Influential factors on vietnams tourism development

of tourism industry Tourism management system, Tourism infrastructure, Social infrastructure, Economic insurance for hospitality, Technology application in tourism; 2 External components

VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

INFLUENTIAL FACTORS

ON VIETNAM'S TOURISM DEVELOPMENT

By NGUYEN THI KHANH CHI

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

HO CHI MINH CITY, March 2011

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VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS

INFLUENTIAL FACTORS

ON VIETNAM'S TOURISM DEVELOPMENT

A thesis submitted in partial fulfilment of the requirements for the degree of

MASTER OF ARTS IN DEVELOPMENT ECONOMICS

By NGUYEN THI KHANH CHI

Academic Supervisor:

DR HA THUC VIEN

HO CHI MINH CITY, March 2011

I would like to thank all lecturers and staffs of VNP program who have helped me by anyway to improve my knowledge

I highly appreciated help from my colleagues in travel companies and respondents from many restaurants, hotels, and transportation services, domestic and foreign tourists in collecting data to serve the thesis

Finally, my deep gratitude is also expressed to Mr Nguyen Khanh Tuyen, my father, helped me to design research survey and contact information of his colleagues in tourism industry and my family for their spiritual support

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HCMC, March 2011 NGUYEN THI KHANH CHI

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DECLARATION

I declare that "INFLUENTIAL FACTORS ON VIETNAM'S TOURISM

D VELOPMENT" is my own work, that it has not been submitted to any degree or

ex mination at any other universities, and that all the sources used or quoted are

in icated and acknowledged by complete references

HCMC, March 2011 NGUYEN THI KHANH CHI

of tourism industry (Tourism management system, Tourism infrastructure, Social infrastructure, Economic insurance for hospitality, Technology application in tourism); (2) External components affecting tourism industry (Political environment, Cultural environment, Competitive environment); and (3) Tourism resources (The good sense

of environmental protection, Natural resources, The cultural value) In which, Factor 1 -Internal components of tourism industry- affects the strongest accounting for 43.3%

of the variation of dependent variable Factor 3 - Tourism resources - accounts for 26.8% of the variation of dependent variable Then, Factor 2 - External components affecting tourism industry -accounts for 21.8% of the variation of dependent variable All factors impact positively on Vietnam tourism development The hypothesis testing results confirms the influence of these factors on Vietnam's tourism development with the significant level of 1%

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TABLE OF CONTENTS

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A~KNO\VLEDGEMENTS i

DtCLARATION ···.~~

A'STRACT ut T tBLE OF CONTENTS iv

LIST OF TABLE vii

LIST OF FIGURES vii

LIST OF BOX vii

ABBREVIATIONS viii

ABBREVIATIONS viii

Chapter 1: INTRODUCTION !

1.1 Problem Statement - 1

1.2 Objectives of the research study 3

• 1.3 The scope of the research 3

1.4 Research questions 4

1.5 Research Methodology and Data Sources 4

1.6 Chapter outline: 5

Chapter 2: LITERATURE REVIEW 7

2.1 "fheoreticalliterature: 7

2.1.1 The concept of tourism 7

2.1.2 The concept of development 8

2.1 3 The concept of tourism development 8

2.1.4 A giance at the development of tourism industry 9

2.1 5 Research on tourism in Vietnam 11

2.2 Empirica1literature 12

2.3 Conceptual Framework 27

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Chapter 3: MODEL SPECIFICATION AND SAMPLING METHOD 29

i3.1 Research hypothesis 29

3.2 Research design 29

3.3 Model specification 30

3.3.1 Measurement ofvariables 30

3.3.2 Empirical1nodel 31

3.3.3 Data collection 34

3.4 Data analysis method 38

Chapter 4: DATA ANALYSIS AND DISCUSSIONS 40

4.1 Overview oftourism industry 40

4.1.1 Development of Vietnam's tourism indust1y 40

4.1.2 Tourism development in other countries 44

4.2 Data analysis and discussion 51

I 4 2.1 Descriptive statistics 51

4.2.2 Exploratory Factor Analysis (EFA) 55

4.2.3 Reliability Analysis 62

4 2.4 Adjustment of model and hypothesis after EF A 63

4.2.5 Multiple Linear Regression (l'vfLR) analysis 63

4.3 Hypothesis Testing and discussion 69

Chapter 5: CONCLUSION AND RECOMMENDATION 72

5.1 Conclusion 72

5.2 Policy implications 73

5.3 Limitations 76

5.4 Future research 77

REFERENCES ix

APPENDIX la- QUESTIONNAIRE (ENGLISH) xv

APPENDIX lb- QUESTIONNAIRE (VIETNAMESE) xix

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APPENDIX 2- Test Cronbach's Alpha of 3 factors xxii APPENDIX 3- Total Variance Explained of MLR xxv APPENDIX 4- Brief some empirical researches in studying tourism development

in Vietnam xxvi

APPENDIX 5- Summary of empirical studies about factors influencing tourism

development xxviii

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LIST OF TABLE

Table 2.1: Factors influencing on tourism development 28

Table 3.1: Distribution of interviewees at 12 provinces and cities in Vietnam 38

Table 4.1: Statistics ofthe number oftourists' arrivals in Vietnam 40

Table 4.2: International tourism receipts and arrivals to Asia and the Pacific in 2005-2009 45

