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The Tourism Industry of Vietnam: A Scenario Analysis

Module Name: BM6172 Business Research in Context: Strategy

Student Name : Nguyen Thi Thao Nguyen

Student ID : UoG0119

Student Email : nguyenntt.uog1@st.uel.edu.vn

Introduction

According to the World Bank (2019), despite of the recent slowdowns in terms of economic

growth in the past decades, Vietnam’s tourism sector has still been receiving major boosts

and expansions to become one of Asia’s top tourism destination within the continent,

accounting for approximately 8 percent of the country’s GDP. Key players within the

Vietnamese tourism industry have been including: Vietravel, Saigontourist and VITOURS,

all of which have been hugely contributing to the rapid development of the industry over the

years (VietnamCredit, 2019). However, significant downturns in the total revenues of the

Vietnamese tourism industry has been recorded ever since the beginning of the COVID-19

pandemic, potentially slashing more than 5 billion USD of tourism revenues throughout the

period (Nicola et al., 2020).

Therefore, this paper aims to provide an in-depth analysis into several key players within the

Vietnamese tourism industry in recent years, specifically into different basis of competition

that these players have been pursuing based on Porter’s (1980) Generic Strategies. After that,

three possible scenarios for the industry in the future will also be given out throughout the

rest of the paper.

Part 1: Critical Evaluation of Key Players

Within the Vietnamese tourism industry, there are three key players that are holding huge

market shares within the sector over the years, including: Vietravel, Saigontourist and

VITOURS.

In terms of Vietravel – the biggest player within the country’s tourism industry at the

moment, it has been officially stated by Vietravel (2020) that the company has been pursuing

the construction of highly unique tour packages and travelling programs that are first on the

market, heavily signaling that they have been opting for the differentiation strategy against

other competitors. Differentiation is considered as an approach for organization takes to arise

their product or service which could be offered in another way by competitors.

Differentiation strategy is one of three strategy in Porter’s Generic Strategy (1980). It is a tool

for organizations to classify itself from competitors. To attain such differentiation in the

market, company has to offer a perfect product matches customer needs and demands, the

innovation in its, and also the price setted on the feature and the obtaining power of

consumers. Vietravel’s usage of differentiation in their products as a basis of competition is

highly aligned with the current state of the tourism industry in Vietnam extracted within the

paper of Truong et al. (2018), which has pointed out that: customers of the industry have been

increasingly demanding a higher element of unique experiences within their tourism

programs.

This basis of competition has also been applied by another key player within the Vietnamese

tourism industry, which is Saigontourist. In essence, Saigontourist has stated themselves that

they have been crafting first-of-its-kind travelling bundles and tourist programs that visitors

cannot find in any other competitors, such as S-I-C tours in Ho Chi Minh City or seat-in-

coach tourist schedules that are organised in the afternoon and evening of the city

(Saigontourist, 2020). It has also positioned itself as a luxury travel company, thus fully

contrasting with the cost leadership strategy within Porter’s (1980) Generic Strategies model.

In recent years, luxury tourism experiences in Vietnam has been concluded by Vo and

Chovancová (2019) to be a highly attractive segment within the tourism industry that has

been generating huge customer satisfaction boosts over the years. Coupled with the fact that

the Vietnamese people’s income has also been increasing year-over-year (Toan, 2019),

Saigontourist’s pursuance of differentiation as a basis for competition is bound to produce

major benefits for its growth in the long-term prospect of the domestic industry in the future.

On the other hand, VITOURS – a rising name within the tourism industry of Vietnam – has

been opting for the complete opposite basis for competition from the aforementioned key

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The Tourism Industry of Vietnam: A Scenario Analysis Module Name: BM6172 Business Research in Context: Strategy Student Name : Nguyen Thi Thao Nguyen Student ID : UoG0119 Student Email : nguyenntt.uog1@st.uel.edu.vn Introduction According to the World Bank (2019), despite of the recent slowdowns in terms of economic growth in the past decades, Vietnam’s tourism sector has still been receiving major boosts and expansions to become one of Asia’s top tourism destination within the continent, accounting for approximately 8 percent of the country’s GDP. Key players within the Vietnamese tourism industry have been including: Vietravel, Saigontourist and VITOURS, all of which have been hugely contributing to the rapid development of the industry over the years (VietnamCredit, 2019). However, significant downturns in the total revenues of the Vietnamese tourism industry has been recorded ever since the beginning of the COVID-19 pandemic, potentially slashing more than 5 billion USD of tourism revenues throughout the period (Nicola et al., 2020). Therefore, this paper aims to provide an in-depth analysis into several key players within the Vietnamese tourism industry in recent years, specifically into different basis of competition that these players have been pursuing based on Porter’s (1980) Generic Strategies. After that, three possible scenarios for the industry in the future will also be given out throughout the rest of the paper. Part 1: Critical Evaluation of Key Pla ...
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