What Makes Vietnam a Preferred Tourism Destination? An Empirical Analysis

Abstract

Following the end of the 20-year war against the US and its allies in 1975, Vietnam gradually opened its doors in terms of market-oriented trade reforms in the late 1980s. The Vietnamese tourism sector simultaneously started to grow and, during the last decade, has shown rapid expansion with major contributors being countries who fought against Vietnam. However, very little scientific research has been published in relation to inbound tourism in Vietnam. This study aims to fill this gap by identifying the factors that attract tourists to Vietnam and analyzing to what extent the improved relationship with the West has impacted on its tourism sector. Our results indicate that the level of income of the travelers, the exchange rate of the country of origin, word of mouth from travelers, the relative price differential between the country of origin and Vietnam, and the normalization of relationship between Vietnam and the country of origin are the major determinants of demand for tourism. One of the policy recommendations from this study is that, to increase inbound tourism, the Vietnamese government should introduce policies that would reduce the local cost of tourism in Vietnam.