Table 4.3: Descriptive Statistics 51

Table 4.4: Descriptive Statistics for dependent variable 53

Table 4.5: Descriptive Statistics for exploratory variables 54

Table 4.6: Results of Exploratory Factor Analysis 60

Table 4.7: KMO and Barlett's Test 62

Table 4.8: Cronbach's Alpha ofthree factors 62

Table 4.9: Coefficients of Multiple Linear Regression model 64

Table 4.10: Correlations among variables in MLR model 68

LIST OF FIGURES Figure 2.1: Regional Competitiveness and Tourism Industry Performance 15

Figure 2.2: Conceptual Framework 27

Figure 3.1: Research process 29

Figure 3.2: The number oftourists' arrivals of the 12 provinces and cities in 2009 36

Figure 4.1: Revenue of tourism industry of 12 provinces and cities in 2009 42

Figure 4.2: The growth of Vietnam's tourism industry in 2000- 2009 43

Figure 4.3: International Tourism arrivals to Asia and the Pacific region in 2009 48

LIST OF BOX Box 2.1: Travel and Tourism Economy- Key facts at a glance 10

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A SEAN EFA GDP ITDR KMO MLR PCA lJNWTO WTTC CPDC ECLAC

Multiple Linear Regression Principal Component Analysis United Nations World Tourism Organization World Travel & Tourism Council

Caribbean Policy Development Centre Economic Commission for Latin America and the Caribbean

The steady development of tourism industry has created many socio-economic

benefits Through tourism activities, Vietnam is close to foreign countries where it is known not only to be a brave and unyielding country in the fight for independence and freedom but also a great hospitable country and a very peaceful town on the way for integration with the world Moreover, through tourism, images of Vietnam as a friendly and peaceful country are raised to a new position in the eyes of the world friends

The development of tourism has created many jobs to domestic people, especially women, so it partly solves job needs of the society, contributing to gradually improve and enhance Vietnamese people's lives The face of an area changes to a complete and positive direction when tourism activities develop there as well as it leads to wide and clean roads and spacious houses In particular, ethnic minorities not only know farming and cultivation but also know how to make featured souvenirs to sell to tourists The contribution of tourism into the national income becomes more and more largely; tourism contributed a remarkable share to the economic growth of Vietnam because it brings inflow in foreign currencies from international tourists to Vietnam The tourism industry has contributed to restructure Vietnam's Economy in a positive

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on the quality of products and services, but also lacks of professionalism in building

an impressive Vietnam's Tourism Brand "Up to now, Vietnam tourism is exploiting what is available, lacks of professionalism, competition, national identity and es~cially does not create added value in depth", Dr Ha Van Sieu- Director ofiTDR

- said Barriers of Vietnam's tourism development is expressed to be difficult transportation, bad traffic coordination, dirty environment and street vendors, John Hummel of Netherlands Development Organization (SNV)1

Cqmpared with other Southeast Asian countries, Vietnam's tourism industry is relatively young and small The contribution of the tourism industry in Vietnam, directly and indirectly, reached US$11 billion in 2008 However, Malaysia's and Thailand's tourism industry was 2.4 times (US$27 billion) and 3.5 times (US$38 billion) respectively the size of Vietnam's tourism industry2 Thus, that how to develop Vietnam's tourism industry is a big question and also a challenge for decision-makers and tourism managers Therefore, the study was carries out to idbntify which determinative factors affect the tourism industry; accordingly, this orients for tourism development in Vietnam This is the reason for choosing the topic

"INFLUENTIAL FACTORS ON VIETNAM'S TOURISM DEVELOPMENT"

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This remark is given on international conference "Building a destination brand" organized by Vietnam National Administration of Tourism on Dec 16th 2010 (http://vef vn/201 0-12-16-thuong- hieu-du-lich-viet-nam-thieu-ban-sac accessed Dec 17th 201 0)

(1) To understand the current status of the tourism industry in Vietnam, the thesis describes and analyzes the development of tourism over years; accordingly, comparison in terms of development between Vietnam's tourism and other countries' tourism was made to identity the position of Vietnam's tourism in East Asia region

