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Laos sees marked shift in tourist appeal

Communist state moves to boost visitor numbers amid multiple challenges to sector

Builders working in a square of tourism businesses in Vientiane. (Photo by Laure Siegel)

VIENTIANE -- It is Saturday afternoon in tourist high season, and Vientiane is very quiet. Most shops are closed for the weekend. A couple of Asian tour groups ascend the Patuxai, the Laotian capital's answer to the Arc de Triomphe. On every floor, stalls are packed with five-year-old photocopies of the Lonely Planet guide to Laos, fake antiques and communist flags, while its female vendors relax in deck chairs.

Down the road at the government tourism office, things are a little more animated. Staff are preparing promotional material for the Association of Southeast Asian Nations Tourism Forum 2018 in the northern Thai city of Chiang Mai, where Laos had a booth in late January.

"We will receive the festival agenda in a few days, come back on Monday!" shouts the woman in charge, before handing out a free map, pen and fan to foreign visitors.

With the slogan "Simply Beautiful," Laos officially kicked off its tourism campaign, Visit Laos 2018, in November. The landlocked nation is aiming for 5 million international travelers this year. Tourism accounts for 9% of gross domestic product and is one of the government's 11 priority development sectors. But in 2017, total arrivals declined by an annual 10%, for the second consecutive year. Back in 2015 Laos tourism reached an all-time high, with 4.68 million international arrivals.

According to data from the Ministry of Information, Culture and Tourism, only the number of Chinese visitors continued to increase from 2016 to 2017.

Tourists in front of the Patuxai in Vientiane (Photo by Laure Siegel)

Visitors from Europe and the U.S. fell by a third, and Laos also experienced a considerable decline in the number of high-end tourists from South Korea and Japan in the same period.

Visit Laos 2018 is aiming to reverse the country's declining tourism fortunes. "Beside attending the ATF, we will have a team with our vice minister visiting the Internationale Tourismus-Boerse in Berlin and we will also be present in the Paris and London tourism fairs. In Asia, we will attend events in Japan, Korea, China and Singapore," Lao tourism deputy director general Bounlap Douangphoumy is reported as saying recently. Official websites about tourism in the different provinces of Laos and a festival calendar have also been launched.

Stefan Scheerer, general manager of Khiri Travel Laos (Photo by Tom Vater)

"Hmong (indigenous people) New Year in Ponsawan, boat racing festival in Vientiane, Loy Khratong (floating basket festival) in Luang Prabang, Lao New Year throughout the country, those are good ways for tourists to engage with the local community," said Stefan Scheerer, general manager for Khiri Travel Laos, a destination management company focused on Southeast Asia. "There is huge potential for development here in the next three-to-five years. We currently sell 1,500 packages a year for Laos while we shift 5,000 in Myanmar."

The tourism industries of Laos and Myanmar share similar challenges: Domestic flights are expensive, road connectivity is limited, and quality accommodation is in short supply. Overall travel costs are higher than in Thailand or Vietnam, as almost everything is imported from those countries. Education opportunities in the tourism sector remain scarce.

With the help of the Asian Development Bank, Laos has published a Destination Management Plan (2016-18), proposing task forces on priorities such as marketing and promotion, hospitality skills, tour guide training, and responsible tourism. For the first time, a tentative dialogue has started between the government, private sector and non-governmental organizations.

"In some provinces, the task forces have set up Facebook pages and WhatsApp accounts where people can contribute," said one consultant familiar with the discussions. "This country doesn't 'do' face-to-face confrontation and there is no room for civil society, so an online discussion on the country's tourism could be a good start."

Crowds of tourists watch the sunset from the top of Mount Phousi in Luang Prabang. (Photo by Laure Siegel)

Meanwhile, the private sector runs its own initiatives. Hotel owners offer extensive discounts, and the Japan International Cooperation Agency is involved in waste management. The celebrated Luang Prabang Film Festival, Vang Vieng Music Festival, and Jazz Festival in Vientiane are putting the country on the map of Asian contemporary culture.

Mickael Perier, who runs Le Trio Coffee in Vientiane, is the organizer of the latter. "Jazz is a metalanguage that talks to everyone. I want to create the Marciac or Angouleme of Southeast Asia," he said, referring to famous jazz festivals in France. "This year, I am trying to become part of the Visit Laos 2018 campaign. But it's difficult to know who to talk to."

This lack of communication between different industry stakeholders crops up again and again. A long-term investor in Laos said: "Tourism creates local jobs the government doesn't have to provide, but the absence of a dedicated Ministry of Tourism has been a problem for a long time. Government officials are suspicious of foreign advisers but they are desperately in need of technical assistance. Only the ADB is involved in tourism in a meaningful way, but it is mostly focused on infrastructure and has limited in-country presence."

Better connectivity is part of regional planning funded by the ADB, and new routes created with the aim of increasing tourist footfall in the lesser-known towns of Laos, Thailand and Vietnam are in the pipeline.

Kayaking tourists on the Song River in Vang Vieng (Photo by Laure Siegel)

Adding to the country's tourism woes, Laos has long been considered an add-on destination. Some 70% of international visitors to Laos also pass through other countries, such as Thailand (60%), Vietnam (53%), and Cambodia and China on their travels. "Laos doesn't have beaches so the key is a multi-country tour and to make sure Laos is part of the trip. We have to sell a natural and quiet destination, the Sleeping Orchid, to make a difference," said Scheerer.

