Executive Summary
Vietnam has emerged as the new tourism destination for many countries worldwide and become
the new potential hotspot for the hoteliers and tourism operators. Vietnam attracts the
international tourists owing to the beautiful landscape, thee unique culture and cost efficiency.
However, the Vietnam market seems to be neglected by the Australian hospitality and tourism
actors for years; particularly, it is inherently perceived by the Australians that Vietnam tourism is
correlated to the cheap and mass- tourism. This paper aims to provide an insight into a tourism
destination region in Vietnam, Phu Quo Island, which is known as a new premium tourism touch
in the Asia Pacific region with references to the high-end accommodation sector. The report
covers three main sections, including: (1) Section 1: An investigation into the current situation of
the tourism and hospitality sector in Phu Quoc with the focus on the luxury and premium
hospitality by the analysis the strengths and weaknesses of the tourism destination region; (2)
Section 2: Justifications for the viability of high-end accommodation service for the leisure
tourists in Phu Quoc; and (3) Recommendations.
Table of Contents
Introduction ..................................................................................................................................... 1
1.0
Tourism Destination Region: Phu Quoc Island, Vietnam ................................................... 2
1.1
Phu Quoc Island, Vietnam ............................................................................................... 2
1.2
Strengths and Weaknesses of Phu Quoc as a Tourism Destination Region..................... 2
2.0
1.2.1
Strengths ................................................................................................................... 2
1.2.2
Weaknesses ............................................................................................................... 3
Luxury Accommodation Sector in Phu Quoc ...................................................................... 4
2.1 Overview of Accommodation Sector in Phu Quoc............................................................... 4
2.2 Australian Tourists and Vietnam Destination ....................................................................... 5
2.3 Justifications of Luxury Accommodation ............................................................................. 5
2.4 Customer Behavior Research ................................................................................................ 7
3.0
Recommendations .............................................................................................................. 10
Conclusion .................................................................................................................................... 11
References ..................................................................................................................................... 12
Introduction
According to VNAT (2018), the total number of international tourists to Vietnam recorded in
2017 amounted to 12,922,151 arrivals, representing a 29.1% increase in comparison to the
preceding years. These figures have demonstrated the consistent performance and growth of the
tourism sector in Vietnam in recent years. The strong growth of tourism has facilitated the
performance of the accommodation sector in Vietnam, particularly in the tourism destination
sites such as Hanoi, Ho Chi Minh City, Da Nang or Phu Quoc. Phu Quoc Island is recognized by
the international community as one of the most attractive destination in the Asia Region besides
other reputable sites such as Bali, Jeju, or Maldives (Spinger, 2018). Unlike the other
destinations in Vietnam which aims at the mass tourism market, Phu Quoc Island is projected to
touch the high-end segment for the leisure tourist. With the huge investment from the
Government and investors in the tourism infrastructure such as airport, highway, amusement
park, international port and a series of high-end hotels and resorts, Phu Quoc Island has
transformed into the hotpot for destination for connoisseurs of luxury accommodation. According
to the most recent year to date, in 2018 Phu Quoc has attracted nearly 1 million international
visitors which is twice as much as that in 2017, representing a 25% in increase in the economic
growth contribution (VNAT, 2018). The enormous potential for the luxury tourism in Phu Quoc
has attracted the influx of investment with more than licensed 200 projects with the sum of
registered capital of over $9.3 billion. Despite the attractiveness of Phu Quoc Island, this tourism
destination is not popular with the tourism operators and hoteliers in Australia; and tourism in
Vietnam is perceived to stick to the mass market. Hence, this report is conducted to provide an
insightful analysis in the sector of luxury accommodation in Phu Quoc regarding the hoteliers and
tourism operators in Australia by identifying and analyzing the strengths and weaknesses of this
tourism destination, and measuring the viability of this sector with the research of the Australian
visitors. It is concluded that it is viable and profound for the development of high-end
accommodation sector in Phu Quoc, Vietnam for the Aussie hoteliers and tourism operators.
