is a new point in the adjustment of development policies for the next few years, and
policymakers in other nations may refer to it for increasing the efficiency of related policies in the
future.

Tourism development in Vietnam: Before and after COVID-19

In Vietnam's tourism development strategy, the government has proposed to the tourism industry
that by 2025, Vietnam will become an attractive destination, aiming to be in the group of three
leading countries in tourism development in Southeast Asia and 50 countries with the world's top
tourism competitiveness, with total revenue from tourists reaching between VND 1,700 and 1,800
trillion (equivalent to USD 77 - 80 billion). It has been determined that 15-20% of the overall USD
40 billion in revenue from visitors is a target for development in Vietnam's cultural tourism
business as part of the country's development strategy for cultural industries with a vision to 2030
(Vietnam National Administration of Tourism, 2023).
Due to the devastating effects of COVID-19, the global tourism industry has destinations
that are slowly reviving and breaking through ((Bhatia et al., 2022). Although the period 2010-
2019, Vietnam was predicted to become one of the fastest-growing tourist destinations thanks to
an annual average growth rate of roughly 18%, COVID-19 has shattered that expectation.
According to the statistics, Vietnam only received 5 million international tourists in 2010, but this
number increased to 9.7 million in 2015 and 18 million in 2019 (more than tripled in 2010). As a
direct result of the pandemic caused by COVID-19, the number of tourists from other countries fell
dramatically to 3.83 million in 2020 and 0.16 million in 2021 (Vietnam National Administration
of Tourism, 2023). Before the pandemic caused a significant drop in the number of international
tourists visiting a country during its first two years, the tourism industry was already severely
harmed, with many businesses shuttered and employees let go. Even with the promotion of an
open-door policy in 2022, the number of tourists from other countries was still just 3.44 million,
which is barely 20% of the figure in 2019 (before the outbreak of the pandemic). It's worth noting
that even while foreign tourism recovered somewhat in 2022, it was still lower than it had been in
2020, the year before the pandemic struck (Vietnam National Administration of Tourism, 2023).
There is no way for Vietnam's tourism industry to recover if it relies solely on the spending of
foreign visitors, as evidenced by the statistical analysis.

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Proceedings of the 17th International Conference on Business Excellence 2023
 20
18.01
18
15.49
16
14 12.92 PICBE |
Million travellers

12 662
9.79 10.01
10
7.57 7.95
8 6.84
6.01
6 5.04
3.83 3.44
4 COVID-19
outbreak
2 0.16
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Figure 1. The number of foreign travelers in Vietnam, 2012-2022
Source: Vietnam National Administration of Tourism (2023).

Most of Vietnam's foreign visitors come from Asia (72%), followed by Europe (13.5%) and
the Americas (9.8%). Among the countries with the most tourists to Vietnam in 2022, the leading
ones were South Korea (769.1 thousand people), the US (215.2 thousand people), Thailand (162.5
thousand people), Cambodia (140.4 thousand people), and Malaysia (135 thousand people).
900

800 769.1

700

600
Visitors (Thousand people)

500

400

300
215.2
200 162.5 140.4 135 128.7 128.4
99.1
100

Figure 2. Number of international visitors by nationality

Source: Vietnam National Administration of Tourism (2023).

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Proceedings of the 17th International Conference on Business Excellence 2023
 Meanwhile, the pandemic has drastically lowered Vietnam's domestic tourism demand,
from 56 million visitors in 2020 to 40 million visitors in 2021. However, the bright spot of
Vietnam's tourism industry is that the domestic tourism market has recovered and grown stronger
than expected with 101.3 million domestic visitors in 2022, higher than the pre-pandemic figure of
2019 (85 million visitors) and far beyond the government's target for 2022 of 65 million visitors.
Therefore, there have been 3.1 times as many domestic tourists as there were in 2012 (at 32.5 PICBE |
million visitors). According to the data, domestic tourism demand was a major factor in Vietnam's 663
tourism industry's revival in 2022 and the years to come.
700
628
600

500 463.2
Million people

400

300

200

100 88.58 89.17

0
2012-2019 2012-2022

Foreign tourists Domestic tourists

Figure 3. Total number of foreign tourists and domestic tourists, 2012-2019 and 2012-2022
Source: Vietnam National Administration of Tourism (2023).

Customers of airlines that cater to tourists in need might boost their companies' bottom lines by
participating in recovery tourism. In 2022, there were 2.44 million airplane passengers from other
countries (Vietnam National Administration of Tourism, 2023). Following a two-year halt in
operations caused by the pandemic, the recovery of tourism helps airport service systems to be
revived (Hoang et al., 2023).
Even though the pandemic has been brought under control, the tourism industry in
Vietnam is only just beginning to recover. This continues to be a barrier to the industry's sustainable
recovery trend in the next few years because the number of international tourists to Vietnam in
2022 is still fairly low when compared to the number of visitors there were before COVID-19.
Since the global economic crisis, the role of domestic tourism demand has emerged as a crucial
driver in the revival of the tourism industry on a worldwide scale. In the 2012-2019 period, the
number of domestic tourists was quite equal compared to the number of foreign tourists. However,
when we expand the statistics, in the 2012-2022 period, the number of domestic tourists is
significantly higher than the number of foreign tourists in Vietnam.