(2) To investigate factors which determine the development of tourism industry in Vietnam, the study synthesized economic and social factors influencing tourism development from previous researches and analyzed the impact of these factors on Vietnam's tourism

(3) To recommend some important solutions and strategies to improve and develop Vietnam's tourism industry based on its potential, the thesis test the significance of these factors withdrawn to apply on Vietnam's tourism development

1 3 The scope of the research

Vietnam is divided into 3 regions: Nmih, Central and South The research purposes to represent for tourism industry of Vietnam; thus the research investigates surveys in 3 regions represented by 12 well-known tourism provinces and cities of Vietnam including the North (Quang Ninh, HaNoi, Ninh Binh), the Central (Thua Thien Hue,

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Da Nang Lam Dong, Khanh Hoa) and the South (Binh Thuan, Ba Ria-Vung Tau Can

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Tho, Kien Giang, HCMC)

The subject of research is investigated in the survey at the point time in 3 different regions In addition, respondents are international and domestic tourists, managers and staffs in hotels, restaurants, transportations, and other services related tourism Especially, the research focuses on surveys from individuals working in tourism industry, not tourists

1.4 Research guestions

In order to obtain the above analysis, this thesis will attempt to answer the following questions:

(1) How has Vietnam's tourism industry developed?

(2) Which factors affect Vietnam's tourism development?

1.5 Research Methodology and Data Sources

This study about influential factors on tourism development can be carried out by two approaches: a qualitative approach and a quantitative approach, in which quantitative approach is determined as a primary approach in this research

To conduct the study, primary data and secondary data are all used The primary data

is conducted in the year 2010 in 12 provinces and cities in Vietnam Secondary data comes from academic books, government reports, statistical reports, journal and newspaper articles, tourism maps and development reports that are more specifically focused on Vietnam's tourism Among these sources of data, the emphasis is placed

on primary data from a survey conducted in 12 provinces and cities of the country

This thesis consists of 5 chapters:

Chapter I firstly presents the research topic and the reason for choosing it It then briefly introduces matter statement, objectives, scope, research questions, research methodology, and data sources This chapter provides a general view to orient the

the~is

Chapter 2 reviews some basic definitions of tourism and the development of tourism industry in Vietnam will also be highlighted and analyzed Besides that, this chapter presents many previous researches about tourism development in Vietnam and in the world It also emphasizes and analyses factors that impact on tourism industry and provide empirical evidences

Chapter 3 atms to present the research methodology of the thesis It presents the econometric method to quantify factors affecting tourism development Methodology used is a multiple linear regression method This chapter presents from research design, model specification to data analysis method In model specification section, empirical model as multiple linear regression model and data collection are focused carefully

Chapter 4 analyzes the results from the model to answer the research questions This chapter combines two approaches: qualitative and quantitative approach to make clear and provide statistical data to analyze clearly tourism development in Vietnam Besides that, the chapter reviews tourism industry of other countries in the regions It

also describes and analyzes influential factors on Vietnam's tourism industry

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2.1 Theoretical literature:

2.1.1 The concept of tourism

The term "tourism" is the departure and the temporary accommodation of people outside the place of their habitual residence However, tourism is a complex economic and social phenomenon in the development process, its content is increasingly expanding and diverse A number of different approaches have different concepts, and

a growing number of authors give their views on tourism:

Tourism is the totality of the relationship and phenomenon arising from the travel and stay of strangers, provided that the stay does not imply the establishment of a permanent residence and is not connected with remunerative activities (Hunziker and Kraft, 1942)3

Tourism is a "man's activities and places to go outside everyday living environment for their relaxation, work and other reasons" (UNWTO, 2002) With the approach of sustainable tourism development, it is mentioned that

"tourism is a reciprocal relationship by the interaction of four groups: hotel, travel agency, local authorities and residents."

According to Vietnam's tourism law, "Tourism is activities related to travel outside of human habitats frequently to meet their needs to visit, study, entertain in a specific time."

Therefore, tourism is an activity which has many characteristics, including many participants, forming a complex whole Tourism activities have characterized as the economic and socio-cultural sector

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2.1.2 The concept of development

Normally, development means "improvement in a country's economic and social conditions" More specifically, it refers to improvements in ways of managing an are~'s natural and human resources in order to create wealth and improve people's lives This definition is based on the more obvious distinctions in living standards between developed and less developed countries

Development is ambiguous, as what constitutes development to one observer may be interpreted as a negative connotation by another What can be said is that development, broadly defined, is an improvement of opportunity and quality of life Thus development is an incremental, long-term (and not immediate) process, used in the comprehensive sense to include economic, socio-cultural and environmental processes and issues related to tourism (Dieke, 2005)

2.1.3 The concept of tourism development

Therefore, we can understand tourism development as the improvement in economic and social conditions in long-term related to tourism in order to create wealth and improve quality of life by focusing on three major components: tourism policy fonnulation, tourism planning and implementation of plans