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1.0 Tourism Destination Region: Phu Quoc Island, Vietnam
1.1 Phu Quoc Island, Vietnam
It is defined by Gopalan (2013) that tourism destination regions refer to the places which attract
the temporary staying of visitors, in which the full factors for the tourists encompass the missing
characteristics in the tourism generating regions and the desire off new experience by the
visitors. The tourism destination regions also the focal hot of the tourism business categories
such as accommodation, entertainment and recreation, food and restaurants, transportations, etc.
Phu Quoc Island has become the new premium destination magnet in the Asia Pacific for the
past five years. Phu Quoc is an island district of Kien Giang Province, Vietnam, which consists
of more than 28 small and isolated islands. Phu Quoc spans the area of 574 square kilometers
with a 150 kilometers coastline which amaze the tourists with the year-round sun, spectacular
landscapes, long and picturesque beach, powdery white sands, and the tranquility and natural
state of the biodiversity (UNESCO, 2016). The tourism industry is the major contribution to the
economy of Phu Quoc in recent years. The major attractions of Phu Quoc are Phu Quoc Prison,
Vinpearl Land Amusement Park, Phu Quoc National Park, Suoi Tranh Waterfall, Dinh Cau Rock
(Cau Temple), and uncovered islands (VietnamGuide, 2016). More than 70% of the district is
covered by Phu Quoc National Park which is the most attractive destinations for the tourists.
1.2 Strengths and Weaknesses of Phu Quoc as a Tourism Destination Region
1.2.1 Strengths
Phu Quoc has many attraction and tourism strengths which have boosted Phu Quoc to become
the new hottest luxury tourism destination in Asia, including beautiful and picturesque beaches
and landscapes, favorable climate with year-round sun, luxurious spruce-up, unique marine life,
local culture, and easy access (DiscoverPhuQuoc, 2016).
Beautiful and Picturesque Beaches and Landscapes
Phu Quoc is made of various small islands and long white sand beaches, which has become the
fascinating characteristics with thee tourists. Particularly, the majority of islands are uninhabited
with the wild and picturesque landscapes which are amazing to the visitors who would like to
enjoy the natural environment.
Year-round Sun Climate
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Located at the Southern Vietnam, Phu Quoc enjoys the year-round sun with the average
temperature of 28°C, which is the most appropriate climate for the tourists. Phu Quoc is popular
with the European tourists who seek for the excellence of sun during their winter.
Luxurious Spruce-up
Although Phu Quoc has just emerged as an investment hotpot in some recent years, however,
more than 70% of the accommodation services in Phu Quoc are high-end hotels and resorts such
as Vinpearl Hotel and Resorts, JW Marriott Phu Quoc Emerald Bay, Intercontinental Phu Quoc
or Bai Truong Tourist Complex, which provide Phu Quoc the sense of luxury and stylish and
elegant spruce-up.
Unique Marine Life
The marine life and biodiversity is regarded as the most fascinated attraction of Phu Quoc with a
coastal ecosystem of more than one hundred of coral species, 135 species of coral reef fish and
132 different types of mollusks. The preserved water in Phu Quoc has facilitated the
development of these species; and the tourism operators have employed this resource for the
tourism development of Phu Quoc.
Local Culture
The tourists enjoy the traditional culture in Phu Quoc with the unique and traditional lifestyles,
special cuisines and festivals. Phu Quoc provides the tourist to participate and explore a nonexperienced culture with the hidden charms.
Easy Access
Dong Duong International Airport is located in Phu Quoc has provided an easy access for the
international tourist to the island with visa-free up to 30 days. Currently, there are direct flights
from Asian countries such as China, Korea, Singapore, Thailand and Cambodia, and European
countries such as Russia, the UK, and Italy to Phu Quoc Island.