To make crossing into Laos more convenient, visa exemptions for citizens from Scandinavian countries have been announced for 2018, adding to bilateral visa exemption agreements with the other nine ASEAN member states, along with Mongolia and Russia. Laos has also extended unilateral visa exemptions to nationals from Japan, South Korea, Luxembourg and Switzerland. Visa exemptions or not, the Asian market appears to be the future of tourism in Laos.

Inthy Deuansavan, president of Green Discovery (Photo by Laure Siegel)

Inthy Deuansavan, president of Green Discovery, a travel agency that has been running trips around the country since 2001, and a member of the Lao Chamber of Commerce, says the industry faces challenges as a result of this shift.

"European and Asians tourists have different expectations. We need to develop different products for different categories of tourists. Of the 4 million arrivals, 75% come from Thailand and Vietnam, many others are Korean and Chinese and most come only once. The government is focused on numbers, they want more tourists. But it would also be good to have tourists who stay longer, or who spend more money locally."

Nowhere is the dramatic shift in tourist arrivals of the past three years more visible than in Vang Vieng, formerly a magnet for young Westerners who tuned in, took drugs and dropped out while drifting down the picturesque Song River in old inner tubes against a backdrop of spectacular karst stone mountains. After too many fatalities and bad media coverage, the government stopped the party in 2012. Since then, Vang Vieng has reinvented itself as an outdoor adventure destination and has morphed into a Little Korea.

Since the broadcast of a reality TV show shot in the area in 2014, more than 100,000 South Koreans of all ages have descended on the town every year. No wonder French hotel owner Stephane Vigie is currently looking for a Korean-speaking intern for his Riverside Boutique Resort. Last year, 42% of his guests came from the peninsula.

Vigie faces daunting challenges to promote luxury sustainable tourism in bustling Vang Vieng. "This hotel represents what I like about Laos, its rich cultural diversity and nature. The buildings draw inspiration from different ethnic groups and I try to source food, furniture and decorations locally. But just across the river, illegal multi-story buildings go up, techno music blares next to drinking huts in the evenings and very little is done about it. Of course it is not easy for local authorities to manage the very rapid changes that are taking place with their limited resources and technical expertise, and I hope things will settle down with time."

Deuansavan also believes in the survival of responsible tourism in Vang Vieng: "If the government manages activities better, keeps the river clean and cuts the noise, Vang Vieng will enjoy the benefits of tourism for a long time to come."

Two hundred kilometres further north, surrounded by mountains, lies Luang Prabang, a magical former royal capital atop a small peninsula, crammed with temples and French Indochinese architecture. UNESCO world heritage status has helped protect the city from inappropriate development, a rarity in Southeast Asia. But almost every building is a tourist enterprise -- a restaurant, hotel, guest house, boutique souvenir shop or spa -- and foreigners pass other foreigners in a city restored by foreigners.

Luang Prabang can feel like a museum, with the locals gone and the tourists on a never-ending treadmill of short hops -- the average stay is two days and one night. While visitors sip coffee for $2 in expertly renovated rooms that cost $100 a night, families living in the hamlets across the Mekong hunt squirrels with home-made traps and kill birds with slingshots.

That is why talk of diversification resonates amongst the industry's stakeholders. While Vang Vieng, Luang Prabang and the 4,000 Islands region in the country's south lure 95% of the tourists, other provinces try to attract hardy travellers. Thakhek, near the Thai border, has become a renowned center for rock climbing and the province of Sayaboury is host to an exemplary learning center about elephants. Its founder Sebastien Duffillot currently welcomes 2,500 visitors per year. "Laos is a country where one needs time. Our sanctuary is aimed at travellers who are not in a hurry."

War tourism is another fledgling industry, something neighboring Vietnam has successfully exploited. Traces of the Lao involvement in the so-called "American war" in Indochina -- the caves of Viengxay, the Plain of Jars and the former CIA airfield of Long Cheng -- all have potential to attract those interested in history.

But perhaps the biggest challenge to expanding eco and history-based tourism rests with the explosion of infrastructure across the country.

Railway construction along Route 13, north of Luang Prabang (Photo by Laure Siegel)

A few kilometers north of Luang Prabang, a giant construction site heralds the arrival of a train line that will run from Kunming in southern China all the way to Vientiane and Thailand beyond. The railroad is supposed to be in operation in late 2021. An eight-lane highway will run parallel to the railway tracks. Along the Nam Ou River four dam projects are carving up the idyllic landscape.

Veosy Soumpholphakdy, general manager of Sala Prabang, a heritage hotel in Luang Prabang (Photo by Tom Vater)

Many tourism stakeholders welcome the development. Veosy Soumpholphakdy, general manager of Sala Prabang, a beautifully restored heritage hotel in Luang Prabang, feels positive about the increased connectivity. "Travelling in Laos is still very time-consuming and the train will add value to our destination. Most of what we buy in the hotel industry is from Bangkok, and much of that comes from China anyway. Once the train passes our door step we save ourselves the middle man."

Soumpholphakdy acknowledges the project will cause the resettlement of hundreds of villages and the destruction of some natural areas. "Some places and some people will be sacrificed in the name of development. The provinces that currently contain special economic zones, such as the area between Luang Prabang and Luang Namtha and all the way up to the Chinese border will feel it, but most of those are already near urban centres."

Deuansavan sees a way to help resolve these clashes of interest that jeopardize some tourist areas. "The hill tribes in the north have been driven off their land and some river cruises have stopped because of the dams. The Ministry of Tourism wants to promote sustainable tourism but that often conflicts with plans made by other ministries. The key is zoning: The ministries should work together to divide the country into distinctive zones used for different purposes and strive for better local implementation of decisions made in Vientiane."

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