Tourism development involves broadening the ownership base such that more people benefit from the tourism industry, skills development, job and wealth creation and ensuring the geographic spread of the industry throughout the province (Western Cape government, 2005)

Consequently the development of tourism is often a strategy employed either

by a Non-governmental organization (NGO) or a governmental agency to

·j promote a particular region for the purpose of increasing commerce through

exporting goods and services to non-locals (UNWTO, 2002)

2.1.4 A glance at the development of tourism industry

Tourism development is mentioned in many studies to improve for growth Figini &

Vici (2009) study tourism and growth in 150 countries between 1980 and 2005 to provide an empirical assessment of the relationship between tourism specialization and economic growth A panel-data approach for international tourism and economic growth studied the proportion of tourism in exports and GDP in the period of 1980 -

1999, which shows the linkage between tourism specialization and economic growth

We also see that international tourism is today one of the most important tradable sectors, with expenditure on tourist goods and services representing some 8% of total world export receipts and 5% of world GDP (Lanza & Pigliaru, 1999) As an industry, tourism is also acclaimed as the fastest growing industry Income from tourism spending grew 35% faster than that tourism growth itself, created about 200 million jobs worldwide (that's one in thirteen workers) and accounted for about 10% of the global GDP (Mingsam, 2005) Other evidence which tourism now becomes the world's largest industry is that according to The World Tourism Council, tourism is responsible for over 9% of the world wide capital investment (Box 2.1) We can easily recognize that tourism development is really necessary for economic development So, this research studies how to develop tourism by focusing on factors that influence on tourism industry in Vietnam

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Box 2.1: Travel and Tourism Economy - Key facts at a glance

& Tourism activity was hit hard by the global slump, with Travel & Tourism hCC:momv GDP contracting by 4.8% in 2009 Even so, the sector worldwide still nrr~" 11 ,"" 11 over 235 million jobs last year

& Tourism's recovery- like that of the world economy- is expected to be a one After growth of just 0.5% in 2010, Travel & Tourism Economy GDP is

to grow by 3.2% in 2011, with momentum building from the second half of

0 and into next year

10-year trend 9.2% Gross Domestic Product (GDP)

The contribution of Travel & Tourism to GDP is expected to •

rise from 9.2% (US$5,751 bn) in 2010 to 9.6% (US$11,151

bn) by2020

0.5°/o Growth

Real GDP growth for the Travel & Tourism Economy is

expected to be 0.5% in 2010, up from -4.8% in 2009, but to

average 4.4% per annum over the coming 10 years

The contribution of Travel & Tourism Economy to total

employment is expected to rise from 8.1 %, 235,758,000 jobs

or 1 in every 12.3 jobs in 2010, to 9.2% of total employment,

303,019,000jobs, or 1 in every 10.9 jobs by 2020

6.1 °/o · Visitors Exports

Export earnings from international visitors are expected to

generate from 6.1% of total exports (US$1,086 bn) in 2010,

growing (in normial term) to US$2,160 bn (5.2% of total) in

2020

9.2°/o Investment

Travel & Tourism investment is estimated at US$1,241 bn,

or 9.2% of total investment, in 2010 By 2020, this should

reach US$2,257 bn or 9.4% of total investment

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Source: WTTC (20 1 0)

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by Pham & Tran (200 I) to estimate the recreational value in Hon Mun islands through

a survey of on-site and off-site recreational behavior, travel experiences, trip costs and socio-economic factors This research provides us a view to determine the value of tourism in economy Secondly, Gilbert, Nguyen & Vu ( 1 998) use Strategic model and data from tourism industry in Vietnam to express the crucial role of information technology in tourism development Moreover, Nguyen Quy Hanh (2007) emphasizes tourism development works best when integrated with community development when she conducted a survey in Doi Village, Central Vietnam Also, Weitzel ( 1997) applied qualitative approach to make clear the importance of environmental awareness and the active participation of local community in monitoring and sustaining the Reserve's ecosystems And finally, although Mok & Lam (1998) show a picture about socio-economic factors affecting Vietnam tourism industry such as the environment, poHtics and government involvement, it also lacks of many other factors

These above five researches mention factors influencing tourism development as same partly as the research of author However, these researches do not draw a whole picture in terms of many factors influencing on tourism development In short, my research synthesizes a large number of influential factors that impact on tourism development, which has not been done by anyone before, from many researches in Vietnam and in the world; and then analyzes to apply the results into Vietnam tourism industry

Especially, Dinh & Hoa, 2008 synthesized and analyzed conditions to develop tourism, which includes a set of factors affecting tourism development At the same time, they gathered preliminarily factors into different groups which reflect the