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 120

101.3
100
85 PICBE |
80 664
Travellers (Million people)

80 73.2

62
57 56
60 COVID-19
outbreak
38.5 40
40 35
32.5

20

0
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Figure 4. The number of domestic travelers in Vietnam, 2012-2022
Source: Vietnam National Administration of Tourism (2023).

According to the assessment of travel trends, as much as 62.8% of visitors have traveled at
the same level as they were before the pandemic. For instance, around 18.3% of tourists went on
more trips compared to before the pandemic. On the occasion of the most recent Lunar New Year,
the tourism industry welcomed 9 million visitors from within the country (representing an increase
of around 47.5% when compared to the same period during the Lunar New Year 2022).
Consequently, domestic tourism has recovered pretty in 2022 and it can be inspired to hope that
domestic tourism will continue to improve in 2023.The pandemic has also caused a significant
number of tourism firms to incur financial losses and fail as a result. The revenue generated by
tourism dropped to VND 312 trillion in 2020 and VND 180 trillion in 2021, down from VND 755
trillion in 2019 (Vietnam National Administration of Tourism, 2023). The tourism industry has
sustained significant losses, and it will take several years for it to fully recover. Despite the
significant increase in demand for domestic tourism, solvency is still limited. As a result, the
revenue from tourism in 2022 was still VND 495 trillion, which is equivalent to approximately
65% of what it was in 2019 before the pandemic. There is no question that tourism revenue is on
the upswing, but it is essential to recognize the obstacles that must be overcome to recapture the
rapid expansion seen in earlier years.

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 800
755
700
637
600 PICBE |
Tourism revenue (Trillion VND)

665
541
500 495

400 417
355
322 312
300 289 COVID-19
outbreak
200
180
160
100 96 130
68
60
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Figure 5. Tourism revenue of Vietnam, 2008-2022
Source: Vietnam National Administration of Tourism (2023).

There are encouraging points, but a full recovery of the international tourism market in 2023
will be a long and arduous task. Foreign tourists to Vietnam are still relatively low, not attaining
the same speed as in the years before the pandemic. This may be attributed to the challenging global
economic condition, the major economic countries tending to slow down growth, and the war
between Russia and Ukraine still being tense. Although China recently eased its Zero-Covid policy,
it still caused significant disruptions with the important market of Vietnam's tourism.

SWOT analysis of Vietnam's tourism industry in the context of the post-

COVID-19 pandemic
Strengths
● As Vietnam is a country that has 3,200 kilometers of coastline and different temperatures
that are typical of the tropical region, there are a great number of stunning natural scenery
that can be developed for tourism. A protracted period of development that has resulted in
the accumulation of rich history and culture. The resources available to the tourism industry
are vast, ranging from heritage to scenery to indigenous culture. Vietnam is consistently
ranked as the most popular tourist destination in all of Asia due to the country's extensive
collection of unique cultural events and charming traditional craft towns.
● The cuisine of Vietnam is quite varied and extensive, and it features a wide range of dish
preparations. The recognition that Vietnamese food receives in the ranks of international
media outlets is ongoing. On the list of the best foods in the world, visitors can find a wide

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Proceedings of the 17th International Conference on Business Excellence 2023
 variety of mouthwatering cuisines from Vietnam. Both foreign and domestic visitors to
Vietnam should try at least one of the many regional specialties that are representative of
Vietnamese culinary culture.
● It is safe and easy to travel around Vietnam. To a large extent, Vietnam has encouraged the
commercial exploitation of tourism without significantly damaging the natural environment.
We are seeing a rise in the professionalism of tourist event planning. PICBE |
666
Weaknesses
● The entry policy is not truly open; there are still problems, particularly for those who are
traveling from other countries. There are various procedures, including many intermediary
procedures. The maximum stay of 15 days is a significant obstacle. Certain potential Asian
markets (e.g., China) have not yet opened their borders broadly for locals to travel overseas,
including Vietnam.
● Global inflation affects the world economy and hurts tourism in Vietnam. Travel costs by
plane are now nearly twice as expensive as they were before the COVID-19 outbreak, which
is only an example of how inflation is affecting the intention of travel of tourists.
● Tourism has suffered from the poor quality of public transportation systems, making it
difficult for visitors.
● The tourism industry continues to suffer from a severe shortage of human resources (Su et
al., 2021). The quality of service has not been up to par with what tourists expect because of
the necessity of rapid recruiting from unskilled sources. Tourists still have concerns and
thoughts about the kind of service they received at several places.
● There are still many problems with destination management in Vietnam, including
overcharging tourists for services, soliciting visitors with insistence, trashing the area, and
stealing from tourists. They can damage Vietnam's reputation as a tourist destination among
its world tourism communication.

