The tourism sector holds the potential to promote economic growth and reduce poverty in Laos. But although the sector is growing, it faces serious constraints and seems to be small in comparison with the tourism industry in neighbouring countries.
New strategies are needed to improve tourism policy to make tourism an engine of economic growth, according to the Organisation for Economic Cooperation and Development (OECD).
It is important to attract more tourists from non-neighbouring countries and to increase spending on tourism, improve infrastructure, upgrade skills and human resources, introduce more public-private collaboration and ensure that environmental and cultural protections are in place.
The government of Laos has adopted a broad approach in promoting a range of types of tourism, according to the OECD report on the Economic Outlook for Southeast Asia, China and India 2016 that was delivered at the recent ASEAN-BIS meeting in Vientiane.
The first tourism master plan was to limit the number of international tourists to promote package tours for small groups of upper-market tourists. However, the National Tourism Strategy 2006-2020 took a broader approach, embracing mass-market tourism while focusing on cultural tourism and, in particular, ecotourism in rural and remote areas.
Ecotourism takes advantage of the country’s natural assets, including the Mekong River and numerous waterfalls, and the government takes a role in guiding the private sector to develop tourism with sustainable and long-term potential.
At the same time, the government continues to focus on community-based tourism as a tool to reduce poverty and promote economic growth. This broad approach is consistent with the Greater Mekong Sub region (GMS) tourism sector strategy endorsed by the GMS countries in 2006.
Through this strategy, member countries aim to promote the GMS as a single destination, ensure that tourism contributes to poverty reduction, minimise the adverse impacts of tourism, empower women and develop tourism products and services that distribute the benefits of tourism more widely.
Tourism has been growing significantly in Laos. The number of tourist arrivals increased steadily from 1994 to 2014, with an average growth rate of 18 percent, although the number dipped on two occasions in the early 2000s.
The main factors behind the decrease – from 737,208 in 2000 to 673,823 in 2001, and from 735,662 in 2002 to 636,361 in 2003 – were the terrorist attacks in the United States on September 11, 2001 and the SARS epidemic in Asia in the first quarter of 2003.
Tourism recovered in 2004 and has continued to grow. In 2014, the number of tourist arrivals reached 4.15 million, the OECD reported.
According to the Tourism Development Department, more than 4.6 million tourists visited Laos in 2015, generating revenue of over US$725 million. The department expects this figure to rise to over 5 million visitors generating more than US$800 million.
Of the 4.6 million people who visited in 2015, the number of arrivals from the four countries of Cambodia, Myanmar, Thailand and Vietnam reached over 3.4 million, which represented 73 percent of the total number of tourists.
The OECD noted that tourists were generating large amounts of revenue and employment. Indeed, one of the most important contributions of the tourism sector is the generation of foreign income.
From 1990 to 2014, annual tourist arrivals increased from 14,400 to 4.15 million. By 2014, tourism revenues had reached US$641 million, making the sector the second largest source of foreign exchange, after mineral exports.
Tourism has also led to the creation of many jobs and provides 17,000 full-time jobs and indirect employment for an additional 167,000 people.
It is also helping to drive the reduction in poverty, partly thanks to the government’s strategic promotion of smaller ecotourism and community tourism projects, which can have greater impacts on the poor. These areas of tourism have contributed significantly to poverty reduction.
The expansion of tourism has also fuelled investment, with the addition of new hotels, guesthouses, restaurants and entertainment establishments. The number of hotels increased from 491 in 2013 to 515 in 2014, while guesthouses and resorts increased from 1,868 in 2013 to 1,911 in 2014. The number of restaurants and entertainment establishments also increased significantly.
The Tourism Development Department reported that the number of hotels increased to 542 last year.
The OECD noted that despite the contribution of tourism to the economy and poverty reduction, the tourism sector faces various challenges, including how to attract more tourists from more countries and how to increase tourists’ expenditure per day.
The 18 percent average annual tourism growth rate from 1994 to 2014 is relatively low compared with neighbouring countries such as Thailand, Malaysia, Vietnam and Cambodia. Moreover, the share of tourist arrivals in Laos was about 4 percent of all tourist arrivals in ASEAN in 2013.
Tourism arrivals in Laos increased to 4.15 million in 2014, but most international tourists – a full 80percent – are visiting from ASEAN countries such as Thailand and Vietnam. Tourism is far less diversified in Laos, in terms of the visitors’ countries of origin, than in neighbouring countries such as Thailand and Myanmar. It is important to promote tourism development to attract more tourists from non-neighbouring countries.
Despite the increasing number of tourists, their expenditure per day is relatively small. Tourists from neighbouring countries generally visit on 1-2 day package tours or quickly transit the country. In 2009, tourists from non-neighbouring countries visited for about 6.5 days on average and spent about US$60 per day. These tourists are interested in nature- and culture-based activities.
Source: Vientiane Times