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- Group 1 : The necessary conditions to develop tourism activities

- Group 2: The necessary conditions to develop tourism business activities for a region in general

- Group 3: The necessary conditions to develop any particular tourism type for a region

2.~2 Empirical literature

Since the thesis focuses on analyzing factors which impacts tourism development supported by many studies Appendix 5 summarized some empirical studies about influential factors on tourism development In addition Osti, Brida & Faccioli (2009) stated that tourism impacts were perceived and evaluated by localities in Folgaria, Italy Another research simultaneously analyzed how local population perceives the impacts of cruise tourism and which factors do affect the relationship between impacts and perceptions' formation in Michigan (Brida, Riaflo & Aguirre, 201 0)

When researching tourism, people usually studies tourism demand Crouch (1994a) researched variables affecting international tourism demand He divided independent variables into three categories The first group is the volume of market, including population, income, free time, education, and job The cost of travel is the second group, including price of tourism services, effect of inflation, exchange rate, transportation cost, distance and time The final group is the utility of image such as tourist attractiveness, publicity, information, weather, and language The most popular variables used in almost studies in international tourism demand are income (89% of studies), price of tourism goods and services (70%), transportation cost (58%), and e~change rate (33%) These studies perform the fact that almost studies used the econometric approach to model market demand

In addition, according to Crouch ( 1994a), there were many disturbances that can cause bias in parameters estimated ignored Political factors, travel restriction (such as visa, foreign spending law), special events (such as Sea Games, world football competition) and many other indirect hardly quantifiable disturbances are examples of these disturbances Moreover, according to Rom illy ( 1997), the number of tourists also changes in seasons The restriction of original currency in countries reduces international tourists coming to these countries The political or socio-economic instability occurred in the destination country can cause the reduction of international tourists to that country

Sinclair, 1999 & Dubarry, 2000 also modeled the impact of variables of political inStability, social dispute, terrorism, movement limitation, exchange rate limitation,

I · and change in free duty terms, economic recession, international fairs, sport events,

oil crisis and national day celebration on tourism demand

Moreover, like any other businesses, tourism sector is also affected by international business environment Each country and each region has different characteristics of the particular business environment Every country has differences in its legal environment, economic environment, political environment, cultural environment and competitive environment4

Tourism is a maJor driver of economic development for many resource-based economies, especially, those with unique resources and/or location advantages A variety of factors impacts the successful development of the tourist industry According to Getz (1999), achieving tourism-related goals is often one of the most important results to undertaking a festival, although other economic, social, political,

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Version 1.1: Aug 19,2010 2:03pm GMT+7 on http://voer.edu.vn/content/m19611/1.1/ accessed Nov 141h, 2010

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anj environmental goals are also important From the perspective, a special event is

of short duration and has an extraordinary impact on the host area in term of, e.g., tottrism volumes, visitor expenditures, and publicity that may lead to heightened awareness and a more positive image of the city or region Festivals have a positive effbct on tourism demand (Kurt and Jonas 2002) Another research shows factors shaping the Vietnamese tourism industry are: the environment, politics, and government involvement, all of which are closely linked and crucial to the successful development of tourism in the country (Mok & Lam, 1998)

Dieke (2005) suggests four critical success factors in less developed countries which lack of natural resources Four factors are the nature of tourism as firstly a multi-sectoral activity that requires inputs of an economic, social, cultural and environmental nature~ secondly institutional structure, i.e supporting for technical issues, marketing, tourism fairs, plans; thirdly legal framework i.e land use regulation, investment incentives, employment of foreign nationals; and fourthly the scope of tourism policy

Recently, according to Effendi (2009), Price Competitiveness and Natural Resources are two most important variables that are very competitive and may further be developed by both the government and investors In this study, he tested 10 variables that impact on the competitiveness of tourism industry as illustrated in Figure 2.1 These variables are Policy rules and regulations; Political climate; Safety and security; Market growth; Infrastructure; Price competitiveness; Cost competitiveness; Human resources~ Natural resources; and Cultural resources

Price Comllftitiwaes

Natural

Resources

Cultural Resources

Figure 2.1: Regional Competitiveness and Tourism Industry

Performance

Clearly, there are some researches pointing out the influential factors on tourism dtvelopment by qualitative method, but there has been few particular researches irpplemented about this matter by quantitative method in Vietnam This thesis tends to contribute partly in discovering influential factors on tourism development in Vietnam

in a quantitative way Thus, the thesis is based mainly on factor groups withdrawn from the study of Dinh & Hoa (2008) about condition for tourism development In addition, I also add some other factors with the purpose to provide more factors

I affecting tourism development based on synthesizing above researches

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I stnthesize and describe a number of factors affecting tourism industry in general as

a ~rst step to have foundation for further analysis in the thesis The description about these influential factors is more clear and detailed than above-mentioned researches