Opportunities
● Improvements in digital transformation, the use of digital technology in tourism, and the
availability of online tools have allowed business owners to run their enterprises totally from
their mobile devices. These days, professionals can work from any location, and there are a
wide variety of simple and effective ways to interact with and serve customers. If companies
do not want to fall behind in the marketplace, they will need to upgrade their technology.
● The government’s emphasis on improving transportation infrastructure, airports, and
seascapes has opened up new possibilities for the tourism industry. As a result, the supply of
tourism products has been increased to accommodate the industry's rapid expansion; and
many other economic sectors have also been given new avenues for growth.
● Integration on a global scale is assisting tourism organizations in accumulating knowledge
resources that can be used for training and the development of teams of managers and tourism
staff members who possess strong qualifications, competence, and expertise. This group is
the driving force behind the expansion of tourism, which has emerged as a leading economic
sector.
● As a result of COVID-19, travelers now have a higher priority on visiting safe areas, and
green tourism is helping to diversify the destinations. Vietnam stands out as a candidate for
the role of a developing market in global tourism.

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Proceedings of the 17th International Conference on Business Excellence 2023
Threats
● After the pandemic, the tourism industry has not focused on advertising and promotion to
attract investment capital from domestic organizations and individuals, foreign investors, and
funding sources. Additionally, the industry has not focused on promoting the development
of joint venture and association models in tourism development. There have been just a
limited amount of communication put into practice and execution. PICBE |
● High fuel costs, inflation, and interruptions to the global supply chain are just some of the 667
issues affecting the tourism industry in the wake of the pandemic. This has a direct impact
on traveler expenditure since it raises transportation and lodging prices. The worldwide
economic crisis has a negative impact on the expenditures of international tourism, as well
as on the prevention of the pandemic and the open-door policies of many countries.
● Following COVID-19, the travel demand has increased alongside the growing tendency of
customers to engage in self-sufficient travel, and customers' requirements have undergone a
great deal of change. As a result of advancements in technology, vacationers now have a
great deal of ease when it comes to planning their excursions, which is putting the jobs of
tour operators in jeopardy.
● After being negatively impacted for an extended period by the global pandemic, many travel
firms have been forced to shut their doors or transition into new businesses. It is still not
possible to manage selling prices, maintain security, order, and safety for guests while they
are at the resort, or examine the cleanliness and safety of the food.

Some strategic solutions for the development of Vietnam's tourism industry in

the light of the post-pandemic context
Because the global tourist industry is still in the process of recovering from COVID-19, it is
essential to suggest strategic solutions to adapt to the new circumstances. Based on the situation
analysis and the SWOT analysis, the following are some strategic solutions that can be
implemented:
First: Communication activities must be promoted via social and marketing channels,
digital promotion is increased, and intelligent tourism is developed. COVID-19 is considered as a
push for digital transformation and the application of artificial intelligence in the development of
businesses, including tourism.
Second: Upgrading of infrastructure, and improvement of traffic connectivity via air,
railway, road, and waterway to increase the connection of tourist areas and attractions in the area,
particularly the connection of waterways of geographical areas, to help reduce costs, travel time,
and environmental pollution.
Third: Training workers, improving professional qualifications and expertise in the
tourism industry, and creating jobs with employee retention wages and fair working conditions,
developing human resources into high-quality human resources. Therefore, the training and
retention of employees need to improve their professional qualifications and expertise. Improving
the quality of human resources is an important solution for the sustainable development of the
tourism industry in the near future.
Fourth: The policy that helps companies and individuals working in the tourism industry
will remain in place until the year 2023. To increase product variety, businesses should be
encouraged to increase their investment in a variety of places. Increasing tourism while minimizing

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Proceedings of the 17th International Conference on Business Excellence 2023
damage to the environment and the natural resources it relies on. Ensuring that travel is both risk-
free and effective.
Fifth: Applying the tourism industry's sustainable development strategies. Combining
exploitation with the preservation of cultural traditions is necessary. Tourism that does not
negatively impact natural resources or the ecological environment. Tourism for experiencing ethnic
cultures, agricultural tourism in the highlands, and various forms of relaxation, exploration, and PICBE |
community ecology. 668
Sixth: One of the top solutions that governments frequently focus on to increase the
number of tourists they receive is to improve their preferential rules on visa procedures. Hence, to
effectively access the potential market, Vietnam's tourism industry needs to have a plan to make
visas unnecessary.

Conclusion
The purpose of this paper is to examine the current state of the tourism business in Vietnam and
draw comparisons between the years before and after the COVID-19 pandemic. In addition, a
SWOT analysis was conducted to shed light on emerging points in the post-pandemic era.
According to the data gathered, domestic tourism demand is helping Vietnam's tourism industry
recover. The paper also offers a fresh perspective on domestic tourism demand as a driving force
for economic growth in the years following COVID-19. The global spread of the COVID-19 virus
has prompted calls for a new, more environmentally friendly approach to the tourism business.
After the pandemic has passed, the tourism industry around the world is predicted to experience a
significant upswing. Besides, the practice of sustainable development is now obligatory in every
industry and on every level of national development strategies. The COVID-19 pandemic can be
seen as an opportunity for updating the development strategy of the tourism sector. Vietnam's
tourism sector should follow the green strategy with a more robust digital transformation. In the
future, domestic tourism demand will raise its role in the sustainable development of the tourism
sector.

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