Vietnam Tourism Report Q2 2008

Tourist Arrivals Overperform Vietnam's visitor arrivals totalled 354,000 in December 2007, bringing full-year 2007 arrivals to 4.17 billion. While month-on-month growth totalled a relatively sedate 4.0%, full-year growth totalled an impressive 16.0%. This was above our more conservative forecast of 13.0%, and is a strong testament to the positive underlying trends within the industry.

Full-year growth was driven particularly by air arrivals, which totalled 3.3 billion, representing year-onyear growth of 20.7%. Less impressive were arrivals by sea and land, which grew by only 0.1% and 4.3% respectively, to total 224,389 and 685,234. Visitors from Europe continued to increase strongly, with visitors from France, Italy, the Netherlands and Belgium growing by 37.9%, 39.2%, 37.9% and 26.6% respectively. Arrivals from the US were less strong, at 6.9% year-on-year growth, reflecting the economic slowdown in the US. However, regional arrivals more than compensated for this slowdown, with arrivals from Hong Kong, Malaysia, Australia and New Zealand growing by 39.6%, 37.8%, 31.7% and 42.4% respectively. Particularly impressive was outstanding growth in arrivals from Russia, which surged by 54.8% year-on-year to 44,544, reflecting both the success of Vietnam's marketing policy and the growing affluence of Russian consumers.

Mekong Investment Boost The Vietnamese government is boosting investment in the Mekong Delta, a currently underdeveloped area that is however highly popular with tourists. VNAT has earmarked US$3.8mn for improving infrastructure within the area, and for training staff to assist with tourism-related projects. Most of the funding will be directed towards constructing bridges and harbours in An Giang province, as well as for installing a water treatment plant. The investment has been designed to harmonise with other regional Delta development projects, carried out as part of a regional plan under the auspices of ASEAN (the Association of South East Asian Nations).

Strong Vietnam Airlines 2007 Results Vietnam Airlines' financial results were impressive in 2007, despite rising oil costs. Revenues rose 15.5% y-o-y, to US$1.27bn. Pre-tax profits reached US$23mn, representing growth of 6.4%. The company is aiming for revenue growth of above 14.0% in 2008, which could be achievable if the fleet continues to increase and oil prices remain steady. Indeed, such factors have been behind the company's strong 2007 figures, with the firm noting that seat occupancy averaged 75% over the year, an improvement of 4.2% on the previous year.