Factor 1: The general components for the development of travelling activities

1 People's spare time

Spare time is in the time fund, and time for travel, sports and leisure is located in the spare time Tourism needs more free time, so well-developed tourism should thoroughly study the structure of work time, the structure of free time and to study the effects of work time on free time

2 High physical standard of living

In many researches, income was often used widely as an independent variable in econometric model of tourism demand, because income is often used to measure the willingness to pay (Cao, 2002) The opportunity to travel is usually best explained by the income of origin (Kulendran, 2000) To have tourism demand, customer's income must reach a certain level It is a popular idea that when income rises, everyone has tendency to seek oversea holidays tours and increases the number of foreign visits (Nguyen, 1998)

3 High educational awareness

If the educational level of a nation is improved, the motivation of traveling will significantly increase in addition to increasing the number of travellers, awareness and desire to get acquainted with other countries From then, travelling habits will obviously form increasingly On the other hand, ifthe educational level of a country is high, that country where its tourism is well-developed will ensure to serve travellers with a civilized way and therefore, it will make tourists satisfied and pleased

5 Political atmosphere of peace and stability in the world

That is to ensure the expansion of economic, political, cultural, scientific and technical co-operation relations between countries in the world If the political climate

in the world is nervous, travelling activities would not develop well (in scale and scope) Previously, the world survived the Cold War; the countries of the world are divided into oppositions, so the world tourism market is relatively divided into three groups:

International tourism markets of socialist countries _International tourism markets of capitalist countries _International tourism markets of the countries of the Third World (the developing countries)

Therefore, the number of international tourists in those years (before 1989) is much less than that now (1950: 25 million passengers, in 1975: 214 million, in 1985: 330 million, in 1995: 567 million, in 2000: 698 million, in 2002: 716.6 million)

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However, the tourists' arrival is eliminated partly in recent years due to wars among countries If we count all current conflicts where hostilities are still present and conflicts that have ceased hostilities but are still unresolved, there are approximately

375 This includes the obvious conflicts in Afghanistan and Iraq, as well as conflicts like Korea war that ceases fires in place but still unresolved and the two sides still stare at each other over a gun barrel

6 The good sense of environmental protection

Environmental protection is not only the urgent task of each country, of economic sectors, but it is also the responsibility of every citizen to combat against the degradation and improve environmental quality, thereby improve the quality of living standard in society and sustainable development of tourism Environmental awareness and the active participation of local community members could become important in

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Many countries attract tourists due to their clean environment For instance, in 2006,

7 5% of overseas visitors agreed with the statement that "Ireland is a clean and environmentally green destination" 6 Clearly, the importance of environment in tourism industry is really high and the government should carry out effective solutions

in encouraging people to protect environment

Factor II: Group of components impact to tourism industry

Like any type of business, tourism business is also influenced by international tourism business environment Each country or each region has different characteristics about its business environment Each country has differences from its legal, economic, political, cultural and competitive environment

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For a fairly accurate list please refer to:

hf!p://www.globalsecurity.org/militarv/world!war/index.html accessed to Dec 9th 2010

6 cited in http://www failteireland.ie/ getdoc/90fe82c6-fd23-4 97 e-8 85b-72e8f.3 7b~ 1 EQvironmental-Action-Plan-200-%281%29 accessed Oct 27th 2010

f/Failte-Ireland-s-I ·f/Failte-Ireland-s-I

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-Topography -Animal -Plants

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7 Situation and development trend of the country's economy:

Situation and development trend of the country's economy is described through:

The growth of gross domestic product (GDP) and gross domestic product per capita

The absolute value of GDP (how many billion dollars?) is used to assess the strength of the economy of a country

Development trends of GDP (GDP growth rate) is used to assess the trend

of economic development in general

To assess the characteristics of an economy, we rely on structural analysis (or the components of GDP)

The proportion and development trends of the consumer and manufacturing industries A country has developed its economy when the proportion of manufacturing industries is high

The development of light industries, agriculture and food processmg industries The development of these industries has contributed significantly to the development of the tourism industry because the tourism industry uses large quantities of food (fresh and processed)

The trend of domestic and foreign trade Proportion of population in working age in the total population: The larger this proportion 1s, the higher economic development potential is

Particularly for the tourism industry is the industry in which labor proportion is required largely and then this factor is especially important to help to develop tourism business

8 The politics, peace and stability of the country:

The political stability is a precondition for economic, political, cultural and social

development of a country A country where there are many tourism resources but

natural disasters and the unstable political situation can not develop its tourism

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11 The historical value

The historical value is particularly attractive for tourists of great learning Some countries have many historical monuments from feudal such as the Czech Republic, Turkey, Germany, France, Russia Especially, Egypt, Greece, India, China, Mexico, Italy, etc are famous for their historical buildings from ancient times

