Vietnam - Stepping into the Future

As its people become increasingly affluent and the demand for high-quality travel content in Vietnam continues to grow rapidly, Abacus International has embarked on a major transformation of travel booking systems in the country.

Abacus plans to help travel agents transition to more Internet Protocol (IP)-based solutions, which will help them to more easily provide the full range of content Vietnamese travellers now demand.

Full transition to IP solutions will not happen overnight as Vietnam’s Internet capabilities currently lag behind some other Asia-Pacific countries in terms of bandwidth, penetration and cost.

However, the country is catching up fast. With more Internet Service Providers (ISPs) entering the market and Internet connectivity becoming more affordable, the number of Internet users in the country more than doubled from 1.9 million in 2003 to 4.5 million one year later. This represents a penetration rate of 5.4 per cent and close to the Asian average of 6.7 per cent penetration, according to the Ho Chi Minh City Informatics Association (HCMIA).

“The Vietnamese are getting wealthier and are demanding a wider range of travel content to be delivered more quickly, professionally and cost effectively,” says Mr Nguyen Thuong Thuyet, General Manager, Abacus Distribution Systems (Vietnam) Ltd. “By making our content even better and equipping travel agents with the best IP tools and solutions, we can help them add value to their customers and exploit new and lucrative sources of income.”

To this end, Abacus is set to conduct a feasibility study into the roll-out of its IP-based capabilities in Vietnam later this year. Once the study is completed, Abacus aims to implement a nationwide IP solutions strategy by 2006.

“More and more of my customers want a travel package of flights, hotel bookings and even car rental. I can already access this content through the Abacus system, but having a more robust Internet solution that makes the searching and booking experience more efficient and productive would really aid the growth of my business,” says Mr Nguyen Quang Bang, Director of Hong Ngoc Ha Travel, a Ho Chi Minh City-based travel agent.

Mr Thuyet says that there will be major growth potential for Abacus’ integrated Internet-based products such as Abacus HotelSmart, which features around 1,000 hotels in more than 55 cities in Asia-Pacific, and enables travel agents to seek and secure the best hotel rates and room availability for their customers with just a few simple keystrokes.

The jewel of Indochina

Vietnam is among the world’s top five fastest-growing economies, with forecast GDP growth for 2005 of around 7.5 per cent, according to the World Bank.

The Government has made major strides to reform and open up Vietnam’s economy as part of efforts to gain entry to the World Trade Organisation (WTO) by 2006. Multinationals are flocking to set up shop in the bustling business epicentre of Ho Chi Minh City in the south, and in the country’s increasingly commercial political capital Hanoi in the north.

Ambitious and much-need infrastructure developments are helping to support Vietnam’s growth. For example, the Government is considering plans for a new US$8 billion international airport near Ho Chi Minh City in addition to Tan Son Nhat, which will be opening a new US$182 million international terminal in 2007.

Hanoi’s Noi Bai International Airport is set to open a new US$236 million terminal by the end of this year.

Overall, Vietnam’s airports have recorded very healthy annual growth of 12.3 per cent for the past decade.

The latest FIT bookings on the Abacus system show that bookings for the first two months of 2005 were up almost 30 per cent on the previous year, and showed 38 per cent and 31 per cent spikes over the corresponding periods in 2003 and 2002 respectively.

A month-on-month comparison shows February FIT bookings dropped 9 per cent. This represents a seasonal blip around Chinese New Year when bookings traditionally cool. Indeed, the week following the dawn of the Year of the Rooster saw bookings rise by almost 60 per cent. 

“The market has very, very good potential,” said Mr Don Birch, President and CEO of Abacus. “Abacus expects to achieve double-digit growth in 2005 and continue to lead the market for the next several years.” 

His optimism is borne out by a recent Master Index study by MasterCard that suggests that the Vietnamese increasingly consider international travel an important part of their personal and business lives. 

The vast majority of travel is intra-regional. For example, Thailand (61 per cent), China (39 per cent) and Singapore (31 per cent) were the most frequently visited countries for leisure travel.

For business travel, China (30 per cent) was the most frequently visited country, followed by Singapore (28 per cent) and Thailand (28 per cent).

Economic miracle

Almost half of all respondents to the Master Index survey said that they preferred to book their flights and hotel rooms using a travel agent, and 40 per cent said that travel agents were their most important sources for information about international personal travel.

Vietnam’s personal travel market was worth an estimated US$2.4 billion in 2004, or 8.4 per cent of total personal consumption, according to the World Travel and Tourism Council (WTTC). Within 10 years, this is expected to rise to around US$6.4 billion, or 11.3 per cent of total consumption.

Conversely, business travel accounted for around US$796 million in 2004. By 2014, the WTTC estimates that this will rise to around US$1.8 billion.

While Vietnam is placed 56th in the WTTC League Table for Personal Travel and Tourism total spend - and 68th in the percentage of total personal consumption - the country is the world’s fifth-fastest growing in terms of the annualised growth of travel and tourism spending over a 10-year period.

“Vietnam’s economic miracle has just begun. WTO membership will propel it to the next stage of development and business and leisure travel will become even more important to people. Abacus will be working side by side with our travel agents to ensure that together, we can seize fantastic opportunities in Vietnam,” concludes Mr Thuyet.

See other recent news regarding: Abacus, Vietnam, MasterCard