Vietnam’s Coastal Resort Locations: Competitive Advantages and Disadvantages (1/5)

Vietnam’s Coastal Resort Locations: Competitive Advantages and Disadvantages (1/5)

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Mark Gwyther, Managing Director

This is a guest post by Mark Gwyther of MGT Management covered in 5 separate posts – Introduction (1/5), The South Coast (2/5), The Central Coast (3/5), The South Central Coast (4/5) and When to Invest & Conclusion (5/5). It’s a must read if you’re new to coastal Vietnam.

“Vietnam’s Coastal Resort Locations: Competitive Advantages and Disadvantages” is just Part II of a three-part series entitled “Vietnam’s Coastal Tourism Growth is Inevitable: Why, Where and When to Enter the Market”. The entire series looks at the future of Vietnam’s coastal tourism market for investors outside of Vietnam.

The other two parts are:

Part I : Why Is Vietnam’s Tourism Growth Inevitable: Look to Mexico

Part III : Why the Cost of Debt is Creating a Buying Opportunity in Vietnam’s Coastal Tourism Industry



In 1995, an expat couple from Europe opened Coco Beach Resort in the sleepy fishing village of Mui Ne, Vietnam, 180 km northeast of Ho Chi Minh City (HCMC). It was a two hour drive from HCMC to the 34 key, 3-star beach resort; the first of its kind to open on Vietnam’s coast. In the 17 years since, over a thousand beach resorts and hotels have opened along the coast, making Vietnam an Asian coastal resort destination.

Vietnam’s beach resort development growth over the last five years has been impressive, but we are seeing only the beginning. Compared to other countries in the region, Vietnam has barely scratched the surface.

Vietnam International Arrivals 2011
International Arrivals 2011

Vietnam’s shared border with China makes it nearly inevitable that the country’s 3,200 km coastline will be covered with resorts by the year 2020. You have doubts? According to McKinsey Consulting, the number of households in China with disposable income is expected to grow from 18 million (2010) to 167 million by 2020 . That is an increase of over 350 million people with the means to travel internationally. The closest comparable is the middle class growth in the United States during the 1950’, 60’s and 70’s . Mexico’s coastal resort expansion was a result of Americans traveling internationally for the first time.

If we believe that Vietnam will become a major destination in Asia for coastal tourism, then the next question is where to invest.  Three clusters of resorts have already begun to form in Vietnam.  All three are near major cities, close to an international airport and have warm, sunny weather at least nine months of the year.

  1. The southern coastal area near Ho Chi Minh City; Vung Tau, Phan Thiet/Mui Ne and Ho Tram.
  2. The central coast cities of Danang, Hoi An, and Hue,
  3. The 100 km stretch of coastline from Nha Trang south to Ninh Chu Bay which is centered at the Cam Ranh  International Airport.

When comparing these locations, we identified three significant factors that need consideration;

  1. Climate/beach/ocean,
  2. Tourism infrastructure, cultural activities, & entertainment
  3. The Provincial government’s policies and performance

Some other locations have resort developments, but are limited by various conditions.  The north has some amazing places to visit, such as Halong Bay, but coastal tourism in Vietnam is largely being developed from the central coast southward where the weather is much better.  Phu Quoc and Con Dao are beautiful, small islands with 5-star getaway resorts but accessible only by flying to small airports.  Their size and limited access eliminates them from our analysis.  Quy Nhon has some development but the beaches are not near major population centers or an international airport.


While Vietnam is not a large country in terms of area, it is a very long country and the change in latitude causes a variety of climates.  From north to south, the length of Vietnam is comparable to the distance from Copenhagen to Rome, Seattle to Los Angeles, and Shanghai to Hainan.

Vietnam Weather Beach Ocean

Consider two key weather patterns when choosing a resort location.  First, central and north Vietnam have rain during the fall and winter while in the south, the rain arrives during summer.  The south central coast receives significantly less rain than both the central and south coastlines and the raining season lasts half as long.

The 2nd consideration is that the weather near Danang gets cool in the winter.  The lowest recorded temperature in Danang is 7 degrees Celsius, and on average, 25 days a year the temperature doesn’t reach 18 degrees. December and January are wet and cool enough that it keeps people from swimming and laying out in the sun.

Vietnam Weather Data
Key Climate Difference

Tourism Infrastructure, Cultural Activities & Entertainment

Coastal resort tourism in Vietnam began within short drives from Ho Chi Minh City. At the time, the country had two international airports (HCMC and Hanoi), one major north/south road (Highway 1A), and a north/south railway built before the war. Vietnam Airlines flew to local airports such as Dalat, Nha Trang, and Danang, but flights were cancelled frequently, making domestic air travel unreliable and expensive. The infrastructure from the early days of Vietnam tourism has had a lasting effect.

To reach its potential, Vietnam’s coastal tourism must be integrated with cultural tourism and entertainment. Bali attracts visitors from all over the world not just because of their beaches, but also because the resorts have been assimilated with local culture. Phuket and Pattaya’s attractions are less traditional, but entertaining nonetheless. Depending on the target customer, golf, shopping, and night life venues nearby are important. To achieve success, resorts in Vietnam must provide customers with enough entertainment alternatives to keep them for many days. Now, most tourists spend one or two days at a location then move up/down the coast.

Provincial Government Policies and Performance

Vietnam’s Central Government does not become involved in the details of the provinces. It establishes guidelines and goals so the implementation is done at a provincial level. Twenty five different provinces border the Pacific Ocean; each has different strategies, priorities, abilities, and policies for coastal tourism. Vietnam lacks a coordinated tourism plan which causes the provinces to compete with each for foreign direct investment and tourism dollars, rather than trying to compete with other countries.

In the early stages of resort tourism, the provincial governments were caught by surprise by the rapid growth along their coasts. In many places, the infrastructure was not in place and some provinces have yet to catch up. Locations that developed later learned from these mistakes.

continue to . . . 

Section 2 of 5: The South Coast – Ho Chi Minh City, Vung Tau, Phan Thiet/Mui Ne and Ho Tram



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