12 The cultural value:

Similar to the historical value, cultural values also attract tourists for the purpose of visit and research Firstly, we should mention the large and famous center of scientific institutions, universities, libraries, cities of art exhibitions and sculptures, the centers

of musical performances, theatrical performances, film festivals, the Olympics, international sporting events, bale performing, the singing contest, the village with its unique architecture and construction, etc

13 The economic achievements of a country or a region

The economic achievements of a country or a region also have special attraction to most of tourists Tourists usually compare the achievement of a nation in the current year with that of the previous years, or with their own nation To promote the economic achievements of a country or a region, many exhibitions, exhibitions, fairs, etc are usually held There we'll see results of the development of industries, agriculture, transportation etc and many cities have become centers for exhibitions

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-activities such as: Lepzich, Poznan, Vienna, Brussels, Moscow, Leningrad, Cairo,

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~e political achievements play an important role in attracting tourists They include achievements of social policies of a country and the role of such a country or area for po[iticallife

Factor IV: Good preparation to serve tourists

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1§ Tourism manaa:ement system:

' 4 The presence of the system of government management on tourism:

- Management at the central level

- Management at the local level

- The system of institutions (laws, legal

d~cuments, etc.), policies (exchange rarte, inflation, social policies, price pcblicies, promotion activities of tourism agencies, etc.) and management

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structure including labor management

I 4 The presence of institutions and enterprises which are responsible for tourism: the business of hotel, travel, transportation and other services related tourism

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of tourism resources and the satisfaction of tourists' needs depend largely on tourism infrastructure

17 Social infrastructure:

Social infrastructure is the system of roads, railway stations, airports, ports, railways, public parks, commercial network, telecommunications, drainage, electricity, cinemas, theaters, museums, etc of the social community

Social infrastructure is a lever to promote all economic and social activities of a

potential and improve the quality of tourism products On the other hand, tourism development is also a positive factor to promote, enhance and expand social infrastructure of a region or the whole country

18 Economic insurance for good tourism preparation:

- Ensuring capital funds to maintain and develop travel business (because the tourism industry is always ahead in terms of modern facilities and continuous innovation)

- The establishment of economic relations with partners The growth of multinational companies, the elimination of the barrier and regulations also create conditions for tourism development in international level

- The provision of materials for tourism organizations must ensure the regularity and good quality

Factor V: Some special events and other factors affecting tourism

19 Special events:

There are some special events attracting tourists and it is a specific characteristic to the tourism development The number of arrivals to destination depends largely on tourism events organized in a period of time (Shuib, 2000) In addition, Brannas and Nordstrom (2002) emphasize that tourist accommodations impact special events since visitors stays longer during festival periods on average These events are national or international conferences, congress, the Olympics, the religious or political celebration, the evening festival, etc All of these events are short but useful in the development of tourism

2ot Seasonality

Seasonality feature in Vietnam's tourism is shown clearly According to Van Houts (1979: 116, cited in Dieke, 2005:10), the tourism season in developing countries is

I • longer than that in most of developed countries The impact of seasonality in

Vietnam's tourism activities is very high, i.e in the summer, domestic tourism areas such as Cua Lo, Sam Son and beach tourism develop strongly with crowded tourist, but in the three other seasons, the number of tourists is very low But this situation has contrast to international tourists to Vietnam Winter is the busiest season with well-known destinations such as Ha long, Sapa, etc

Short seasonality causes a large waste in using tourism resources, infrastructure and human resources under capacity Human resources are not used at full capacity on short seasonality, which leads to temporary unemployment The IUOTO (1975, cited

in Dieke, 2005:11) assessed the impact of this seasonality characteristic on employment, noting that 25% of tourism employees are temporarily unemployed or seek another job The people most hit by temporary unemployment are the less

qualified~ in this category women are often victims (Bryden, 1973 cited in Dieke, 2005:11)

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2008, there is a drop in demand from both business and leisure tourists in the world Because the financial crisis is global, the fears and impacts of it are global as well Tourism is also affected by high costs of food, fuel and other commodities

22 Information Technology application

In the hospitality industry, information technology (IT) largely plays a support role (Cash, 1995, p40) Technological changes within tourism surround several different factors from medical advances to the innovative space tourism Similar to tourism, technology is an ever changing and sometimes unstable business Better communication, transport and safety have encouraged new consumers to the industry Improvements in water supply, medicine and knowledge have meant areas are opened

up which were not possible before technological advances In today' s society in which a consumer wants easier, quicker and cheaper service, only technology has helped tourism fulfill his/her demand

Another massive effect on tourism is the rapid increase in online booking that has given consumers more opportunities to make holidays