1.2.2 Weaknesses
Despite the strengths boosting the tourism development of Phu Quoc, there are some remained
weaknesses which slower the growth speed of Phu Quoc’s tourism, including the poor
infrastructure, labor and low level of service quality.
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Poor Infrastructure
For the direction of tourism development by the Vietnamese Government, the tourism
infrastructure such as airport and highways are significantly improved in both the quality and
quantity; however, it is required that other sectors such as electricity supply and water treatment
should be upgraded. The report by HVS (2016) concluded that the infrastructure improvement
should be the first and foremost priority for the tourism regulators in Phu Quoc for the better-up
experiences for the tourists, particularly international tourists.
Labor
The increase in the number of tourism operators, accommodation providers and other business
categories has raised the high demand for skilled and competent labor in Phu Quoc. However,
due to the remote location, the organizations have encountered the shortage of skills staffs for
years.
Service Quality
Emerging as a new destination, Phu Quoc is challenged to provide the excellence of service
quality with a wide range of offers, value for money, and provided service. Due to the lack of
skilled and competent workforce, this challenge has remained to be the weakness which
potentially hinders the tourism growth of Phu Quoc.
2.0 Luxury Accommodation Sector in Phu Quoc
2.1 Overview of Accommodation Sector in Phu Quoc
The accommodation sector in Phu Quoc has been boosted and facilitated with the increasing
trend of tourism sector in Phu Quoc. The hotels and resorts are invested by the worldwide giant
hotel chains such as JW Marriot or Intercontinental as well as the domestic group such as Sun
Group. It is estimated that only in the past three years the total sum of registered budgets of the
investment projects in the accommodation sector amounted to more than $9.3 billion to highlight
the luxury touch of Phu Quoc (Savills, 2017). The report reveals that as the end of 2017 the
accommodation service market in the island is dominated by the high-end hospitality with the
representation of 71% of five stars hotels and resorts with more than 2,000 rooms of four and
five stars hotels (Savills, 2017). In 2017, the total revenues raised by sales of accommodation are
recorded to reach $510 million, accounting for a 30% increase. Due to the potential growth of
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this sector in Phu Quoc, the luxury accommodation sector is projected to experience the strong
growth in the upcoming years.
2.2 Australian Tourists and Vietnam Destination
Among the top list of the countries with the largest number of tourists to Vietnam, Australia is
ranked at the 10th position which means that Vietnam, a tourism destination, is attractive to the
Australians. According to VNAT (2017), there are 370,000 arrivals from Australia to Vietnam in
total in 2017; and it is expected that this number will increase to 500,000 arrivals as the end of
2020. The major categories offerings for the leisure Australian tourists consist of Cultural
Package, Beach Package, Traditional Cuisine Package and Natural and Eco Tourism Packages.
The tourism destination regions of focus in the tourism development of Vietnam include Hanoi,
Ho Chi Minh City, Da Nang, and Phu Quoc, in which Phu Quoc is strongly marketed by the
Government to upgrade the tourism development in Phu Quoc. Currently, the focus of Australian
tourism operators is the low-cost tours with the massive market segment. The offered price for
the low-cost tour for the Australians ranges from AUD $1,000 to AUD $ 3,000. However, there
are significant potential for the segment of premium and high end tourism and accommodation.
Particularly, with the improved infrastructure and investment from the giant worldwide hoteliers
in Phu Quoc, the Australian tourism operators should drive their attention to this sector to offer
their customers with more choices and earn profits from this segment.
2.3 Justifications of Luxury Accommodation
There are some reasons attributable to the viability and profitability of the luxury
accommodation in the tourism destination region, Phu Quoc Island, to the improved consumer
spending power, trends of luxury tourism, and the incentives from the Vietnam Governments.
Improved Consumer Spending Power
It is reported by Deloitte (2017) the economic recovery of Australia has boosted the demand for
leisure tourism, including both domestic and international travel. The economic growth has
increased the earnings of the Australians, resulting in the increase in the disposable incomes of
the Australians. The higher retained incomes have led to the higher demand for tourism,
particularly the overseas holidays and vacations. Vietnam is inherently an attractive tourism
destination to the Australians; however, the major product packages offered to the Australians
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are low-cost tourism packages. The rise in the spending power will trigger the opportunities for
the growth of premium segment.
Trend of Luxury Tourism and Hospitality
According to Forbes (2017), luxury tourism and hospitality has gradually replaced the mass
tourism to become the trend of the tourism industry in recent years; and this trend will continue
to foster in the upcoming years. In the global tourism and hospitality market, the high end sector
has experienced a double digit growth in the past three years, which contributed to the expansion
of this trend in Australia and Vietnam (IBIS, 2018).
In terms of the Australian tourism operators, the offerings of premium tourism packages are
prioritized by the marketers to promote the high-end segment. The tourism operators offer a wide
range of incentives to boost the sales in this segment (Deloitte, 2017).
In terms of the luxury tourism and hospitality sector in Vietnam, this market segment is
facilitated by the global trend. According to VNAT (2018), there is a significant increase in the
number of five stars hotels and resorts are licensed in Vietnam; and the occupancy rate of five
stars hotels has increased to 62.7% in 2017, representing a 32% rise in comparison to the
preceding year. The supply of high end hotels has been consistently rising in the tourism hubs in
Vietnam such as Hanoi, Ho Chi Minh City, Phu Quoc and Da Nang; however it is reported that
the demand for the premium accommodation services, including four and five stars hotels and
resorts, is unexpectedly higher than the supply (HVS, 2016). This offers the penetration
opportunities for the international tourism operators and hoteliers.
Incentives from the Vietnamese Government
For recent years, the tourism and hospitality has become the leading sector contributing to the
socio-economic development off Vietnam; therefore, various incentives and policies are
proposed and approved by the Vietnamese Government to encourage the investment in this
sector and attract the influx of visitors. Various promotion programs with attractive incentives
are held by the Government and VNAT to promote the Vietnam tourism to the Australians;
moreover, the visa policies also support the Australians to visit Vietnam’s tourism destination
regions. Furthermore, the open policies in investment and trades have also encouraged the
Australian tourism operators and hoteliers to penetrate the Vietnam market.
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2.4 Customer Behavior Research
To critically and statistically analyze and evaluate the viability of the luxury accommodation
segment in Phu Quoc Island to the Australians, an email questionnaire research has been
delivered to the Australian tourists with the support of the tourism operators. Firstly, the
researcher accessed the managers of the tourism agencies to receive their approval to reach their
customers. Then, the emails were sent to the customers to invite them participate into the survey.
At the end of the research, the total number of received responses reached 86 responses with the
acceptable and proper answers. The information are collected and analyzed with the frequency
and percentage basis to draw the conclusion whether the offerings of luxury accommodation for
the Australian tourists to Phu Quoc Vietnam is viable and profitable.
Demographics
Age Range
9%
26%
12%
18-30 years old
30-45 years old
45-60 years old
More than 60 years old
53%
Figure 1: Age Range of Respondents
Out of 86 respondents, more than a half is within the age range of 30-45 years old (53%) who are
within the working ages and present a strong financial position. People whose ages from 18 to 30
years old account from 26%; the lefts are 45-60 years old respondents (12%) and over 60 years
old respondents (9%).
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Occupational Status
5%
3%
14%
Students
25%
Paid Employees
entrepreneurs
Retired
Unemployed
53%
Figure 2: Occupational Status
The paid employees who earn monthly salaries make up for 53% of the respondents, which
means that these respondents have the financial capacity for enjoying the holiday and vacation
packages. The entrepreneurs also account for one-fourth of the participants; this group of
customers also represent for the high demand of tourism. 14%, 5% and 3% are the portions of
students, retired and unemployed people respectively; these groups are featured as the customers
with lower demand for tourism packages.
