Does Vietnam have what it takes to compete in the luxury travel industry

Try it: show anyone overseas a photo of one of Vietnam’s unspoiled, gorgeous tropical beaches – taken at one of those wordlessly beautiful resorts on Phu Quoc, Con Dao, Ke Ga or Ninh Van Bay – and ask them to guess which country they’re looking at. Without clues, no one in a million years will pick Vietnam. Thailand, maybe, or the Maldives – but not here. That right there is the Achilles’ heel of the Vietnamese tourism industry: nobody but the backpackers knows how beautiful this place can be, and backpackers don’t have the money to spend the night at high-end resorts.

Ask anyone who’s never been here what they imagine Vietnam to be like, and they’ll inevitably talk about the dense jungles they’ve seen in classic war-era films rather than the graceful, tree-lined boulevards of central Saigon (what few remain, that is) or the country’s extraordinary 3,260 km coastline. The sad truth is, the world at large just doesn’t see Vietnam as a country capable of delivering the cream on the cake. For high-end travel service providers – particularly those that fall into the burgeoning luxury industry – operating in Vietnam can thus be a major challenge. There are clients out there with their private jets who are certainly in the market for the kind of service where they can snap their fingers and have their every whim attended to, money being no object – but convincing them to touch down at Tan Son Nhat is another story.

Even so, the luxury sector remains a tempting category to work in: statistics released at a recent World Travel Market expo in London showed that the world’s highest net worth individuals (those with liquid assets of over a million dollars) are rising in number, with the majority of new millionaires turning up in emerging economies like Brazil, Russia and China. Since the international travel economy began to show signs of recovery in 2011, sales for premium air travel and luxury hotels have approached 10 percent growth annually – and while Italy, France and the UK are still the most popular destinations for luxury travelers, Cuba, Vietnam and Cambodia are stepping up as new destinations for the wealthy. With figures like that, traditional logic might suggest that establishing an elite tourism operation in this country is a fairly good bet right now. As it turns out, this is not necessarily the case. While many mid-level operators dream of the lucrative markups that luxury-category tourism offers, Vietnam’s near-invisible reputation as a five-star-plus destination has made this uphill work.

Five-Star Price, One-Star Service

Successful attempts to establish a genuine luxury operation that remains viable beyond the initial stages of optimism and enthusiasm is something of a rarity here. Tourism marketing specialist John, who  has worked to promote the luxury travel sector in Vietnam for several years now, has seen a number of businesses make similar mistakes in shooting for the top two percent of international travelers. “There are some common pitfalls here,” he says. “Three star operators chasing the high-end tourism dollar often have very little understanding of what they’re getting into. They talk about ‘redefining luxury’ and providing extraordinary levels of service, but in the end they can’t offer anything beyond merely staying in a five-star hotel or traveling in a Mercedes, which is the bare minimum of what’s expected by the market sector.

They don’t appreciate the fact that Vietnam’s infrastructure is largely inadequate to meet what most high-end travelers would expect from a luxury destination. They focus on planning these grandiose tours, but when they get clients, they find they’re unable to implement the services they thought they could achieve. Unlike with budget tourists, you can’t just make it up as you go along. Everything has to be perfect.” “They usually end up compelled to go after the flashpackers for survival,” John adds. “That just ends up diluting their brand. They use the term ‘luxury’ as a tool to maximize profit, and then they lose the confidence of their intended market.”

While there have been a fair number of flops, one firm that has managed to survive for a good decade in this category is an agency simply entitled Luxury Travel, which was founded by Pham Ha right at the beginning of the five-star tourism wave. Ha still enthuses about the industry: “The luxury travel segment is a huge opportunity for Vietnam,” he says. “The market for luxury travel is expanding and Vietnam has many tourism resources which are ideal for the luxury and ultraluxury markets, but these are yet to be exploited. They will bring enormous benefits to the country.” Ha is quick to dismiss the limited conception of luxury that has proven the downfall of many other startups. “Luxury is not and should not be as simple as going to five-star hotels,” he says. “This is a very narrow definition of luxury. Luxury travel is helping visitors to benefit from the best products and the most comfortable services. But it’s more a question of understanding the clients, anticipating their expectations, and offering them a real customized experience, something unique especially designed for them and for no one else. “The essence of luxury travel is to listen,” he adds. “I mean that luxury travelers, beyond being amazed by the destination they’re visiting, want to experience the real and authentic Vietnam, to live an experience that no one else will.

One example of how we attempt this is the Emperor Cruises we’re about to launch on ultra-luxe boats in Nha Trang Bay this January – journeys on gorgeous traditional junks including limousine and butler services, cocktails at sunset, a vast choice of activities, and so on. Luxury operators have to be very selective and position their expectations on a higher level compared to the local standards, in order to match those of tourists who are used to a very luxurious standing in their daily life in Western countries. But it is an exciting challenge making things change within Vietnam.” A relatively new entrant into this market sector is Gingko Voyage, the manager of which, Jeremy Odoux, is under no illusions about the challenges the company will have to face in order to reach any level of success. “Compared to popular luxury travel destinations in the region such as Thailand, Bali, Singapore or Hong Kong, it’s easy to see that these destinations offer better infrastructures and connectivity than Vietnam. Despite that, significant efforts in this field have, in the past years, seen the development of key infrastructures here that will surely contribute to the development of luxury projects in Vietnam.”

One of the chief complaints wealthy tourists have about services in this country is a distinct lack of finesse in the manner in which they are carried out. “The essence of luxury travel is more about the experience, the service, the exclusivity, the individuality and the authenticity,” notes Jeremy. “Today’s luxury travel offers a wide variety of activities, ranging from beach holidays and cultural tourism to adventure trips – but whatever the activities are, the high quality of service and uniqueness of the experience remain the key expectations. Beside the infrastructure and facilities, well-trained and qualified human resources are a requirement in order to deliver and constantly maintain a high level of services to luxury clients who are ready to pay more but who, in return, also expect more. The lack of well-trained and qualified human resources in Vietnam is a real challenge, and not only in the tourism sector.”

With ongoing developments and improvements in service levels, Vietnam may well be on track to offer what the market defines as genuine luxury standard tours – in greater and more reliable volumes than it does now – in the very near future. Agencies with a clear vision of what luxury clients expect and who dedicate themselves to absolute standards of service do have a good chance of turning wealthy heads and succeeding in bringing the luxury category dollar to this country. In the meantime, however, the absence of dedicated promotions by the Vietnamese tourism administration targeting wealthy travelers means operators such as Luxury Travel and Gingko must work to demonstrate the viability of Vietnam as a luxury destination by themselves – in the face of a market that up to now simply doesn’t believe. Whether those attitudes change or not largely rest on their efforts.