More and more people are now booking their holiday via internet, as many people are looking for a better priced deal than that they're being offered by their travel agent Both holidays and airline bookings have not dramatically risen in sales from the travel decrease of 2001-2002 due to the massive consequences of September 11th and the threat of terrorism which has increased The Iraq war, the SARS/bird flu epidemics and hot European summers have persuaded the usual long haul travelers to stay at home

The consumers weren't only using internet to book their holidays but also to research and gain knowledge of the destinations they wanted to go to

So online booking for travel has dramatically changed tourism in the world It has provided a less time consuming, cost effective and an overall efficient method in organizing tourism

23 Legal environment

Obviously, legal environment has its influences to tourism industry Law of Vietnam

on ·Tourism enacted in 2006 defined terms affectting directly tourism resources, tourism activities, tourists, tourism and tourism-related organizations This law relates all fields of tourism industry such as tourism development principals, policies; tourism association; tourism environment protection; tourism management; management, protection and development of tourism resources; tourism development plal'lning, travel guide, international cooperation in tourism, etc

24 Cultural environment

Cultural environment has greatly affected tourism and it is the "soul" of travel Tourism should not only have beautiful scenery, but also need to have a unique and different culture from other countries Tourists travel to enjoy a new culture, which is one of the factors boosting tourism demand There are a large number of countries which do not have many attractions but still attract tourists, it thanks to that country's culture

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I

I •

Figure 2.2: Conceptual Framework

Table 2.1: Factors influencing on tourism development

Factor (1 ): The general 1 People's spare time

I

coqtponents for the 2 High physical standard of living

deVIelopment of travelling 3 High educational awareness

activities 4 Transportation development

5 Political atmosphere of peace and stability in the world

6 The good sense of environmental protection(*) Faotor (2): Components 7 Situation and development trend of the country's impact to tourism industry economy

8 The politics, peace and stability of the country

9 The safeness for tourists Fa¢tor (3): Tourism 10 Natural resources

resburces (**) 11 The historical value

12 The cultural value

13 The economic achievements of the country or region

14 The political achievements Fattor (4): Good preparation 15 Tourism management system

to serve tourists(**) 16 Tourism infrastructure

1 7 Social infrastructure

Faetor (5): Some special 19 Special events

events and other factors 20 Seasonality(*)

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Chapter 3: MODEL SPECIFICATION AND SAMPLING METHOD

Discussing

t -~

with experts

Pilot testing

-Survey Reliability r Explanatory Factor Multiple Linear

Figure 3.1: Research process

Step 1 : based on synthesized and analytical literature review in previous part and discussing with experts, we build first draft questionnaire Discussing with professor/ experts/ managers in tourism industry about the detailed contents of questionnaire is

as below:

Determine factors impact to tourism development in Vietnam

- Build the statement to estimate the influence level of factors to Vietnam's tourism Then, remove illogical and meaningless statement and supplement necessary the statement

- Add demographic questions into questionnaire

- Evaluate the rationality of questions and statement

Decide the number of interviews and regions needed

- Design questionnaire clearly and brightly

Step 2: At pilot testing stage, 10 interviewees have been interviewed directly The pilot testing stage has helped a lot of in term of re-designing questions to get the right and unbiased answers The final questionnaire is used to conduct the survey

Step 3: Results from the survey are used by SPSS software to analyze EF A and test reliability After that, we carry out Multiple Linear Regression Analysis

I •

This research measures Vietnam's tourism development by five indicators: (1) completely not developed; (2) Not developed; (3) Neutral; (4) Developed; (5) Completely developed

The indicators to measure 25 explanatory variables are: (1) completely disagree; (2) Disagree (3) Acceptable; (4) Agree; (5) Completely agree

*Age This research divided age in five categories: (1) 18-24; (2) 25-31; (3) 32-38; (4) 39-45; and (5) more than 45

*Gender

, • I Th~ measurement for gender is a dummy variable indicating whether the surveyed

individual is (1) male or (0) female

* Marriage status The measurement for marriage status is a dummy variable showing whether the interviewee is (1) marriage or (2) single

*Career Career is divided into five categories: (1) Pupil/Student; (2) Homemaker; (3) Worker/Staff; (4) Manager/Director; and (5) Other

* Business type This research separates business type into five categories: (1) Hotel; (2) Transportation service; (3) Travel agent; (4) Restaurant; and (5) Other business

related tourism

*Region Region comprises twelve (12) categories: (1) Quang Ninh, (2) HaNoi, (3) Ninh Binh; (4) Hue, (5) Da Nang, (6) Lam Dong, (7) Nha Trang; (8) Binh Thuan, (9) Ba Ria-Vung Tau, (10) Can Tho, (11) Kien Giang, and (12) Ho Chi Minh