Customer Behaviors
Budget for Tourism
8
Budget for Tourism
4%
11%
Less than $ 1000
$1000-$3000
25%
$3000-$5000
49%
$5000-$10000
More than $10,000
11%
Figure 3: Budget for Tourism
Nearly a half of the customers said that they are willing to pay an amount of $1000-$3000 for a
package of tourism while the figures for the amount of $3000-$5000, and $5000-$10000 are
11% and 25%. 25% of people who would like to spend $5000-$10000 for a tourism package are
unexpected. Particularly, 11% of the customers said that they can pay more than $10,000 for a
tourism package if it is unique and value for money. This means that the demand for the high end
tourism package is relatively high.
Motives for Tourism
9
Motives for Tourism
Motives for Tourism
Others
13,95%
Entertainments and recreations
61,63%
Good infrastructure
68,60%
Good services
76,74%
Wild biodiversity
31,40%
Beautiful mountain
37,21%
Peaceful lifestyle
53,49%
Exotic and picturesque beaches
77,91%
Figure 4: Motives for Tourism
It is recognized that exotic and picturesque beaches, good services, good infrastructure,
entertainment and peaceful lifestyle are ranked as the top motives for the selection of tourism
packages for the Australians. Other motives such as wild biodiversity or mountain are minors to
the customers.
The findings gathered from the research draw the conclusions that the offerings of luxurious
accommodation services are quite viable for the Australian tourism operators because (i) the
customers are willing to pay a premium amount for value for money high end tourism package;
and (ii) the development of Phu Quoc tourism is compatible with the motives of the Australians.
3.0 Recommendations
Depending on the analysis of the market trends, the strengths and weaknesses of the tourism
destination region, Phu Quoc Island, and the research on customer behaviors, it can be concluded
that the Australian tourism operators and hoteliers should expand their businesses to Phu Quoc
Island with reference to the offerings of luxury accommodation services. Some recommendations
for the expansion include:
(i)
Developing and marketing the attributes of the packages in alignment with the
prioritized customer motives: The tourists seek for the tourism packages which can
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meet their demands and deliver the best values. In the high end segment where the
price sensitivity is lower than that of other segments, the demand satisfaction is more
important. Hence, the Australian tourism operators should develop the tourism
packages which can meet or go beyond the expectation of the tourists. The important
tourism motives should be focused on during the development of packages and
promotion;
(ii)
Phu Quoc Island is quite new to the Australians as a premium tourism destination;
hence, the recognition of the offerings of high end accommodation service in Phu
Quoc is low. The Australians operators should incorporate with the VNAT and
tourism agencies in Vietnam to promote the understanding of Phu Quoc to the
customers. Cultural events and social media platforms can be employed as the
promotion channels to boost the recognition of the luxury accommodation and
tourism in Phu Quoc; and
(iii)
The Australian hoteliers and tourism operators should take advantage of the supports
from the Vietnamese Government regarding the investment policies and tax to
expand their businesses to Vietnam. The areas of investment should focus on the
luxurious hotels and resorts, and infrastructure which are viable and profitable.
Conclusion
Conclusively, this report is a critical and statistical analysis of the opportunity for the offering of
luxurious accommodation service to the Australian tourists in a newly emerging luxury tourism
destination region, Phu Quoc Island, Vietnam. The analysis indicates that the luxury tourism has
become a prominent trend in the industry of tourism and hospitality; and this sector in Phu Quoc
offers a high potential for the growth and profitability due to the strengths and the directions for
the tourism development of Phu Quoc. The insights on the viability of the offerings of high end
accommodation for the Australian tourists are provided by the findings of the questionnaires
which indicate that the strengths and the tourism development of Phu Quoc are in alignment with
the demand of the Australians regarding the premium segment. The leveraging of the
governmental supports, development of unique and high end values of the packages, and
promotion enhancement are the recommendations for the Australian hoteliers and tour operators’
intention to expand to Phu Quoc.
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