BMI's Executive Summary

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New Business Environment Ratings

For 2008, BMI has made wholesale changes to the methodology behind its proprietary Business Environment Rankings for the tourism industry across Asia. Our new rating system is divided into distinct areas: limits of potential returns, which evaluates the size and growth potential of every state's tourism industry, as well as broader factors that may inhibit its development over the coming years; and risks to potential returns, which evaluates industry risks and threats coming from the state's political and economic backdrop that may impede the realisation of anticipated returns from the sector over our forecast period.

These ratings have been developed to complement BMI's range of country risk ratings and now integrate all of the 16 industries covered by BMI under one methodology.

In these new ratings, Thailand emerges as the best-placed country, scoring 68 points out of a possible 100. The country has recovered well from the tsunami of late 2004 and continues to prioritise the tourism industry as a key source of foreign currency earnings. The lowest-placed countries are Indonesia and Vietnam, which both score 56 points. Indonesia is penalised for the still-high risk of further bombings on the key tourism island of Bali, while Vietnam is still only in the very early stages of establishing a dedicated tourism policy. Indeed, it was only in September 2007 that the nation created its first ever ministry of tourism.

Tourist Arrivals Boom

Vietnam's visitor arrivals totalled 358,000 in September 2007, bringing year-to-date arrivals to 3.17 million. This represented only a 0.6% month-on-month increase from August, but contributed to an impressive 18.5% year-on-year increase for the January-September period. In particular, growth was driven by air arrivals, which increased 26.5% y-o-y. By contrast, arrivals by sea and land declined slightly. Visitors from Europe increased strongly, reflecting the tail-end of the European holiday season. Visitors from France, Italy, the Netherlands, Belgium and Spain increased by 47.4%, 51.7%, 47.9%, 40.0% and 32.8% y-o-y respectively. Visitors from within Asia also showed a marked increase, with arrivals from Malaysia, Hong Kong, Thailand and Singapore growing by 57.5%, 38.6%, 37.3% and 30.0% respectively y-o-y.

Indeed, Vietnam is on track to meet our target of 13% y-o-y growth for tourist arrivals. Although the year-to-date figure displays growth of 18.5%, we remain cautious as to whether this rate of growth can be sustained for the year as a whole. Visitor arrivals, particularly from Europe and North America, tend to decline slightly towards the end of the year. As such, we are maintaining our 13% y-o-y growth forecast, although the risks to our forecast are to the upside.

Tourism Ministry Created

The Vietnamese government has formally recognised the importance of tourism to the economy by creating the first tourism ministry. Known as the Ministry of Culture, Sports and Tourism, the ministry was created in September 2007 and is headed by Hoang Tuan Anh. It has not yet been announced what will happen to the Vietnam National Administration of Tourism (VNAT), which until now has been the main portal for visitors interested in visiting the country or for foreign tourist agencies looking to set up in Vietnam. VNAT is likely either to be amalgamated with the new ministry or be subsumed into it, as a separate agency operating under the ministry's auspices.

Vietnam Airlines Buys Boeing 787-8 Dreamliners

State-owned airline Vietnam Airlines announced in October that it has signed a deal to buy 12 Boeing 787-8 Dreamliners, to begin delivery in 2015. It has also signed a memorandum of understanding to buy a further 12, although delivery dates have not yet been confirmed. This purchase is part of the airline's long-term plan to modernise its fleet, which currently comprises 10 Boeing 777, 10 Airbus A320, 10 A321, 10 A330, 10 French-made ATR-72 and two Fokker-70. The airline is seeking to expand its market share in the region. At present it dominates the local market but faces strong competition from regional peers. Plans to launch a direct flight from Ho Chi Minh to Los Angeles by end-2008 should prove an important move, opening up the lucrative US market.

Chapter 1 - New This Quarter

Core Forecasts

Bird Flu

2007: China Consumer Demand Supportive, South Korea Less So

Chapter 2 - Market Overview

Tourism Outlook

Table: Vietnam – Historical Data And Forecasts (US$mn unless otherwise stated)

Table: Vietnam Travel Industry – Historical Data And Forecasts

Vietnam Tourism Industry SWOT

Chapter 3 - H5N1 Virus: Vietnam Cases Surge Afresh

Macroeconomic Scenario: Key Source Markets

WTO Entry To Sustain Rapid Growth

Table: Output & Population

Chapter 4 - Country Snapshot: Vietnam Demographic Data

Exchange Rate Trends Largely Neutral

Chapter 5 - Tourism Business Environment

Tourism Business Environment Ranking

Table: Asia Travel And Tourism – Business Environment Ranking

Politics – Long-Term Risk

Overall Business Environment

International Tourism Receipts

Visitor Arrival Growth

Investment Environment

Shock Factor

Chapter 6 - Travel

Commercial Airlines

Chapter 7 - Hospitality

Accommodation

Regional Case Study: Intercontinental Hotels Group (Asia Pacific)

2004 Results

Strategy

Fresh Projects

Outlook

Gaming

Infrastructure

Chapter 8 - Company Profiles

Saigontourist

Vietnam Airlines

Huong Giang Tourist Company

Chapter 9 - BMI Forecast Modelling

How We Generate Our Industry Forecasts

Tourism Industry

Sources

Competitive Landscape for Asia Tourism Reports: Sample of Companies Ranked

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Comparative cross-border analysis assessing business and regulatory factors to rank Asia’s most competitive tourism markets. Indicators used include Political Risk, Business Environment Risk, Forecast International Tourism Receipts, Visitor Arrival Growth, Investment Environment and Shock Factors (taking account of any special factors such as terrorism, natural disasters and disease). Company SWOTs for leading resort, hotel, airline, travel and tourism operators in each market, including competitive intelligence on overall geographic presence, competitive positioning and relationships with international operators; % share of operator markets; % share of international arrivals and departures; % share of busiest domestic routes; main products and services; panregional expansion, merger and acquisition strategies.

Network of Asain Tourism Sources

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BMI's Asian Tourism Reports are based on an extensive network of multilateral organisations, government departments, tourism industry associations, chambers of commerce and company reports. Information sources include: